Thursday, August 30, 2012

Top Tips For Safe Credit Card Usage

In this financial climate, owning a credit card has become a necessity for many of us. Although many people believe these cards are 'bad', they aren't really, they provide a vital purpose. However, many people use them incorrectly which means that the expenses quickly rack up large amounts of interest, and before you know it, spending could be out of control. Follow these credit card tips however, and you will find that borrowing can be incredibly cheap.

Firstly you should always shop around for the best deal out there. Basically you will be wanting to look for the amount of interest charged, whether there is any interest free period, and of course, whether there are any subscription fees for just owning the card. One thing that ties into this really is to not own too many cards. This is one of the top tips offered by people in financial turmoil, most of their problems have been down to not being able to keep up with the repayments on their cards.

Keep your 'limit' though (this will stop you using the card for anything but emergency purchases), and you will want to pay off the card in full every single month so that interest does not accumulate. There is no sense just paying off the 'minimum amount' as to be perfectly honest, you will never pay the credit card back at that rate!

Try to avoid paying late on your credit card, not only can this lead to high 'fines', but it will also lead to bad notches on your credit report. Keep doing this, and you are going to ruin your credit score for a long time to come.

Always make direct purchases as opposed to 'withdrawing cash' on your card. Cash Withdrawals (sometimes known as advances) are a considerably more expensive interest wise than a straight purpose, and quite often, the interest will start racking up on them immediately as opposed to the next month.

Finally, sure you have the money in place, but be honest, do you really need to spend it? You will want to weigh up the difference between what you 'want' and what you 'need'. If you follow just one of these credit card tips, it has to be this one! There are so many people out there who will spend money just because they have it. So when you are considering a purchase, particularly a large one, you will want to consider whether you actually need it there and then, or whether you are better off waiting, which of course will end up being cheaper in the long run. If you provide this same sort of attention to all purchases, you will find that you won't 'dive' into your credit card balance too much.

Sunday, August 26, 2012

Variable Rate Credit Cards - Good or Bad?

If you've been reading our blog, then you know that I am not a big fan of credit cards. Credit cards are very convenient and they are mandatory when doing certain things such as securing a rental car or for buying airline tickets. Shopping online is also another area where a credit card is a must. I would also take a moment to discourage anyone from using a debit card (linked to your checking account) to purchase items online, especially if you do not know the vendor. It's very difficult in some cases to get your money back and as you know, the money disappears right away from your bank account. OK, with that out of the way, let's talk about today's topic, the variable rate credit card.

Now why would we want a credit card whose rate goes up and down? Well, the idea behind this is that you would get hooked by a low teaser rate and then be presented with a prime + some number as the rate you would eventually pay. Now the only time that this would be a good idea is at times when the economy is depressed and interest rates are low. Hey, wait a second, isn't that now? Yes, it certainly is! With the prime rate now in the low single digits (currently 3.25%), it's a good time to have a credit card that is a variable rate a few points over the prime rate!

Credit card companies are getting money at a super low rate now from the Fed. If you have one of those 27.99% APR credit cards, and if you have good credit, now's the time to take action.

In the case where you already have a credit card with a balance, you can save a pile of money by calling your credit issuer's customer service line. Explain to them that you've been a good customer and that you want your interest rate lowered. Be firm, but polite. If you don't get the answer that you are looking for, keep going up the chain of command. These people are working in datacenters off a script and will do everything they can to let you know that they cannot help you. Some will repeatedly insist that nobody's available, but wear them down and keep at it. Sometimes you will have to hang up on a stubborn representative. Sometimes you will have to ask for the department that closes the account before they'll do something.

Either way, companies know that rates are low and they have absolutely no justification for charging you big interest fees. The best way to avoid these fees is to always pay off your balance each and every month. I advise all of my friends and family to avoid using credit cards at all except where no alternative is available. Keep in mind that easy credit is a lure to make you spend money that you don't have. Do not succumb to the temptation of an impulse buy. When shopping, take along a list of essentials and only carry cash. That will save you from the dreaded credit card trap.

Monday, August 20, 2012

Tips for Closing a Credit Card Account Without Hurting Your Credit Score

If you are in debt, you may have already considered closing a credit card account. While this can help you save money on fees, it has one potential drawback-it can seriously damage your credit score. The good news is that there are ways on how you can avoid this.

Knowing how to cancel your credit cards the right way can put off the risk of lowering your rating. Here are the steps that you can follow to evade undesirable repercussions on your report:

Take note of your current credit score.

Before you do anything, make sure that you know what your credit score is. You can get a copy of your credit report from any of the three credit bureaus. Every consumer is entitled to get a version of their report once a year for free.

Know your credit utilization ratio.

This is one of the factors that affect your credit score. Also known as debt to credit ratio, this should not go over 30% so your score will not decrease. To compute your credit utilization ratio, add all your available credits. Then calculate all your balances. Divide your whole balance by the total credits to get the percentage. For instance, let us assume that you have available credits worth $3,000 and your total balance is $1,000. After computation, your credit utilization ratio will be 33%.

Pay off all your debts.

If you can't, you can simply pay off the credit card that you are trying to cancel. After repaying your debt, closing a credit card account will be much easier. Don't forget to confirm that your credit card has indeed zero balance by calling your issuer's customer service hotline.

Cancel your card.

Once your account's balance is zero, you can contact your creditor again to start closing the card. You may be thrown a few retention offers to entice you to withdraw the cancellation.

Follow up on your request.

Even though you have already spoken with a customer representative, you should follow up on your application to close your account. You can send out a request in writing stating the same thing. You may also want to obtain a written statement authorizing the termination of your account. It is good practice to keep a copy of the records you have acquired.

Check your credit report.

You may have to wait a few weeks before the activity will appear on your credit report. Make sure that everything is accurately documented including a zero balance on the closed account and that you have paid the card in full. Compare your credit score at the moment with your rating before you close the account. Hopefully, there is only a subtle change or none at all.

Wednesday, August 15, 2012

What Are Cash Rebates?

Cash rebates are a favorite type of reward. Many consumers are easily enticed by the line "Spend more to earn more." Credit cards that offer cash back or cash rebates let you earn a percentage each time you purchase against your credit. Most cards give you points or miles which you need to convert first to use them. Cash back is different since they are in the form of spendable dollars. Discover® was the first company to implement this offer and soon enough, other credit card companies followed suit.

How to Earn Cash Rebates

The process is actually very simple. All you need to do is use your credit card on purchases. It is similar to carrying a discount card around except that you don't get the discount on the spot. Often, companies will give you your cash back at the end of the month. The complex part is finding out how much percentage you get on each purchase. Thankfully, creditors have made it easier for consumers to compute their cash rebates by grouping the purchases together.

For instance, the amount of percentage you get from conventional purchases such as groceries, medicine, and gas is all the same. All other purchases entitle you to smaller rebates. However, if you purchase from their partner merchants, you can get really huge rebates. If your creditor has an online shopping website, you might want to shop there using your credit card. This is because they can give you 10% to 20% or even more for each purchase you make.

How to Qualify

First of all, you need a credit card that allows you to earn cash rewards. The catch is that most creditors will only approve applicants that have excellent credit. Even those that have good credit can be turned down. Aside from your credit score, they may also take a look at your employment status or your current income. There is often an income requirement since most of the credit cards that offer cash rebates come with high annual percentage rates, interest rates, and other charges. You should also be aware that you have to pay all your bills in full to avoid paying the high monthly interest fees.

Cash Rebates Tips

It is noticeable that the card offers are slightly different from one another. You can find cards that give you rebates each time you purchase on a particular category. You can sign up for each category every quarter of the year to qualify for the rebate. Other financial organizations will give their consumers a flat rate, which they need to earn throughout the year.

If you wish to gain more rewards, you may need more than a single card. With more cards, it would be easier to rack up on your total percentage. Additionally, using two or more rebates credit cards gets your more discounts on not just one type of purchase. Each card has unique privileges when it comes to cash back rewards.

Instead of using debit or even hard cash to pay for your purchases, use your credit card with cash rebates to get huge savings in the long run. Be sure to pay your dues on time, though, to avoid penalty fees and getting into debt.

Monday, August 6, 2012

How to Use The Credit Card Wisely?

Plastic money is ruling the world today. In the recent times, holding a credit card is as common as holding the cell phone. None other than the credit card will help you in the best way to meet your financial obligations. If you use the card wisely, you will be the master of your life. Financial issues will never have command on your life. The current article tells the reader about how to use the card effectively and manage the budgeted life.

Everybody knows that cash flow is important in life. If the cash runs dry, getting financial assistance in these scenarios is pretty difficult because most of the people in the world today run budgeted life. Here comes the role of credit cards into the picture, they extend required financial help. Unlike bank loans and money lenders, these credit cards will never ask you any security against the finance that you take. The credit card institutions want you to be responsible in maintaining your finance by paying the bill amount promptly. It helps you to build good credit history which in turn paves a way for easy loan approval in future.

Use the credit card wisely

The problem with usage of the card rises only when your accumulated bill go high and you are unable to close it on time. You may need monetary help for many things life. Sometimes you need it to buy your basic needs and sometimes you need it to meet your travel expenses. Depending on the single card to meet all your expenses will exceed your credit limit and your inability to pay the bills on time will give you bad credit score.

Today's credit card market includes customized cards to meet your purpose. You have cash back cards which gives you cash back rewards for your daily purchases, travel cards will give you the free credit miles for your journey. You can even find business cards which gives you special discounts on your business expenses.

Sharing your monthly bill across different cards will keep you in your credit limits and gives you ample time to pay off your credit bills.If you are a travel freak, use the travel cards to meet the travel expense. Your daily purchases will earn cash back rewards for your regular purchases. If you different cards for different purpose, you will not only manage your finances but also earn rewards in form cash backs, free miles and discounts.

In spite of your effort, sometimes you may find your card bill on the sky. If you are looking out for an option to reduce your interest rate and clear off the debt in the short time, you can take the advantage of balance transfer cards. Using these cards you can transfer the amount form your high interest paying credit card and reduce your credit bill.