Credit Card Quick

How to Avoid Emotional Spending

Credit Card Debt

I will fully admit that I was a full-fledged, emotional spender. Upset, stressed or excited,  I would always head to the mall for a bit of retail therapy. Unfortunately, most of my emotional purchases came back to bite me.

Those $150 red, high-heeled boots that I thought I absolutely had to have? Yep, they’re sitting at the bottom of my closet. I never did find anything to match them. But, I paid the price for many months as I struggled to pay them off.

I awarded myself with a cruise for my job promotion a few years ago. Unfortunately, the cruise cost more than my job promotion paid and I ended up with a hefty credit card bill that took the better part of two years to pay off.

What both of these purchases had in common were that, given the opportunity to do over, I would have not likely indulged in them. Classic emotional spending mistakes that I wish I could have taken back.

I have since learned the art of controlling my emotional spending by following three, simple rules:

1. I keep all but one of my credit cards at home, locked in my safe. It’s a whole lot harder to make an emotional purchase if I have to travel home first to retrieve the credit card.
2. I avoid my weak spots. I have an affinity for a certain little retail shop in the mall. If I don’t have the money to purchase anything, I simply don’t go there. In fact, I don’t even walk past it. It may sound simple, but many of our little “harmless” trips into our favorite stores end up costing us big.

I wait it out for at least 24 hours. I have learned to “sleep on” any large purchases. In other words, I check out the product, get a price and then head home to think it over for the night. After considering the cost, as well as the length of time it will take to pay it off, I often find myself passing on purchases that, just 24 hours earlier, I thought I absolutely must have.

Are Credit Card Convenience Checks all they’re Cracked up to be?

Credit Card Rewards

Most of us are aware of those credit card convenience checks often sent to us by our credit card company. Sometimes they come with special rates and incentives, and many are sent right along with our credit card bill.

The checks are blank and ready to use. Sounds tempting, doesn’t it? A new pair of shoes, a weekend getaway or even a new vehicle is just a check away.

But before you start spending with your credit card’s convenience checks, you may want to take a step back and consider the advantages – and disadvantages – of credit card convenience checks.

Advantages

• Writing out a convenience check is often much easier than applying for a personal or car loan.
• Ideal for situations where a credit card would not or could not be used, such as paying a contractor.
• Often times, they come with promotional rates that are much better than the current interest rate on your credit card.
• Convenience checks may be an ideal way to consolidate your debt.
• Convenience checks may be useful for paying off medical debt, student loan debt or any other type of consumer debt.
• Convenience checks may be deposited into your bank account for cash.

Disadvantages

• Promotional rates on convenience checks are often short-lived. If you receive a great promotional rate on a convenience check, chances are you will not be able to pay off the debt before the promotional period ends.
• Convenience checks often come with fees. These fees can equal a percentage of the check’s total, or can be a straight fee, depending on the creditor and the offer.  Keep these fees in mind when writing convenience checks, as they may outweigh the benefits of the promotional rate.
• Convenience checks may give the consumer a false sense of security when it comes to being able to pay off the debt. In other words, the sheer convenience of convenience checks may cause consumers to overspend when they might not have otherwise overspent.

Should you put up with Credit Card Annual Fees?

Choosing Credit Card

Many credit card companies are getting quite creative when it comes to socking customers with fees. Case point: there are a few credit card companies that are now kicking around the idea of reinstating annual fees. During the height of the credit boom, most creditors threw annual fees out of the window. Now, however, they seem to be singing quite a different tune.

The question is: should you pay an annual fee for your credit card?

If you have good credit and you’ve proven yourself to be a good credit card customer, then absolutely not. As consumers, there are certain things that we will inevitability have to put up with, given the state of the economy and the pitiful state of the credit card industry. However, annual fees shouldn’t be one of them.

Who wants to pay their creditor for the privilege of spending their own money? I certainly don’t, and neither do most consumers.

Testing out Annual Fees

There are many reports that credit card companies are now in the process of “testing out” annual fees for their credit cards, which means that if enough consumers complain about this unnecessary fee then most companies will ditch their annual fees and leave them in the trash, where they need to remain.

Bank of America, for example, recently announced that it would start to “test” annual fees for its customers, and charge a select group of customers an annual fee of anywhere from $29 to $99, although it isn’t clear how they will decide which customers pay the lower fee and which customers will be charged the higher fee, and if there are any fees in between.

When you may not Have an Option

There is, perhaps, one occasion that you should simply pay the annual fee and quietly go on your way. If you have poor credit or have been unable to pay your credit card bills in a timely fashion then you probably don’t have a whole lot of options when it comes to annual fees. In other words, if you dispute your annual fee, your creditor may very well tell you that you must pay the fee or risk losing the card.

Your best bet, as a credit card customer, is to simply contact the creditor and request that the annual fee be removed from your account. Some companies will comply, particularly if you have proven yourself to be a good customer, while others will stick to their guns.

A Race to the Finish: Interest Rates Soar as new Credit Card Laws Loom

Credit Card Debt

As the holidays creep closer, we may all be so busy thinking about our holiday shopping that our credit card interest rates may be the last thing on our minds. But not so fast.

Before you spend another dollar on your credit card, you may want to first check to see if it is one of the countless credit cards that will see an interest rate hike before the end of the year. Many creditors, in an attempt to beat the credit card legislation to the punch, have chosen to increase consumers’ credit card interest rates before the law goes into effect in February.

What’s Next?

And what does that mean for consumers like you? You guessed it: a potentially expensive holiday season.

Many industry analysts have seen creditors of late increasing credit card interest rates; some to nearly double their current rates. Many creditors have raised interest rates upwards of 30 percent – or more!

And don’t think that these interest rate hikes are for those credit card consumers with less-than-perfect credit.  Many credit card customers who have always played by the rules are even experiencing these credit card interest rate hikes.

A Nine-Month Mistake

Many industry experts knew that this kind of situation would result, as members of Congress gave creditors nearly nine months to consider the implications of this legislation and change up the rules before they take place.

In other words, creditors are getting what they can from their customers while they still can.

Your Rights

It is important to understand, however, that creditors still don’t have cart blanch when it comes to your credit card account. If your creditor raises your card’s interest rate, the new interest rate can only apply to new charges. In other words, if you have a balance of $1,000 with an interest rate of 9.99%, your creditor must allow you to pay off that debt at the current interest rate and not the new, raised interest rate.

There is one catch to this, however; if you fail to make a payment on time or exceed your limit your creditor can then change the terms of your contract, which would likely include an increased interest rate on your existing debt.

Is it Time to Break up with your Credit Card?

Choosing Credit Card

The credit card news, as of late, has been anything but positive. The government is tightening the reigns the credit card industry who, in turn, is scrambling to switch up the rules of their credit cards before the new credit card bill takes place. And who is left in the middle of this mess? That’s right: you, the consumer.

All of this mess can make any consumer think twice about even having credit cards anymore. But is the solution to simply cut up your credit cards and live without them?

Although it would make sense that credit cards sometimes hurt credit, most of the time they help credit. In other words, cutting up your credit cards and ending your relationship may not be the best idea, in terms of your credit score.

A Cash-Only Life?

If you plan on living on cash alone for the rest of your life then perhaps ending your relationship with credit cards can work. However, if you plan on financing a vehicle, purchasing a home or refinancing your current mortgage, your credit card relationship is crucial.

This is because credit cards help you establish a strong credit history which, in turn, helps to boost your credit score. Without credit cards, your credit history can be brief, thereby hurting your credit score and your chances of securing any type of financing.

And, given, the state of the current economy and credit sector, a strong credit score is king. Without it, you can all but forget about securing a home loan, vehicle loan or personal loan.

With that said, there are a few things you can do to make your relationship with your credit card company run a bit more smoothly, even in these uncertain economical times:

• If you received notice from your credit card company that your interest rate has been raised, immediately contact your credit card company and request that they cancel the card. They will undoubtedly ask why, thereby giving you a chance to ask if they can lower your interest rate.
• If your creditor refuses to lower your interest rate, you may want to look for another card with a lower interest rate onto which you can transfer your balance. Beware, though, of the balance transfer fees and promotional interest rates, both of which can end up costing you in the long run.
• If you don’t have the option of transferring your balance, the new credit card law allows you to “opt out” of your higher interest rate credit card. If you cancel the card, the creditor must allow you pay off the balance at your current interest rate.

Even the Most Dutiful Credit Card Customers may soon be Hit with Unexpected Fees

News

You’ve always played by the rules. You dutifully pay on your credit card each and every month, and are proud to say you’ve never missed a payment or a due date.

So, why in the world have you just noticed that your credit card’s interest rate is set to go through the roof?

Unfortunately, many banks are not being particularly choosy with whom they raise rates and introduce fees. Take Bank of America, for example: this creditor has plans to implement an annual fee to millions of its customers, ranging anywhere from $29 to $99. Bank of America, which is calling this annual fee “experimental,” may affect any cardholder.

Citigroup has also gotten creative, as it has recently begun charging annual fees to those customers who don’t charge a specific amount onto their cards in a given year. Called inactivity fees, many creditors are requiring that their customers charge at least a specific amount during a specific time period, or be faced with fees.

If it seems a little more than odd to be punished for staying out of debt, then you’re not alone. Millions of Americans are scratching their heads and wondering: what exactly do I have to do to NOT incur fees and interest rate hikes on my credit card?

If you have a strong credit score, you will likely be in a good position to call the shots if you receive any new fees or charges on your credit card:

• Call the creditor and demand to have the fee waived. Argue that you have been a loyal and dependable customer.
• Consider paying the fee anyway. If you have a good credit card with a great, low interest rate, consider paying the fee, as the benefits that the low interest rate brings will certainly outweigh the inconvenience of the annual fee. Likewise, if you have a great rewards card that pays out in the form of cash or rewards, you may be cutting off your nose to spite your face if you cancel your card.
• If you are unhappy with your creditor and you have great credit, you should still have plenty of options regarding credit cards.

Why Cutting up your Credit Cards may not be the Right Move

Credit Repair

Many consumers, worried about an overabundance of credit card debt and rising interest rates, have chosen to take matters into their own hands and cut up their credit cards, once and for all.

But is this really the best decision, both for yourself and your credit score?

The first thing you need to know is that your ability to borrow virtually any kind of money is dependent upon a strong credit score, especially in today’s economy. It is because of this that cutting up your credit cards, although a seemingly smart idea, may really be detrimental to your credit score.

For example, cutting up your credit cards and canceling your accounts immediately affects your FICO score, as your available credit is now much lower. Because part of your FICO score is related to your available credit, canceling your accounts may do much more harm than good.

Consider All of your Options

Instead of cutting up your credit cards and closing your accounts, consider paying down the balances. This is simply the easiest way to protect your credit score and keep your debt manageable.

Your timely payments will allow you to establish a good credit history which will, in turn, improve your credit score. In addition, your low credit card balances will keep your available credit open, which will therefore produce a stronger credit score.

The Basics of a Good Credit Score

A good rule of thumb is to seek consumer credit counseling services if you are drowning in debt; otherwise, it is best to manage your debt by making timely payments and by keeping your credit card balances to a minimum.

It is also a good idea to regularly check your credit score. Order a copy of your credit report from all three credit reporting agencies at least on a yearly basis to make sure that your report is accurate and free of any errors or discrepancies.

Why it Pays to Consider all of your Options when Shopping for a New Credit Card

Introduction

We all remember those days when credit flowed freely. Our mailboxes were crammed full of credit card offers and we essentially had our pick of credit cards.

Shopping for a credit card in today’s economy, however, is decidedly different. We are no longer inundated with credit card offers, and we may not even be eligible for some of the credit cards that, just a few years ago, we could have easily obtained.

Order your Credit Report

Before you begin the process of shopping for a new credit card you must understand where you stand as a customer. To do this, you should order a copy of your credit report from the three, major credit reporting agencies.

If you want further information about your credit score, you can go to myfico.com to get your FICO score. This website also gives you access to financial tools which allow you to see how some of your financial decisions can affect your FICO score, either for the better or the worse.

It is important to understand that most banks will consider you a good credit risk if your credit score is 750 and above, so understanding where you stand is a great, first step when shopping for a credit card.

Consider your Future Plans

Before you apply for a new credit card, consider whether you will make any large purchases in the upcoming months, as a new credit card can reduce your FICO score, which may make it harder to snag a home loan or a car loan (or get a better rate).

You may want to pay off and cut up your old credit card once you have received a new credit card, but reconsider closing the account, especially if you plan to make any large purchases in the upcoming months, as closed accounts lower your available credit, which in turn lowers your FICO score.

Decide on a Card that’s Right for you

If you carry a balance, your first priority should be to find a credit card with a low interest rate. If you travel often, consider a travel rewards credit card, and so on. Make sure your credit card meets your needs and that the terms and conditions of the card make sense for the type of spender you are.

Small Businesses Turning to Credit Cards as Traditional Bank Loans Dry up

News

Ask any small business owner and they will surely tell you that traditional small business loans and lines of credit just aren’t readily available anymore.

Charging it up

Banks are simply not offering much in the form of small business loans lately, so small business owners are getting their money where they can, and that is generally on credit cards.

Although most small business owners would rather secure a small business loan that is backed by the Small Business Administration, and has a capped, fixed interest rate, the truth is that these types of traditional loans have simply dried up.

Small Business Loans Disappearing

President Obama recently chastised those large banks that have received tens of millions of dollars in TARP money for not easing the lending practices for small businesses, although the jury is still out regarding whether his new policy changes will have any effect.

As a result, more than 60 percent of small business owners have used a credit card in the past year to access business capital, as reported by the National Small Business Association.

Although credit cards have always been an option for small businesses, the fact of the matter is that they are now often their only option.

Small Business Credit Cards Taking Over

According to the Small Business Administration, small business loans of $100,000 to $1 million fell nearly 23 percent in 2008.

And, since April, small business lending from the nation’s 22 largest banks has dropped nearly $8 billion.

As a result of the lack of traditional loans for small businesses, many creditors are now swooping in with small business credit cards, such as JPMorgan Chase’s Ink card, which features an interest rate of nearly 30 percent.

Many small business owners – especially those individuals are not able to obtain traditional loans anymore – must use credit cards to stay afloat.

And, given the hit that many small businesses have taken as a result of the lackluster economy, the trend of credit card use among small businesses is only likely to increase.

Payday Loan Scams Flourish as Access to Consumer Credit Slows

News

As the economy struggles and banks and creditors tighten their belts, many Americans are caught in a precarious situation of not being able to make ends meet until their next paycheck.

It therefore comes as no surprise that cash-advance lenders are now using the lack of consumer credit to their advantage. With credit cards maxed or canceled, and personal loans nearly impossible to come by, many consumers are looking to their short-term cash solutions, which is where cash advance loans, often referred to as payday loans, come into play.

Although most cash advance lenders are reputable, there are a few that are looking to scam consumers and make a quick buck.

If you do not have access to cash or credit, and you are in a financial bind, you may look to cash advance loans for your short-term cash flow problems. From a broken down vehicle to an overdue gas bill, millions of Americans use payday loans ever year.

However, it is important to understand that all payday loans are not created equal, and that you should be aware of some of the signs of a possible payday loan scam:

• The online payday loan company does not have a mailing address or telephone number. Many scams do not have solid mailing address and telephones, thereby making the process of finding them much more difficult.
• The payday lender solicits you by phone, as payday lenders are prohibited from doing this under the Federal Trade Commission laws. Never respond to any type of solicitation over the phone, and certainly never provide them with your personal information.
• The payday lender asks that you wire money to them before you can receive your payday loan. A payday loan should never cost you any upfront money, so if a payday lender is requesting upfront money, move on.
• The payday lender asks for your personal information over the phone or Internet and the Internet connection is not secure. Many online payday lenders feature easy, online applications; but make sure the Internet connection is safe – and that the lender is someone you know – before providing any information.
• The payday lender is located outside of the country.