Credit Card Quick

When to say When: How many Credit Cards are too Many?

Credit Score

The art of obtaining a good credit score can be quite tricky. You must have credit cards in order to build a strong credit history, but too many credit cards can lower your score. You have to apply for a credit card in order to be approved, but applying for too many credit cards can lower your credit score. You must spend on those credit cards in order to build a credit history, but too much spending can lower your credit score. Hmmm. Confused? You’re not alone!

If you are a credit card holder, you may be wondering if you have too many credit cards and if they will affect your credit score, either positively or negatively. Although it would be nice to have a definitive answer, the fact of the matter is that the right number of credit cards will be different for everyone.

However, there are a few ways you can examine your personal financial situation to determine if you have achieved a happy medium between not enough credit and too much credit:

• Review your current credit card situation – Are you currently able to handle the credit cards in your wallet? What are the finance charges and are those finance charges reasonable?
• Reexamine your ability to manage all of your cards – Are any of your current credit cards maxed out? How much credit do you have left on your cards (the credit reporting agencies will often lower your credit if your balance exceeds 30 percent of your limit)? Have you been late paying on any of your cards in the past six months? Do you often feel overwhelmed by your debt?
• Consider whether consolidating or canceling credit cards is right for you – Although most financial experts will encourage you to keep your credit cards open (even if you don’t spend on them) so that your available credit will raise your credit score instead of lowering it. However, if you feel like you will overspend on your credit cards, it is best to close the account. The small ding on your credit report will certainly be offset by the temptation you eliminate by canceling the card.
• Reexamine your spending lifestyle – If you are a good credit card holder, a credit card can easily raise your credit score and allow you to benefit from it; however, reckless, careless spending often has the opposite effect, so always take into consideration your personal financial spending situation and spending habits.

The Pros and Cons of using your Home’s Equity to Pay off Credit Card Debt

Introduction

If you have acquired a large amount of credit card debt you may be inclined to use your home’s equity to pay it off.  From home equity loans to cash-out refinancing, using home equity to pay off debt is a common practice throughout the country. However, is it right for you?

Say Good-Bye to Credit Card Debt

If you are overwhelmed by credit card debt, or if you are simply tired of looking at high credit card balances, you may want to consider using the equity in your home to pay off these debts. However, many financial analysts warn against doing this, as it could create a number of problems.

In particular, it is important to point out that credit cards are unsecured loans; meaning that the credit card companies cannot take away any of your assets due to nonpayment. A home loan, however, is a secured loan, so if you fail to pay your home loan payment, the bank can foreclose on your home.

The Advantages and Disadvantages of Turning to your Home’s Equity

With that said, it is important to consider whether using the equity in your home to pay off your credit card debts will make your home loan payment difficult to make. If so, then it is probably wise to reconsider your decision to use the equity in your home to pay off your unsecured debt.

However, if you have enough equity in your home, and you can either refinance your home at a lower rate or take out a home equity loan with a low interest rate, you may want to consider the advantages of paying off your higher interest rate unsecured debt.

It is also important to remember that the interest on home equity loans is often tax deductible, thereby providing you with another benefit.

Finally, if you want to avoid racking up more debt on your credit cards once you have paid them off, develop a plan of action for budgeting yourself and spending wisely so you don’t find yourself in the same position as you were before.

Have you Performed a Credit Card Check-up Lately?

Credit Repair

Most of us make a point to go to the doctor every year for our annual checkup. But when was the last time you performed a financial checkup on yourself?

Our finances are an incredibly important part of our lives, whether we like it or not. And credit cards, for many of us, can either make or break our financial health. With that said: when was the last time you checked up on your credit cards? Are they working for you?

Dealing with credit cards, especially in this economic climate, should be on the top of our priority list; unfortunately, though, many of us spend on our credit cards without giving any thought to the money we could be losing. Because of this, it is important to review your credit card situation at least on an annual basis so that you have a greater hand in your financial health. Here’s what you’ll need to do:

• Order a copy of your credit report – Before you even begin looking into your credit card situation you should order a copy of your credit report. You can order a copy of your credit report from all three major credit reporting bureaus once a year, free of charge, so take advantage of this privilege. Once you have the credit report in front of you, carefully read it and immediately contact the appropriate credit reporting agency if you find any errors or discrepancies.
• Review all open credit card accounts – Your next order of business should be to carefully review all of your open credit card accounts. Carefully reread each of the card’s terms and conditions, and review the APR and related fees associated with each card.
• Close, transfer balances, if necessary – If you find that your credit card company isn’t giving you the best deal, contact them immediately and negotiate better terms. If you are unable to negotiate terms to your liking, consider closing the account and transferring any balance you have onto a different credit card. Pay close attention, however, to any balance transfer offers, as they often come with their own share of fees.

What you need to Know when using a Credit Card for Large Purchases

Introduction

If you need to make a large purchase, but you want to avoid taking out a personal loan or other line of credit, you may have considered using your credit card to make the large purchase. Credit cards can be quite convenient for making large purchases, and they can potentially save you from high interest rates commonly associated with retail credit and personal loans.

However, like any other type of financial tool, you should make sure that this is the best option for you. Here’s what to remember before making a large purchase on a credit card:

• Consider your credit card’s interest rate and do the math to see if it worth charging a large purchase. In addition, don’t forget to consider what your minimum payment will be once you have charged the large purchase.
• Some credit cards offer special introductory rates, but pay close attention to the expiration of the introductory rate, as this could affect the amount you pay in finance charges if you are unable to pay off the purchase before the expiration of the introductory rate.
• Consider using convenience checks that often come in the mail from your credit card company. Convenience checks often come with lower interest rates, and often these interest rates are fixed for the purchase. However, consider the fee charged by the credit card company for the convenience of using these convenience checks; often times, these fees can be quite high.
• Before making a large purchase, consider whether it will put your credit limit at its maximum.  In other words, always avoid carrying more than 30 percent of your credit limit on your credit card, as this can lower your credit score.
• If you plan on making a particularly large purchase, you may want to call your credit card company ahead of time to alert them to this charge. Many credit card companies will decline a large purchase if they suspect fraudulent activity. It is therefore wise to avoid the hassle and embarrassment of a credit card denial by calling ahead and alerting them of the impending purchase.

How to Protect your Child from Identity Theft

Identity Theft

You’ve probably done all you can to protect yourself from identity and credit card theft. But did you know that you also need to protect your children?

It’s true! Studies show that up to 7 percent of all reported cases of identity theft are targeted at children. However, this statistic may be much higher, due to the fact that many families do not find out about the problem until the child becomes of age and applies for credit.

One of the biggest problems lies with social security numbers. Because a child’s social security number is dormant when they are a minor, identity thieves use them to create phony lines of credit and credit card accounts. Many times, they are able to get away with this for years.

With that said, there are a few things that you should do to help protect your child from identity and credit card theft:

• There is typically no reason to give out your child’s social security number. Question anyone (even their doctor) that wants to use their social security number as their identification number. In addition, always remember to destroy any document that contains their social security number.
• Remind your children to never give out any personal information to anyone, either on the phone or online. Identity thieves count on children giving up this information freely, so take the time to teach your child about guarding his or her personal information.
• Don’t check your child’s credit report unless you suspect foul play. This may seem counterproductive, but the fact of the matter is that checking your child’s credit report activates their credit report, which then could enable identity thieves to more easily access to their information.
• Any type of solicitation with your child’s name on it could mean trouble. If you begin receiving credit card offers or calls from collection agencies, immediately run a credit report to check for any suspicious activity.
• Immediately contact the appropriate authorities if you suspect a problem with your child’s credit. Contact the Federal Trade Commission’s identity theft prevention website at www.ftc.gov.

Essential Tips for Rebuilding your Credit after a Bankruptcy

Credit Repair

Make no doubt about it, bankruptcy will destroy your chances of getting any type of credit for quite a few years. However, after your bankruptcy is discharged it is time to begin rebuilding and reestablishing your credit.

There are certain things you should do and certain things you shouldn’t do, however, when it comes to making the right moves regarding your credit:

• As soon as your bankruptcy is discharged, apply for at least two credit cards. It is important to understand that you will likely qualify for traditional, unsecured credit, so you may have to first start with a couple secured credit cards. Secured credit cards, while they act the same regarding the rebuilding of your credit, are different because they require a cash deposit equal to your credit limit. Just like a typical credit card, you will be expected to pay the bill each month; if you fail to do this, the credit card company can then use your cash deposit to pay the bill and close your account. Your payment history with your secured credit cards will be vital when it comes to reestablishing your credit, so take these seriously.
• After about 12 to 18 months of making regular payments on your secured credit cards you can then attempt to apply for an unsecured credit card. At this time, you will have likely established a good credit history using your secured credit cards. Avoid opening too many new credit card accounts at once, though, as this could lower your credit score.
• Avoid closing any credit card accounts, regardless of whether you spend on them or not, as a good portion of your credit score is made up of your available credit. The more credit accounts you have open, the higher your available credit.
• Make purchases on your credit cards each month, but also make a point to pay them off in full when the bill comes. Adopting this responsible habit will allow you to enjoy the benefits of good credit without becoming overwhelmed with credit card debt.

The Best Financial Tools for College Students

Introduction

As a college student, or one headed to college, you may begin thinking how you will manage your money while at college. Because of the many expenses associated with college, one thing’s for certain: you will definitely need to find a good financial tool for handling your money.

Will you choose a debit card, a credit card or a prepaid card? Although none of these options is the right option for every college student, you may want to begin thinking over which financial tool is right for you:

• Credit cards – You may have heard about the crackdown on student credit cards over the past year, as new legislation states that creditors can no longer offer you a student credit card if you have no steady income to back it up. However, if you are employed while attending college you may choose to have a student credit card in your back pocket. A student credit card is a fantastic resource if you find yourself in a financial emergency. In addition, it can help you begin building your credit history, which is vital for your credit score. Keep in mind, however, that a student credit card can be quite dangerous if you don’t keep your spending in check. In addition, pay close attention to student credit card interest rates, as they are often quite high.
• Prepaid credit cards – Prepaid credit cards have gained quite a bit of popularity over the past few years. They work like a debit card, as you can spend only what you have loaded onto the card. Many parents of college students have opted to use these to provide their children with money, but control their overall spending. In addition, prepaid credit cards are easy to use, as you can transfer money from your bank account to a prepaid credit card whenever desired. Keep in mind, though, that prepaid credit cards do come with their share of fees, so it is best to shop around before deciding upon one.
• Debit cards – Debit cards provide quite a bit of convenience, as they allow you to access your money quickly and easily. However, even though debit cards provide the practicality factor, they can be easily overdrawn, thereby resulting overdraft fees. In addition, you run the risk of someone stealing the card and draining your bank account. Although you will unlikely be responsible for any fraudulent charges on your debit card, it could create quite a bit of hassle if your bank account funds are drained.

Store Credit Cards: A Good Decision or Pitfall?

Credit Card Rewards

You’ve probably heard financial experts saying that store credit cards are nothing but trouble. However, this massive business is still going strong, so there are many individuals still seeking them out and using them. So, are store credit cards all bad, or are there reasons why a store credit card might be right for you?

Store credit cards are often discredited by financial experts because of their sky-high interest rates. However, if you are a financially responsible credit card user, they may very well provide you with some benefits.

The Lure of Discounts and Rewards

Stores will often reward customers with frequent discounts and rewards for using their store credit cards. This, of course, can prove to be quite beneficial, particularly for retailers you frequent. However, it is important to understand that if you fail to pay your card in full each month you could very well lose all of the advantages of discounts and coupons due to finance charges.

One of the downsides to store credit cards, besides their high interest rates, is that many individuals tend to spend more at their favorite retailer when they come armed with a store credit card. In fact, retailers are counting on it.

If you find yourself purchasing more than you normally would if you were paying cash, or if you find that you are not using good judgment when it comes to purchasing items that are too expensive for your budget, then you should reconsider using a store credit card.

Controlling your Spending and Keeping your Spending Habits in Check

Many times, store credit cards give us the false impression of having more money. Many individuals, armed with a store credit card, will shop to excess. High store credit card balances, of course, lead to credit problems, particularly if they are unable to pay off the balance in full each month.

Like any other type of financial tool, it is best to examine your credit card spending habits before agreeing to open a store credit card. If you are confident that you can pay off your balance, each month, in full, then it may be a good idea to use a store credit card, particularly one that comes with discounts, rewards or other shopping perks.

How to Prevent Credit Card Fraud and Identity Theft

Identity Theft

Do you have the knowledge to help prevent credit card theft?

Unfortunately, many of us do not, which therefore leaves us quite vulnerable to a credit card thief. It is important to understand that credit card thieves are constantly finding new ways to steal other individuals’ credit card numbers and identity. Although we can’t always protect ourselves from credit card thieves 100 percent of the time, there are many things that we can do to help ourselves from becoming an easy target:

• Don’t let a clerk walk away from you when you are making a retail purchase. If your credit card is out of sight it can spell trouble in terms of credit card fraud and identity theft. If possible, request that the clerk remain at the counter with your credit card at all times.
• Never give out your credit card information over the phone unless you have initiated the phone call and you have researched the company’s credibility. Remember: a company will never, ever initiate a phone call and ask for any of your personal information, including credit card numbers.
• Never give out your personal information or credit card information through an email. And never, ever provide information of this kind if a company solicits you by email claiming to be your bank or credit card company.
• Never give out your credit card information on a website that isn’t secure, or one that you don’t fully trust. It is best to always shop with trusted retailers on the Internet and to make sure that your computer’s antivirus and firewall protection are comprehensive and up to date.
• Invest in a good shredder and take the time to shred all of your personal documents, including credit card statements and credit card offers.
• Don’t carry around a wallet full of credit cards. Instead, carry only the credit cards that you will need and keep the rest at home.
• Check your credit card statement carefully and immediately report any activity that you don’t immediately recognize. Remember: many credit card thieves will charge only small purchases so that many credit card customers won’t catch them!

Should you Consider Credit Card Debt Settlement?

Credit Card Debt

You see the commercials all the time; companies promising to slash your credit card debt and give you affordable repayment plans for your mounting credit card debt.

You may have begun thinking about turning to a debt settlement company, but are quite leery of the promises.

If you have questions about credit card debt settlement, then consider the following factors before picking up the phone and taking the next step:

1. Don’t consider credit card debt settlement if your credit card bills are still manageable.
2. Don’t consider credit card debt settlement if your credit card bills total less than $10,000.
3. Most credit card debt settlement companies require that you prove a financial hardship. This may include the loss of a job, a great deal of medial bills or other type of unforeseen circumstances. Expect the company to ask you to provide proof of your financial hardship.
4. You may consider debt settlement if the credit card laws make it too difficult for you to file bankruptcy.
5. Although Congress has made a point of flushing out many of the unscrupulous debt settlement companies, it is still in your best interest to research the debt settlement company before agreeing to proceed.
6. Although credit card debt settlement will allow you to pay off your credit card debt in less than five years, and for a fraction of what was originally owed, understand that your credit score will be negatively impacted. For individuals who already have suffered a blow to their credit score, this won’t be too much of an issue.
7. Consider researching many debt settlement companies online through debt relief networks. The Internet is a great source of information on debt settlement companies, so use this resource to your advantage when researching debt settlement companies.
8. Consider a debt settlement company only after you have exhausted all other possibilities. Often times, debt settlement companies have much more success in negotiating better repayment terms, but it never hurts to contact the credit card company and request better terms. If you get nowhere fast, you may then choose to use the services of a debt settlement company.