Annual fee vs. reward points: the tradeoffs
September 30, 2009
When you visit the bank to sign up for a brand spanking new credit card you are often offered what is generally termed a reward card, or a card which gives you points or other goodies each time you spend money (for example, one credit card gives you one mile in a certain airline’s mileage program every time you spend a dollar, with bonuses for money spent in certain stores). However, these should be viewed with caution, even during bad economic times when the rewards will be put to good use. Firstly, credit cards with a reward component often have some draw back which cards without a reward component do not have. This may be a higher rate of interest, a higher annual fee or simply not being able to access your money when you want to access it! When faced with a problem such as this, it must be considered what the cash value of airline miles and store gift cards are. I once read that the value of one airline mile should be considered to be one penny when comparing the benefits of going with two different items. That’s a lot of miles to make up for the high annual fees!
Using your credit card can help save you money
September 30, 2009
In the global economic down turn that we are currently experiencing, every single dollar helps when trying to pay the bills every week and feeding the family. The easy access to credit has been blamed for the global economic down turn (banks approving what were described as ‘bad debts’ using the real estate market as insurance in case the deal fell through), and it can also be the solution to yours – all it requires is a little change in the allocation of your spending between cash, debit and credit, although you should remember to consult your accountant or financial professional before taking any advice here of course! So, how can you save just that little bit extra? Use your credit card as much as possible – yay, an excuse to go shopping! If you use your credit card instead of cash (and put your cash in to a high interest savings account until your credit card balance is due), you can receive a small amount of interest for the time that your money was in there. This might be as small as $20, but as I said in the beginning of this post, during this economic down turn every little bit helps!
Beware of High Fee cards
September 27, 2009
There are many people who get stuck in a conundrum, they have bad or no credit and cannot qualify for a regular unsecured credit card with a bank. They then think that their only opportunity to rebuild or build their credit is through so-called, “bad credit” or “no credit” credit cards. These cards often charge you high annual fees, start-up fees and monthly service fees all for the honor of having their card.
Most people realize once they get these cards that they are paying far more money than the spend every month just in minimum payments. This cards are not the way to go. You are just chasing good money after bad. Instead you should go to your bank or look for online applications with major banks and apply for a secured credit card. This card will still report to your credit reports and you have the opportunity of having the card become unsecured after about a year of payments. This is a far better route to go and because it was your own money invested it will give you the resolve you need to get back on track and get your credit score up.
The Credit Card Game
September 26, 2009
In this day and age having a good credit score is the deciding fact in whether you can buy a house, a car, afford a loan for school and sometimes if you will get a certain job. Most of us realize this and do what we can to get good credit but many people do not know the game they have to play to ensure that they get a good credit score and keep it.
Most people know the first step, you need to get credit to use credit to build credit. Many people sign up for as many credit credit cards as they can, max them out and then find themselves in a really bad situation. They usually end up with mountains of debt and bad credit.
Here are some tips you need to know before you enter the credit card game:
1. Do not apply for lots of cards at one time. Inquiries count towards your score and too many inquiries can lower your score, for up to two years, for that is how long they stay on your report.
2. When using credit, try to not use over 35% of the credit line, you maximize your score with lower percentage rates of credit used.
3. Do not charge something on every card every month. Rotate the cards. You lose points by having a balance showing on every card.
4. Do have different types of credit on your reports. You get extra points if you have a credit card and an auto loan on your reports showing good current payments.
5. Do not pay late, or your card may report you to the credit bureaus and that will cause you to lose alot of points.
6. Do not apply for credit up to 6 months before you apply for a mortgage, it will make the lenders wary of you.
7. Make sure to check your credit reports regularly to ensure that everything is reporting correctly.
The role of interest in credit card debts
September 26, 2009
You must know that the interest charged every month, adds on to your credit card debt to make the latest balance or the new amount of credit card debt. So, if you keep on paying partially (or do not pay at all), the charges of interest on the credit card debt are calculated for the new amount of your credit card debt. This means you also pay the interest even on the interest of previous months.
Hence, the debt on your credit card gets collected at a very rapid rate and in a short time, you will see that the debt, which once seemed to be very small has grown to a large sum and is probably impossible for you to pay. Also, if you still fail to control the spending habit, the debt on your credit card grows even more rapidly. This is the working method of the harmful cycle of the credit card debt.
Understading the basic fundamental of credit card debt
September 26, 2009
The total amount that you owe to the credit card supplier is your total credit card debt. It is must to settle the credit card debt every month. Hence, the credit card bill or the monthly statement is sent to you. It shows your total credit card debt. It is necessary to clear the credit card debt before the due date otherwise a late fee and interest charges are imposed. Alternatively, you have a choice to make a minimum partial payment to avoid the late fee.
In this case, only the interest will be charged on the credit card debt. Unless the credit card debt is not paid completely, the interest charge is added. Hence, this continuously increases the credit card debt goes on increasing. This happens more because the rate of interest for the credit card debt is usually greater than the rate of interests for other types of borrowings or loans.
What leads to credit card debts?
September 26, 2009
Credit cards are not just a luxury anymore. In fact, they have become a necessity. Hence, more and more people are moving towards purchasing credit cards. The fact is that most of the people have multiple credit cards. As a result, the credit card business is increasing at a rapid rate. But, a major problem faced by the credit card industry as well as the card holders is that of ‘credit card debt’. But, before we can understand the meaning of ‘credit card debt’, we must understand the flow of work related to credit cards.
As it is clear by their name, credit cards are electronic cards on the basis of which you get credit. To get credit means to borrow (i.e. credit card debt). Your credit account with the supplier of the credit card is represented by the credit card. All the payments made by you with the use of credit card are in fact, your borrowings which are added to your credit card debt.
Tips to stay out of Credit card debts
September 25, 2009
It will also be a good idea to follow the same rules again, which you had followed while trying to pay off the credit card debt. Below listed are some of the things about which you should be careful, even when you are out of your credit card debt:
• Avoid overspending. Going just due to sale offers, for something which you really don’t require, results in overspending and is surely a big mistake.
• Always try to be within 70% of the total credit limit that you have.
• Try to make full payment of the credit card bills in time.
• Try to hold not more than 2 credit card accounts (2 accounts are sufficient for any individual).
It must be noted that these are only some of the very basic tips. You can always add more to them depending on your knowledge and experience. These tips can help you in managing your financial matters effectively.
How to eliminate credit card dets
September 25, 2009
It has already been mentioned that everyone does not succeed in paying off their credit card debts. This simply means that failures also exist. But, the reasons for the failure could be different. Some people fail after successful pay-off of their credit card debt. The reason behind this is that these people allow themselves to be loose and start uncontrolled spending once they have paid off the credit card debt. This results in another credit card debt, which they again have to pay.
Hence, it is necessary not only to pay off the credit card debts, but, also to keep the ‘no-debt’ status, even after the credit card debts are paid-off. In this world of credit cards, this is the only way to ensure that you have a life, which has no stress at all. Therefore, you should learn from your lessons as well as from the lessons of others and should not let yourself move towards a new credit card debt.
Clearing Your Credit Card Debts
September 25, 2009
Credit card debt is one of the significant concerns faced by a majority of people, who are undisciplined or irresponsible about the use of credit cards. There is a possibility that some of the people, who are worried about their credit card debt, might have undergone an unfortunate event or an emergency situation in their lives, but, the fact is that most of them have a credit card debt as a result of their own improper habits (i.e. their inappropriate use of credit cards debt).
There are a number of methods to pay off the credit card debt and a large number of people follow them. Since everyone is not able to pay off the credit card debt, it is like an achievement for those who are able to do so. However, a large amount of restraint, planning and perseverance, along with discipline, is necessary to get all of your credit card debt paid.
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