Credit Card Quick

Is a No-Debt Approach to Credit Cards the Best Approach?

Introduction

America loves it credit cards and, as a result, they have become a problem for millions of Americans. It may seem obvious that the answer to solving the credit card problem is to simply eliminate the use of credit cards. After all, they can’t cause us problems if we don’t use them, right?

Well, unfortunately, the answer is not that simple. For starters, credit card spending is a problem for just a small percentage of the population. If you have difficulty controlling reckless spending then a credit card probably isn’t right for you. However, for the rest of us, credit cards serve an important purpose and, let’s face it: they can provide us with an incredible amount of convenience and financial flexibility. Here’s why:

1. Credit cards make a bulk of our credit report – Credit cards are the easiest way to establish a long credit history. They are often the way to build our credit scores so we can be approved for cars, homes and other large items. If we eliminate credit cards from our lives, our credit scores may take a hit. Responsibly using and paying on a credit card throughout the year is one of the most effective ways to build an impressive credit score.
2. Credit cards provide us with convenience and practicality – Credit cards allow us to spend with a grace period. They allow us to spend now and pay later, making budgeting much easier. They allow us to cover emergency expenses and cover unexpected expenses. In short, a credit card, for many people, is like a financial security blanket.
3. Credit cards have an advantage over cash – Credit cards can do much more than cash. They can help us track our expenses; they can help us budget; they can help us run our business; they can provide us with protection against theft; and they can offer us many features, such as travel insurance and rental insurance. They eliminate the need to use cash when traveling, and they are accepted virtually anywhere. Renting a car, purchasing airline tickets and booking a hotel can be done quickly and easily with a credit card.

How to Manage your Budget with your Credit Card

Credit Card Debt

If your monthly budget is blown every month, and you’re scratching your head, wondering where it all went, a credit card can help.

For many of us, a major challenge each month is staying within our budget. Often times, a few bucks in our wallet disappear in the blink of any eye. From our morning latte to stopping off to buy a gallon of milk and a loaf of bread, our budget is blown in a heartbeat.

If you want to get a handle on your budget, the first thing you need to do is consider where your money is going. In order to accomplish this, you may keep a notebook in your purse or wallet and mark down every expense (which is annoying and time consuming to do), or you can simply start swapping out your cash purchases in lieu of your credit card.

A credit card does something cash cannot: it tracks every penny you spend and then sends you an itemized list of those expenses each and every month, in the form of a credit card statement. So, why not consider using your credit card to track your household’s monthly spending?

Here’s what to do:

• Get a credit card with a great rewards program. After all, why not add a little incentive to your spending each month by racking up rewards points in the process?
• Swap out all cash, check and debit card purchases with your credit card.
• Don’t consider this project to be a “free for all” in terms of spending, as this will not accomplish much of anything. Instead, shop as you normally would; simply pay by credit card instead.
• When your credit card bill arrives, pay it off in full, otherwise your rewards won’t mean much.
• Sit down, as a family, and review your last month’s spending. Separate the purchases into categories and consider areas in which you can cut back. Have you exceeded your monthly grocery budget? Have your clothing purchases caught up with you? Do you really need to go out to eat that many times each month? Use this statement as your wake-up call to make changes so you can, once again, gain control of your family budget.

Your Guide to Understanding Your Credit Card’s APR

Introduction

You see it, you know it costs you money, but you’re not sure exactly what it is. It’s the APR on your credit card, and it pays to understand the ins and outs of this acronym.

What is an APR?

APR stands for Annual Percentage Rate, or the amount of interest charged by the credit card company for your purchases each year. To figure out how much interest your credit card company would charge you for your purchases is to divide your APR by 365. However, the amount in interest you end up paying if you fail to pay off your balance each month is much more because of the concept of compound interest. If you want to always avoid paying finance charges and not worry about your APR, simply pay off your balances in full, before the due date each month.

What is an introductory APR?

An introductory APR is a special, “teaser” APR designed to attract new credit card customers. You will often find introductory APRs last between 6 and 12 months. After that, the card’s default APR will set in. Beware of introductory APRs because they can give you a false sense of security that you have a card with a great APR. Although a credit card company may offer you a zero percent introductory rate, the default APR may be quite high. Therefore, it is important to pay close attention to the card’s default rate and not just the introductory rate.

Will my credit card’s APR ever change?

Perhaps. However, due to the CARD Act legislation, your credit card company must inform you of the change, in writing, 45 days in advance of the APR change. When applying for a credit card, look for one that has a “fixed” APR, not a “variable” one, as a variable APR will change according to the prime rate.

How important is my card’s APR?

Although most people look just at card’s APR, it is important to also look at other features of the credit card when determining whether the card is right for you. In short, thoroughly read the card’s terms and conditions so you can fully understand all features of the card, including the card’s APR.

What You Need to Know About Balance Transfer Fees

Choosing Credit Card

Ah, the balance transfer fee. It puts a damper on an attractive balance transfer every time. If you are looking to transfer your higher-rate credit cards onto a new credit card with a great balance transfer offer, you will surely want to check out the card’s balance transfer fee before making the move to the new card.

What is a balance transfer fee?

A balance transfer fee is the fee charged by the credit card company for the luxury of transferring other balances to the new credit card. Most credit card companies charge this fee as a way to recoup some of the loss they may experience from offering an attractive balance transfer rate.

How is a balance transfer fee calculated?

There are still some credit card companies that charge a flat fee for a balance transfer, but most charge the customer according to the balance transferred. The balance transfer fee is usually a percentage of the transferred balance, and most credit cards charge between three and five percent. For example, if you transfer a $10,000 balance and your balance transfer fee is five percent, you can expect a charge of $500 to appear on your credit card upon receipt of the balance transfer.

Are balance transfer fees worth it?

The short answer is: sometimes they are and sometimes they are not. In order to fully understand whether a balance transfer offer is advantageous for your financial situation you must do the math. Consider the interest you would pay on your current debt without transferring the balance. Then, consider the cost of the balance transfer fee. If the fee is less than the interest you would pay on your higher-rate debt, then you come out ahead. If not, it is probably best to pass up the offer and continue paying on your current debt.

Are balance transfer fees negotiable?

Most credit card companies do not negotiate when it comes to balance transfer fees, although it never hurts to ask. The best thing to do instead is to compare balance transfer offers from a number of credit card companies so you can find one that best fits your budget and your financial needs.

Important Tips to Remember When Applying for a Credit Card

Introduction

Applying for a credit card for the first time (or the hundredth time!) is typically a very simple process, but there are a few things to keep in mind to ensure you will get the best offer from the credit card company and to ensure your chances of being approved.

Here is what to remember when applying for a credit card:

• Read the application’s fine print carefully – In other words, don’t jump at the first credit card offer that appears in your mailbox. Instead, carefully read the terms and conditions surrounding the credit card and the credit card offer, and take your time to ensure the credit card for which you are applying best fits your needs and your budget.
• State your actual income – People applying for a credit card often either (a) inflate their income or (b) deflate their income. Both of these actions can affect your chances of being approved or affect your credit card limit. Don’t inflate your income level on a credit card application because it could affect your ability to repay the card. Likewise, do not deflate your income because your application can be denied or your credit limit can be much less than what you need.
• Consider the type of credit card for which you are applying – These days a plain vanilla credit card is often unheard of. Instead, credit cards are often attached with rewards of some kind. With that said, consider your lifestyle and your spending habits when choosing a credit card.
• Think twice before requesting an authorized user card – Although authorized users on your credit card account can be an easy way to track spending and simplify your household finances, handing out authorized user cards to a family member who isn’t financially responsible can create a financial nightmare. Therefore, think twice about handing out an authorized user card when applying for a credit card.
• Pay close attention to introductory offers – If you are accepting a credit card offer that comes with an introductory offer, such as a balance transfer offer, pay close attention to the terms and conditions associated with the card. Although the large print on the credit card offer may seem quite attractive, it is important to read the fine print, as this details a number of things you may have not considered.

Why a Credit Card Can be Your Best Friend When Traveling Outside of the Country

Introduction

A credit card is never as useful, perhaps, as when you travel outside of the country. If you have plans to travel outside of the country for any amount of time, whether for pleasure or business, it pays to have a solid credit card in your back pocket. And here’s why:

• If your credit card is lost or stolen, it can be replaced almost immediately. If your card has been stolen, for example, it is best to first contact the local authorities and then contact your credit card company, who can often replace your card in a very short period of time, thereby allowing you to continue your travels without much interruption. Consider, on the other hand, a stolen credit card, which can take some time for the bank to get that money back into your bank account, thereby leaving you high and dry.
• A credit card can help you receive prompt medical treatment if you become sick or injured. Because foreign countries don’t recognize your U.S. health insurance, you are most often expected to pay in cash for any treatment you receive. If you don’t have access to that much cash (and who does?), a credit card can cover your medical expenses.
• A credit card can handle your foreign exchange rates so you won’t have to. Although most credit cards charge a foreign transaction fee for overseas purchases (although there are many credit cards that have dropped this fee), it is still the best way to go because you won’t dampen your budget by converting your American dollars into foreign currency.
• A credit card can take care of paying the proper amount for every purchase. Although you think your foreign currency knowledge is accurate, the truth of the matter is that many Americans are duped out of their cash while traveling because they are not completely familiar with the currency in the foreign country. A credit card, on the other hand, gets it right every time.
• Your rewards points can go the extra mile when traveling. From airline miles to rental car costs, using your credit card while traveling can mean great rewards points for you.

Safer Ways to Make Online Purchases

Identity Theft News

If you’re a bit worried about making online purchases with your credit card – and let’s face it, who isn’t? – don’t despair. There are a number of steps you can take to make sure your next purchase is a bit safer.

The sheer number of online security breaches and sophisticated computer hackers has left many consumers weary about making online purchases. Although the only way to ensure safety from online hackers is to completely eliminate making online purchases, there are a few things you can do to greatly reduce the chances that you will become the next victim of online credit card theft:

• Ask your bank if you are able to create a “disposable” credit card number.  Consider ShopSafe, through Bank of America, for example. If you have a Bank of America Visa or MasterCard credit card, you can simply sign into your Bank of America account online and follow the ShopSafe prompts to sign up for a temporary, 16-digit credit card number, which can then be used to make an online purchase. This temporary card number, which even comes with its own expiration date and security code, is valid at only one online vendor. Therefore, you must sign up for a new card number for each online purchase. However, if you frequent a certain online vendor, you can continue to use that same temporary credit card number.
• Consider using an online payment service, like PayPal or Google Checkout. These online payment services eliminate the need to provide online vendors with credit card numbers and other personal information, and instead allow you to sign into the service and make the purchase. In addition, they also offer protection against unauthorized purchases, provided you report the fraud within 60 days.
• Consider purchasing a prepaid credit card. If you really want to avoid entering your credit card information online, you may want to purchase a prepaid credit card. To activate one of these cards, simply load it with the desired amount of money. Then, every time you make a purchase, the purchase total is deducted from your account balance, like a debit card. Be careful, however, of the fees that are often associated with prepaid credit cards, as they can come with their share of sneaky fees, such as activation fees and “load” fees.

Serious About Paying Down Your Credit Card Debt? Tips for Reducing that Debt Today

Credit Card Debt

CreditCards.com spells out the grim truth: the average credit card debt of an American household is a whopping $14,743. This level of debt can be incredibly overwhelming for any family to tackle, and many families therefore do very little to attack the debt head-on and reduce it. After all, paying down that level of debt can take years to pay off.

However, if you are serious about paying down your credit card debt, there are a few major steps you can take to accomplish this. Here’s what you need to do to tackle that credit card debt today:

1. Gather your debts and total them up. Your total credit card debt may be quite a bit more than you previous thought, especially if it is spread out over a number of credit cards. Don’t round totals or ignore even the smallest debt; total it all up, down to the penny, so you can get an accurate picture of your current debt load.
2. Talk about the debt together as a family. One member of the family should not have to shoulder the reality of your family debt. Instead, call a family meeting and discuss the problem with all members of the family so everyone is aware that major changes will be taking place in your household to tackle the family debt, once and for all. In addition, talk to each other about how you got to where you are and the changes that the family will make to ensure this type of debt does not present itself again.
3. If the debt is too much to handle, consider calling in the professionals. Avoid debt-elimination companies or debt-consolidation companies, as it is often quite difficult to discern between the legitimate and not-so-legitimate companies. Instead, contact the Association of Independent Consumer Credit Counseling Agencies and ask about developing a debt management plan.
4. Get immediate cash in hand. If you need to put a serious dent in your debt, consider selling material things. Is your house too much to handle? Is your car note simply too steep? Can you sell electronic equipment, furniture and other material goods to get back on track? Although this is often difficult to stomach, getting rid of those things that put you in debt in the first place may be just the way to go.

The Top Three Purchases to Always put on your Credit Card

Introduction

Unbeknownst to many of us, our credit cards do more than just provide us with shopping convenience. In fact, credit cards are quite useful when making certain types of purchases. It always pays to carefully read the terms and conditions of your credit card so you can be sure you are taking full advantage of all the perks being offered by your credit card company.

For example, there are a number of purchases that are actually protected when you charge them:

1. Expensive items, such as computers, appliances and electronics – Any big-ticket item should be charged because, chances are, your credit card company offers extended warranties for these purchases. In short, many credit card companies offer better warranties that the original warranty offered by the manufacturer. In addition, many credit card companies offer price protection, meaning that if you find the same item, either through the same retailer or a different retailer, within 60 days of your purchase, your credit card company will match that price and provide you with a credit for the difference in price.
2. Services – Any type of service you receive – from landscaping to plumbing – should be charged. Any company that takes credit card purchases must adhere to the terms set by the credit card company, meaning that if you have a dispute with the service offered, the burden of proof is actually on the service company to prove that the work was done to your satisfaction.
3. Travel expenses – If you are taking a holiday, it pays to charge your expenses. What many people don’t realize is that most credit cards offer such protections as travel accident insurance, car rental insurance and even lost luggage insurance. So, before you take off on your next trip, contact your credit card company and ask what travel perks are afforded to you. Most credit card companies will provide protection for everything from lost luggage to the theft of your belongings from a hotel room, so don’t leave home without your credit card and without a good understanding of the protections afforded by the credit card company.

How Many Credit Cards do you Need?

Introduction

You may have heard the question: How many credit cards should I have?

Well, the short answer to this question is: It all depends.

Now that we’ve thoroughly confused you, here’s a little better explanation.

The fact of the matter is that what’s good for one person in terms of credit cards may not be best for another person. Typically, however, having more than one credit card in your back pocket may help you in a number of ways:

• You have another card in case one of your cards is rejected – Perhaps you forgot to pay your credit card bill on time, or you hit your credit card limit and you really need the security of another credit card. A second credit card can really come in handy in case of these scenarios. Sure, in a perfect world you would never reach your credit card limit or forget to pay your bill, but having another credit card for the “what ifs” is never a bad idea.
• Your main credit card is lost or stolen – If you have trouble with your main credit card and you are unable to use it because it has been lost or stolen (and your credit card account has been compromised), it is always a good thing to have another credit card to use.
• You need access to a large credit line – Often times, an extra credit card is kept by many consumers who want access to another line of credit in case of a financial emergency.
• You want to increase your available credit for credit score purposes – Part of your credit score is determined by something called your “debt to income ratio.” What this basically means is that about a third of your credit score is based on how much available credit you have at any given time. If you have a couple credit cards, chances are your available credit will increase, along with your credit score.
• You want to have spending options – You may have a couple credit cards that you use for different reasons. You may keep one and use it strictly for business expenses and keep another because you can rack up rewards on certain types of purchases. Because there are so many credit card hybrids out there now, you may have more than one card to take advantage of the many features and rewards being offered.