Credit Card Quick

Not-so-Obvious Actions That Can Have a Negative Impact on Your Credit Score

Credit Score

Think you have it together when it comes to your credit score? Well, you may be missing some key actions that can have a negative impact on your otherwise-spotless credit score:

• Opening too many accounts in a short period – Although opening a new credit card account certainly won’t damage your credit score, opening two or three could. If a lender notices that you have been opening many accounts or lines of credit in a short period of time, it may raise a red flag that you are in financial trouble.
• Selling your home through a short sale – Although many homeowners are told that a short sale won’t hurt their credit score, the truth of the matter is that the loan is reported to the credit reporting agencies as a “settled” loan. In other words, a short sale is just as bad in the eyes of the credit reporting agencies as a foreclosure.
• Signing for someone else’s loan – Although you may think you’re simply doing a good deed for a friend or family member by helping them obtain credit, the truth is that this debt goes directly onto your credit score, thereby raising your debt amount and lowering your chances of getting the best rate for any number of things, such as a car loan or a mortgage.
• Paying only the minimum balance – Although it may seem like you’re doing the best thing by paying on your card each month, paying just the minimum balance could raise a red flag with a potential lender because it may signal that you’re under financial stress. In other words, the chances of getting approved for more credit are unlikely because many lenders view your financial health as shaky.
• Taking out a cash advance – If there is one bit of good advice to remember when it comes to your credit card it is: Avoid cash advances at all costs! If you are in an emergency situation and you absolutely must get your hands on cash, then by all means use it. But don’t use a cash advance as simply a way to get easy cash! Cash advances are not viewed favorably in the eyes of the credit reporting agencies and lenders, so it is best to always avoid them.

Credit Card Cash Advances: Resist the Temptation

ATM Credit Card Debt

Cash advances may seem like a great idea at the time, but they may end up being your worst enemy when it comes to your credit card balance.

Cash advances on credit cards typically work like this: you need cash so you use your credit like you would an ATM card and withdraw money at any ATM machine. Sounds pretty simple, right?

Well, the process of obtaining a cash advance is the easy part. It’s the fees and interest rate that comes along with it that may end up causing you problems.

Let’s talk about why it may in your best interest to avoid cash advances:

• If you use the cash advance feature on your credit card, expect to pay a fee. In fact, every major credit card charges a fee for cash advances. You can expect the fee to range from $10 and up. Some credit cards charge a percentage of the cash advance amount, which can also be significant.
• If you have a great rate on your credit card, don’t expect the cash advance option to carry the same, competitive interest rate. In fact, you can expect to pay double – even triple – the amount in interest than you would on purchases and balance transfers. Some credit cards charge as much as 24 percent for a cash advance!
• Unlike purchases, where you can avoid interest charges by paying your balance off in full when your statement arrives, the interest on a cash advance begins to accumulate the day you take the cash advance. To put it into perspective, if you took a cash advance for $1000 at the beginning of your billing cycle, you could end up with more than $70 in interest charges by the time your bill arrives.
• Consider that if you pay just the minimum payment on your credit card with an interest rate of 24 percent for a cash advance, you could, in theory, only pay the cost of the interest each month, thereby leaving you with an untouched balance.  Sounds scary, right? This fact alone may be enough to make you run for the hills before you take out a cash advance!

Credit Card Tips that will never Let you Down

Introduction

We are constantly bombarded with tips and hints for smart credit card use, but how can we distinguish between the helpful and not-so-helpful tips?

Although each financial situation is different, there are a key set of tips that will never guide you wrong and never let you down when it comes to managing your finances and your credit card debt:

• Pay on time – So this first tip may sound a bit obvious, it begs repeating: you must pay your credit card bills on time, each and every month, if you expect to enjoy a strong credit rating. Although you may think that your late payments are not such a big deal, understand that creditors and the credit reporting bureaus may not agree with you. If you have a difficult time paying your bill on time, consider setting up automatic bill payment through your credit card or your bank.
• Stay away from any type of “convenience” offered by your creditor – In particular, avoid at all costs cash advances, as they come with hefty fees and are looked down upon by the credit reporting agencies when it comes to your FICO score, and convenience checks, as there are almost always fees and other strings attached to them.
• If you don’t need it, don’t get it – Simply put, applying for a credit card merely to get rewards or other perks is a tricky situation in which to put yourself. In particular, be extra careful when it comes to retail credit cards, as they are notorious for offering attractive deals, while at the same time charging super-high interest rates. It also never hurts to take an inventory of your credit cards on an annual basis to ensure that they are still working for you.
• Be diligent when it comes to checking your credit card accounts and credit score. Don’t just pay your balance each month; take the time to look over your statement and double check all of the charges.  Order a copy of your credit report at least once a year, or more if you suspect foul play. It never pays to be too diligent!

How to Avoid Credit Card Fees

Introduction

Sure, the new CARD Act has done a lot to reduce the amount of money we pay out in credit card fees. But, the reality is that there are still plenty of ways in which credit card companies can still charge you fees; fees that may not seem like much until they start adding up, day after day, month after month.

Let’s start with the obvious: if you pay your credit off, in full, each month, you won’t have to worry about pesky finance charges. Unless you are certain that you can pay off your balance in full, don’t charge it! Many of us have found ourselves in the unfortunate situation of not being able to pay off our credit card balances in full each month and end up with mounting debt. In addition, pay close attention to your card’s billing cycle and your due date, and plan to pay the bill at least five days before the due date to avoid any finance charges.

However, in addition to finance charges, you may be paying other numerous fees for your credit card:

• Annual fee – The simple fact is that you don’t need to pay an annual fee for the privilege of accepting a credit card. Although some individuals accept an annual fee because of other rewards and incentives offered by certain credit cards, in general you should not have to pay an annual fee on a credit card. If you have a good credit history with your credit card, chances are you can negotiate to have this fee removed.
• Cash advances – Cash advances should not be used, if possible. First of all, they come with exorbitantly high interest rates; second of all, there are often fees associated with them. Avoid them at all costs and you’ll be much better off.
• Balance transfer fees – Although it may be hard to do, many creditors are now offering fee-free balance transfers. Considering that balance transfer fees may cost as much as 5 percent of the balance of the transfer, this could end being quite a costly fee for you.

Which Credit Card Rewards Program is Right for You?

Credit Card Rewards

Today, the choices in credit card rewards programs is vast and diverse, and to some consumers, having so many choices can seem overwhelming. However, there is a way to make things a little easier on yourself when it comes to choosing a credit card rewards program. You don’t want to go with just any old program. If you do, you might not see benefits that really suit you.

Lifestyle and Needs

Consider your income, spending habits and the way you pay your bills, especially a credit card bill. If you can pay the balance off every month, avoiding all that added interest, you have more flexibility in your choice of cards. If you will be carrying a balance, keep in mind that you will be paying more in interest, and it can take time for rewards to really add up. Look for a card that will benefit you most. If you need to save for something, get discounts on particular items and services that you frequently utilize, need to travel often, or just want cash back rewards, there are cards out there for all of that.

Options

Once you have considered your options for rewards, you need to take a look at and compare several cards to see who will give you the best bang for your buck. Ideally, you want plenty of benefits as well as a low rate. Compare other fees as well, like the annual fee, cash advance, late fees and other charges and look at just how your awards accumulate and how long it will take to be able to benefit from those rewards. Choose the card with the best balance among all of these things.

Read the Tiny Print

Some rewards programs have yearly and lifetime limits. Some are simple and straightforward while others are quite complicated. Be sure you understand what you are getting into and try to find a rewards program that does not leave your head spinning in the end.

Once you have found the card that best suits you, apply for it. Once you get it and start to use it and pay on it regularly, you can watch those perks and rewards really start to work for you. If you use it just right, a credit card can bring you lots of freebies from clothing to vacations and more!

Credit Card Cash Advances: What You Need to Know

ATM

Credit card cash advances. A good idea or a transaction you should avoid altogether? Some say yes; others advise consumers to steer clear of cash advances. The truth of the matter is that a cash advance can sure be lifesaver when other funds are limited. While you probably should not abuse the privilege by running out and getting some cash on every little whim, it is nice to have the option if and when the situation calls for it.

Things to Consider

Cash advances really are not the solution for a general cash flow problem. If you do not have enough money to pay your bills and meet your needs, how can you expect to pay off your credit card? Cash advances need to be reserved for emergencies where even though you have enough income, you just can not access the cash right then and there from some other source, but you know you will have the cash soon enough to not only meet all of your living expenses but to pay off what you owe on your credit card balance as well.

That said, there are a few other things you need to know before you run to the ATM to withdraw that green.

Grace Period

For most purchases, credit cards offer a grace period for paying down the balance before finance charges set in. With a cash advance, the grace period typically is not an option, and those finance charges go into effect as soon as you make the withdrawal.

Cash Advance Fees

In addition to any other fees you will already be paying on your credit card and your cash advance, you will incur a fee for your cash advance. This is a percentage (usually 2%-4%) of the amount of the cash advance. If your cash advance is $500, you will be paying a minimum of $10 and a maximum of $20 for the cash advance fee. This can get expensive on top of your other credit card fees and purchases. While you definitely want to take out enough to make the fees worthwhile, you also do not want to take a credit card cash advance and its subsequent fees too lightly.

Interest Rates

Your interest rate, depending on the card you carry and your credit approval, most likely runs somewhere between 12% and 23%. Interest can really add up on purchases alone, so considering that a cash advance can carry an even higher interest rate, you will want to keep this in mind. Assuming you pay off your entire balance by the due date, the interest can still take up a good portion of your balance due. If you only pay the minimum balance each month, it can add up even more. It’s important to be confident that you can pay back the amount of the cash advance along with your additional credit card activity, including the interest. In the end, you could wind up paying a lot more in interest than the sum total of the rest of your balance.

ATM Fees

You also need to know that when you go to the ATM to withdraw that money, the bank who owns the ATM will also be making some money off of your transaction. ATM fees can run $2-$4 per transaction and there is the rare ATM that even charges $5. Still, you want to be aware of the additional fees that you will be incurring, as this will show on your credit card statement, adding to the balance you will be responsible for paying back.

In conclusion, no, credit card cash advances are not a bad idea. They are a great and convenient source of funding when most needed. However, one should approach them responsibly, knowing they can pay back the balance and not overusing the privilege.

Five Surefire Ways to Negatively Impact your Relationship with Credit Cards

Introduction

Credit cards have gotten a bad rap as of late, mainly as a result of the Credit Card Reform Act recently signed into law by President Obama. It is important to remember, however, as these new credit card changes begin to take place, that you also have a degree of responsibility when it comes to your credit cards and your credit score.

Many consumers, however, fail to consider this until they find themselves in an unhealthy relationship with their creditors and in over their heads in credit card debt.

What did they do wrong?

1. They didn’t shop around for the best card. Keep in mind, even with the current state of the credit card industry that it is quite competitive and that, although it may take some searching, there is likely a card out there for you. From low interest rates to excellent rewards programs, there are a slew of attractive offers from creditors.
2. They never paid more than the minimum. The minimum payment amount set forth by creditors is not written in stone. In other words, your check each month to your creditor should not reflect just the minimum payment. The more you pay on your card each month, however trivial you think that amount may be, will get you out of debt all that much quicker.
3. They never searched for more money in their budget. If you don’t think you can afford more than the minimum payment on your credit card each month then you’re doing yourself a huge injustice. Some of the smallest changes in your budget can make the biggest difference in your credit card balance. Sit down, write out a comprehensive budget, and find ways to save so that you can put that extra money on your credit card each month.
4. They used cash advances and convenience checks way too often. Cash advances and convenience checks are often a problem in disguise. However convenient they may seem, they often come with many fees and charges, all of which can do nothing but plunge you further into debt.
5. They lived beyond their means. Simply recognizing the difference between your wants and needs can do wonders for your budget and your credit card balance. Instead of purchasing things that are simply out of reach for you financially, take a moment to visualize your overall goal of financial independence and say “no thanks” to living beyond your means.

Warning Signs of Credit Card Problems Leading to Increased Debt

Credit Card Debt News

For many of us, we simply don’t realize (or don’t want to recognize) we have a problem with credit card debt until we begin to receive constant phone calls from creditors asking for money.

The truth is that most of us are given warning signals far in advance of creditor phone calls, but we simply ignore them. So, the question is: when does credit card debt become more than a nuisance? When does it start to interfere with our lives and threaten our credit rating?

If you have concerns about your credit card debt, you may want to ask yourself the following questions:

• * Am I only able to pay the minimum monthly payment on my credit card?
• * Am I using my credit card to pay other bills, such as utility bills, car payments and other credit cards?
• * Am I taking out cash advances against my credit card to make ends meet?
• * Do I frequently make purchases on my credit card that I know I cannot realistically pay off?
• * Do I use credit cards to live beyond my means or to maintain a certain lifestyle?
• * Have I applied for a new credit card because my current one is maxed out?
• * Am I making monthly household purchases on my credit card because I don’t have the cash to cover them?
• * Am I ever late on my credit card payments?
• * Am I ever unable to pay the minimum monthly payment on my credit card?

If you answered “yes” to even one or two of the above questions, then you may be headed toward financial trouble.

One of the best things you can do when credit card debt seems overwhelming or out of control is to contact an accredited consumer credit counseling service in your area, as they can often work with your creditors to reduce your interest rates or find ways to consolidate or pay off your credit card debt.

Best of all, they can often provide you with the resources necessary to get yourself out of credit card debt and to handle your credit more responsibly so that you can move forward without the burden of credit card debt.