Credit Card Quick

The Top Five Tips for Managing your Credit Cards

Introduction

Credit cards are the ultimate convenience for many individuals. However, they have also proven to be quite a nightmare for millions of other consumers.

There are a number of ways to meet your financial obligations and still manage your credit cards successfully; you must, however, be committed to a number of obligations if you expect to enjoy the many benefits of credit cards.

1. Always make a point to establish an emergency savings fund so that you won’t have to rely on credit cards if an unexpected expense creeps up. Putting a large purchase on your credit card may make it incredibly difficult to pay off, thereby setting you up for long-term debt.
2. Always take a moment to question your purchase so that you can decide if you are living within your means. A spur-of-the-moment trip to the beach many sound like fun, especially if you have a large credit limit, but you must think hard about whether this type of credit card purchase can be realistically paid off in a reasonable amount of time. The problem with credit cards is often that individuals get the false sense of having money because they have their credit cards in their back pocket.
3. If you are unable to pay off your credit card balance, in full, make a commitment to stop spending until the balance is paid off.  Making this small commitment to yourself will likely mean the difference between living within your means and living with credit card debt.
4. If you are saddled with too much credit card debt, take the time to set up a realistic repayment schedule and stick to it. Instead of simply paying the minimum payment, treat your credit card bill like any other bill and stick to the monthly payment you set up. You may even want to set up an automatic bill payment so that you won’t be tempted to pay less each month. You can often find calculators online that will provide you with a monthly payment amount that will allow you to reach your credit card payoff goals.

The Top Three Reasons why Credit Card Balances Spin out of Control, And What You can do to Stop it

Credit Repair

You thought you had a good grip on your credit card usage. But then, before you knew it, you were staring at a maxed out credit card and no way of paying it. What happened?

For many of us, spending on our credit cards is not a well thought out decision. We spend – often carelessly – and simply assume that we will pay the bill at some later point in time. However, when that time comes, we often find ourselves short on money and in deep with credit card balances.

Don’t let yourself become yet another credit card statistic. Instead, make it a point to become more aware of your spending so that you don’t find yourself in over your head in credit card debt.

Here are the top three reasons why our credit card balances spin out of control:

1. We don’t pay close attention to our credit card statements – The next time your credit card statement arrives, make it a point to take the time to carefully read the statement. It is much easier to ignore the mounting charges when you simply tear it open and write a check for the minimum payment amount. Simply becoming more aware of your spending can turn your shopping habits around.
2. We fool ourselves into thinking we’ll pay it off soon – Did you ever charge something expensive and fool yourself into thinking that, although you don’t have the money now, you’ll pay it off down the road? For most of us, counting on future income is the wrong move to make. Don’t bet on future earnings to pay off your credit card balances because, chances are, you will be faced with other expenses that must be met and your credit card balances will be left neglected.
3. We carelessly spend – It is common knowledge that people simply spend much more when they have a credit card in their hands. The allure of buying what you want and not dealing with the payment now is very attractive to many people. If you find yourself carelessly spending on your credit card, make a list before you leave the house and stick to it. Also, take a moment before checking out and consider whether you really need to purchase that particular item. Just a few minutes and a little thought can save you from overspending.

Calculations: Breaking Down Your Credit Card APR

Introduction

When you have a credit card, you know that you are going to pay a certain amount in interest every year, This equates to some percentage of your credit card balance. It can be fairly low (9%-12%) for those with excellent credit or mid to high (13%-23% or more) for others. Everyone knows that carrying a balance on your credit card, combined with the APR can really add up. However, do you know how to break it all down and find out exactly what you are paying over a shorter period of time?

Calculating Your APR

Under the Truth in Lending Act, your credit card company is required to inform you of the APR that you are paying by ensuring that the rate is visible on your bill. Unfortunately, they are only required to tell you the yearly rate. They do not have to break it down for you into monthly and daily rates. No problem. You can still figure this one out on your own.

Look at your billing statement. Your credit card company either lists your finance charges at a monthly or daily rate, also called a periodic rate. To calculate your monthly rate, multiply your interest by 12. Then, to determine your monthly finance charge, take your average daily balance and multiply it by the monthly rate. If your company is in the habit of conveying your charges as a daily rate, you will need to divide your APR by the number of days in the year.

Something to Keep in Mind

Your APR is, by no means, set in stone. You might have an introductory APR that lasts a certain term or your credit card company might change your rate at their discretion. Credit card companies can change their policies, with or without reason. All they have to do is give you some short notice that the change is coming. Sometimes, it is as simple as the company trying to rescue themselves from the bad customers they have encountered, raising good customers’ rates to make up the difference. Often, however, it is because of your own situation.

If you think the credit card company is not watching you, think again. Just because you pay your credit card balance on time does not mean a thing. credit card companies periodically check customer credit reports. If you have had any difficulties in some other financial area, they will find out. The red flag goes up and now you are a high risk customer, causing your rates to soar. Fair? No, not really. Reality? Yep.

The best way to protect yourself is to pay all of your bills on time each and every month, so as to have nothing negative reflected in credit report. If you find yourself in difficulty, contact your creditors beforehand to see if you can work out a deal. Often, this will result in cooperation and will leave the difficulties unreflected on your credit report.

How to Say Good-Bye (once and for all) to Large Credit Card Balances

Credit Card Debt

Your credit cards can become the heaviest thing you have in your wallet if you carry around large balances on those cards. Many Americans have become credit card junkies, as is evident in the fact that the average American now carries an average credit card balance of over $7,000.

Dealing with high balances on credit cards, however, doesn’t have to be a life sentence. In fact, there are a few, simple tips that can have you waving good riddance to those credit card balances, once and for all:

• Pay more than the minimum – Paying just the minimum on your credit cards will surely ensure that you will be spending the bulk of your future paying them off. Even paying just a small bit more each month on your balances will greatly reduce the time you will spend repaying them. Aim to pay double your minimum payment each month; if you can’t swing that, make yourself a promise to pay at least 20 percent more than the minimum balance.
• Make a plea to your credit card company – If you have been a solid customer and have always paid your bill on time, then you will likely be able to swing a lower interest rate on your credit card. Luckily, all it takes is a phone call, so you have nothing to lose! Plead your case for a lower interest rate and you may be very surprised to find that your creditor is willing to comply.
• Don’t bet on rewards programs – Rewards-style credit cards are for individuals who pay their credit cards off each month; they are not designed to benefit those individuals who carry a balance. After all, any type of rewards you may be earning will be quickly erased when you consider the finance charges you pay each month. Instead of hanging onto rewards credit cards, which often come with higher interest rates, switch to a no-frills credit card with a low, fixed interest rate.
• If in doubt, cut it up – If you are having difficulty managing your credit, the very best thing you can do is simply cut up your credit card. Then, work on paying it off.

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!

Your Rights under the CARD Act if you Carry a Balance

Introduction

Many of us carry a balance on our credit cards from month to month; in fact, statistics show that about 46 percent of all American families roll their balances over each month. If you’re one of those individuals, consider yourself lucky to be protected under the CARD act currently in place by Congress.

In fact, some of the provisions of these new credit card laws could very well be speaking directly to you, particularly if you find yourself carrying over your balances from month to month.

Here’s how the new CARD act may affect you and your credit card balances:

• Rate Freeze on New Accounts – The new legislation states that creditors must not change a cardholder’s interest rate during the first year of opening the account. That’s great news for the many cardholders who found credit card companies raising the interest rates on their credit card mere months into their new account. However, there are some exceptions to this rule: expiration of a promotional rate; variable APRs; or payments that fall 60 days past due. The creditors, in these three circumstances, have the legal right to change your credit card’s interest rate.
• Reward for Responsible Behavior – If you find yourself on the receiving end of a rate increase because you fell at least 60 days behind on your credit card payment, you may still be in luck. Although the credit card company has the legal right to raise your interest rate due to nonpayment, they must reinstate your original credit card interest rate if you make all required payments during a six-month period.
• Protection on Existing Balances – Although credit card companies are permitted to increase your card’s interest rate after a year of opening a new account, they are not permitted to apply the new, higher interest rate to your current balance. Only those purchases made after the rate hike can fall under the new interest rate.
• Payments to Higher Interest Rate Balances First – If you have a credit card that has different interest rate for different purchases, the credit card company must apply all of your payment (beyond the minimum payment) to your balance with the highest interest rate first, thereby enabling you to save big on finance charges.

A Useful Website for Cardholders

Credit Card Types

The Federal government has a great website that could provide you with plenty of useful information regarding credit cards.

This new site (found at www.federalreserve.gov/creditcard), which is maintained by the Federal Reserve Board, has been launched to provide consumers with a basic guide to understanding the credit card industry.

Some of the useful features on this new website include:

• An Interactive Tools and Features section, which includes an area about learning more about a credit card offer you may have received. Located in an easy-to-open PDF file, this handy link allows you to better understand the terms and features of any credit card offer. Also located in this section is a guide to understanding your statement.

We think this section is particularly useful, as it breaks down all of the legal credit card terms into easily understandable language so that you can better navigate your monthly credit card statement.

Finally, the last section of this Interactive Tools and Features section is a Pay it Off calculator, which allows you get an estimate of how long it will take to pay off your credit card balance, given your interest rates and monthly payments.

• The Federal Reserve also has a great section on their website that allows credit card customers to watch their PSA; this video essentially teaches consumers how to navigate the credit card process and get the most out of their credit cards.
• The What you Need to Know: Credit Card Rules section is designed to educate and inform consumers on the new credit card legislation and how it can change the way your credit card company handles your credit card account.
• A small section called 5 Tips for… on the Federal Reserve website provides easy-to-follow steps for doing a number of things, such as “Improving your Credit Score” and “Getting the Most from your Credit Card.”
• The Federal Reserve credit card website also features additional sections that allow you to learn more about: options, interest rates, fees, lost or stolen credit card, billing errors, general complaints and managing your credit.

Smart Holiday Spending

Credit Card Debt

You don’t have to spend the better part of the new year stressing over bulging credit card balances and high interest rates!

Called “holiday hangover,” it is the time of the year that many consumers cringe when they open their credit card bills. Too much debt and not enough cash means that credit card balances go nowhere while interest rates and fees continue to mount.

This is the year that you can change this, though. Instead of digging yourself into debt this holiday season, change your attitude toward holiday spending and instead spend smart to save yourself from a “holiday hangover” in 2010.

How to Keep your Credit Card Spending in Check this Year:

• Understand retailers’ tricks and be prepared to reject them. It is not uncommon to be inundated with credit card offers every time you walk into your favorite retailer. Although these enticements can be tempting, keep in mind that most retailers charge much, much more in interest charges than major credit cards. The bottom line: you will likely end up spending more in interest charges with retail credit cards, regardless of whether you take advantage of a promotional rate.
• Take your credit card out of your wallet unless you make a planned purchase. Impulse spending is the weak spot of many consumers. You’re out and about when you notice something that you didn’t think you need, but now you can’t live without. Sound familiar? For most consumers, this type of spending is dangerous and all too common. Your best bet is to simply leave the credit card at home until you are ready to make a purchase.
• Make a budget and stick to it. If you do your homework and set a strict budget for all the people on your list you are far less likely to go overboard with purchases, and far less likely to charge up your credit cards.
• Determine your ability to pay off your debt before you make a purchase. If you want to make a credit card purchase, but you know you don’t have the money to pay it off in full next month, sit down and calculate the interest you will be paying. Often times, this bit of reality is enough to make you think twice about hefty purchases.
• Choose the best credit card and put away the rest. You don’t need to use all of your credit cards, and you really shouldn’t. Instead, take the time to compare the rates and terms on your credit cards and use only the card with the best terms and conditions.

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.