Credit Card Quick

How to Avoid the Pitfalls of Credit Card Debt

Credit Card Debt

Think of your credit card as an opportunity to prove your credit worthiness. Your credit card is your chance to build a strong credit history so that you can enjoy all of the benefits that come with a strong credit score.

Here are some tips for preventing the pitfalls of credit cards that so many consumers have found themselves in:

• Find the credit card that is right for you – Instead of choosing a card because of rewards or introductory rates, concentrate on the basics of the credit card, including the APR and the annual fee. Your ability to build a strong credit history relies on your ability to pay your card on time and pay it off in a reasonable amount of time. It is therefore imperative that you find a card with only the most competitive rate and terms.
• Understand your card’s terms and conditions – Your card’s terms and conditions are likely to change because of the new credit card legislation, so it is more important than ever to pay close attention to any and all changes relating to your credit card’s terms and conditions. It is ultimately up to you to understand your credit card and all of the rules and regulations that go along with it.
• Know your credit card’s APR and pay close attention to any changes –Always pay close attention to your credit card’s APR. In fact, it is a good idea to take note of the APR every time you receive your credit card statement. Although credit card companies must provide you with at least a 45 day notice of any changes to your card’s APR, you may miss this disclosure. It is therefore always a good idea to take note of your card’s APR.
• If your card isn’t working for you, don’t be reluctant to find another card that will work for you. You must remain in charge of your financial well being, and that includes taking charge of your credit card. If you don’t feel as if your credit card is giving you the most competitive rate and terms, then by all means find another card that will.

Smart Steps to Build a Positive Credit History

Credit Score

The last year or so has done a lot of damage to many Americans’ credit scores. With lending standards tighter than ever, it is now of extreme importance that we all work towards a strong credit score because our ability to obtain any type of credit depends on it.

Our credit score is determined, in part, by our credit history; in particular, if we have one, and if that credit history is positive. There are many ways to build a strong credit history; here’s how:

• Pay everyday bills on time and in full each and every month – Not only do loans and credit cards affect your credit score, but everyday bills do, as well. From your electric and gas bills to your phone and water bills, your payment history on your monthly utility bills can make a big difference in your credit score.
• Open a checking and/or savings account and take care of it – An active bank account is another great way to build a strong credit history. Take care of your bank account; don’t overdraw it and keep a steady balance in it, if possible. Your ability to manage a bank account is essential for developing a strong credit history.
• Obtain a credit card and never, ever miss a payment – A credit card is a great, first step in establishing a positive credit history. If you can’t snag a standard credit card, consider a secured credit card. Although secured credit cards must be secured with a cash deposit, regular payments still positively reflect your credit history.
• Choose credit over cash – When possible, choose to pay your purchases with a credit card. The more activity on your credit card the more history you can establish. Make certain, however, to keep close track of your monthly purchases and to pay off your credit card in full each month.  Remember: we must use credit to build credit, so establish a healthy respect for your credit cards and you will soon find that your credit score is making positive gains.

Why it may Pay to Stick with your Current Credit

Credit Card Types

For many of us, the great credit card balance transfer offers over the years have tempted us to transfer our credit card balances from card to card. However, given the dramatic shift in the credit card industry, what once was commonplace now becomes a liability.

This holds true for many aspects of the credit card industry, including the length of time in which we keep our credit cards. Maintaining and developing a relationship with a trusted creditor is often worth much more than the short-terms savings you may experience from balance transfer offers or introductory offers.

Here are some of the reasons why it may pay to hold onto your current creditor:

• Best rates – It’s simply a fact that long-term customers get the best rates. Most credit card companies offer great interest rates to their valued customers because they have a credit history on which to draw from. In other words, if you have proven yourself to be a trustworthy customer, your credit card company will likely reward you with a competitive interest rate. You will likely also have more room to negotiate if you feel that you creditor could offer you a lower interest rate.
• Positive impact on credit score – Your FICO score, although determined using many factors, may be influenced by your history with the same creditor. In other words, you may have an excellent payment history, but another individual with the same history that has not switched credit cards every year or so will probably enjoy a higher FICO score in this area.
• Higher credit limit – Along with a better interest rate, you will likely enjoy a higher credit limit as a loyal customer. Many times, your creditor will gradually increase your credit limit as you prove your credit worthiness to them.
• Late payment forgiveness – Good customers who almost always pay their credit card bills on time will likely enjoy leniency from their credit card company if they slipped one month and paid their credit card bill after the due date. In fact, many credit card companies will remove late payment fees for loyal customers who failed to pay their credit card bill on time just once or twice.

When Co-Signing for a Credit Card may not be the Best Idea

Introduction

You may be approached by a loved one asking you to co-sign for a credit card, and you may have difficulty deciding if this is the best decision to make. So, what do you do?

For many individuals, the idea of co-signing is met with a great deal of trepidation, and rightly so. After all, you are just as responsible for the credit card bill as your loved one is. So, if they fail to pay the bill, guess who’s responsible? And, if they act irresponsibly with the credit card, guess whose credit score will suffer?

It is because of the above reasons that you must seriously consider whether co-signing for a loved one is the best idea. Here are a few situations where you may want to decline a request to co-sign for a credit card:

• Your loved one has a shaky employment history – The bottom line is that the only way to pay for a credit card is by working, and if your loved one is not currently employed, or has a habit of moving from job to job, co-signing for a credit card may not be in your best interest.
• Your loved one has a poor history – or no history – of handling credit – For most individuals, there’s a good reason why they can’t obtain credit, and it usually has to do with poor credit mistakes in the past. If your loved one has never handled credit, this may also be a warning sign for you to decline co-signing for the card. If there were legitimate circumstances under which your loved one’s credit was damaged (the loss of a spouse, a divorce) then you may feel better co-signing for a credit card.
• Your loved one has a history of making bad decisions – If your loved one made rash purchases in the past that they could not afford then you must ask yourself what is preventing them from doing the same thing if you co-sign for a credit card? Your loved one may make all the promises in the world, but in the end it is their actions that speak much louder than their words.

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.

College Students: Easy Ways to Begin Building your Credit Now!

Credit Score

The college years are filled with excitement and optimism, yet they can also be riddled with uncertainty about life after college. It is therefore of the utmost importance to start thinking about life beyond college, even if you’re still a freshman!

In particular, it is vital that you begin working to establish a strong credit history so that you can begin your life after college with a good FICO score in your back pocket. After all, your ability to obtain a car loan, a home loan or even a good job relies on a strong credit score.

How to Start Working toward a Great Credit Score while you’re still in College:

a)      Jump onto your parent’s credit card. If your parents are good with their credit, and if you are ready to take on the responsibility of a credit card, you may want consider asking your parents if they can add you to their credit card account as an authorized user. This is often a great way to begin establishing your credit history, and is a solution to the tight restrictions due to be placed on student credit cards as a result of the new credit card legislation.

b)      Ask your local bank or credit union if they provide student credit cards. Although these types of cards typically come with a low limit and a higher APR, they are still the ideal way to begin building your credit history. This is not the time, however, to get yourself into credit card debt. Make a point to purchase only needed items, and to also pay off your balance in full, every month, without exception.

c)       Consider a secured credit card if options A and B aren’t possible. Secured credit cards require a cash deposit equal to your credit limit, so that the bank will be protected in case of your failure to pay. However, they are also a practical way to build your credit history. Then, once you have established a strong credit history you can move to a standard credit card.

The Top Three Ways to Keep your Low Interest Credit Card

Introduction

If you are one of the lucky few to have a low interest credit card in your back pocket, then congratulations are in order! A low interest credit card means that you have worked hard to maintain an excellent credit score and a gleaming credit history.

Don’t assume, however, that once you earn your low interest credit card that it will be there forever. Instead, you must continue to prove that you are a good credit risk and that you deserve the perks that go along with a low interest credit card – especially given that many creditors are pulling low interest credit cards right out from under their cardholders the first time they make a mistake.

The following three tips will help you keep your low interest credit card:

1. So, it’s a no-brainer that you must pay your low interest credit card bill on time each and every month to maintain your low interest rate. However, did you also know that your creditor could be watching your other debts, as well? It’s true! Many creditors are now frequently checking their cardholders credit reports and, if they see other delinquent bills, they may very well relinquish their customers’ low interest status.
2. Keep your debt to a minimum. In order to qualify for the lowest interest credit card, you will need to keep your debt-to-income ratio in check. Always aim to stay well under 40 percent so that you will continue to show creditors that you are a safe credit risk.
3. Consider utilizing an automatic bill payment service so that you don’t risk paying your credit card late. Most of us have, at one time or another, been in a position where we simply forget to pay a bill on time. Well, with low interest credit cards, you simply can’t afford to not pay your bill on time, as one misstep could result in a rise in your APR.

An easy solution to this are automatic bill payment systems which take care of business, regardless whether you remember your card’s due date or not. A one-time set-up, either through your creditor or your bank, is all you need to set up an automatic bill payment system.

Credit Card Woes: When Making the Minimum Payment Becomes Difficult

Credit Card Debt Credit Score

It comes as no surprise that millions of credit card holders are struggling to make ends meet. From mountains of debt to increasing credit card fees and interest rates, many consumers have found themselves in the unfortunate position of not being able to pay the minimum payments on their credit cards.

You’ve always paid your bills in the past; you managed your credit card debt; and you were always able to make the minimum payments – if not more –on your credit cards. Your job hours have been cut, your variable interest rate on your mortgage just changed, and you’re struggling to pay your everyday bills, let alone your credit cards. What do you do?

First and foremost, you can not afford to avoid paying your credit card bills. Although it is important to first pay your secured credit, such as your car payments and home loans, not paying your credit card bill should be your absolute last option.

The bottom line is that your credit score, if it is strong, can continue to provide you with options, while a poor credit score can close off doors and leave you with few options regarding your ability to obtain any type of credit. It is therefore of the utmost importance to do everything in your power to continue to pay your credit card bills each and every month.

Your Options

That is not to say, however, that you don’t have options regarding your credit card’s minimum payment. Your first order of business is to contact your credit card company and explain your financial hardships to them.

Given the current state of the economy, many credit card companies are willing to negotiate lower monthly payments. If you have been a good customer with a good credit history then it is likely that your credit card company will work with you. In addition, many credit card companies have financial hardship programs for which you may be eligible.

The absolute worst thing you can do is to either not make the minimum monthly payment or not make the payment at all. You cannot afford to pay outrageous late fees and you certainly cannot afford to destroy your credit.

Finally, you may want to seek the services of an accredited consumer counseling service in your area. A reputable credit counselor may be able to help you (a) lower your monthly payments; (b) lower your interest rate; and (c) pay off your debt.

Tips for Finding the Right Credit Card

Choosing Credit Card

If you have managed to keep a sparkling clean credit history and have earned the bragging rights of a great credit score then you are one of the lucky few to have your choice of credit cards. Individuals with great credit can expect a barrage of credit card offers, mainly through direct mailings.

So, how do you find the credit card that is best for you?

1. Decide what you need – Do you need a credit card for personal use, or will you be using it for business, as well? Do you need a high credit limit, or is flexibility and a low interest rate more important to you? It may be a smart idea to make your list of credit card must-haves before you begin your credit card search.
2. Compare current interest rates, fees, terms and rewards online – A quick search of the Internet will yield many websites offering current information regarding credit cards. You may want to begin your search for current interest rates on some of the most popular credit cards, and determine which companies are offering the best deals. You may also want to check current special offers, such as 0% balance transfers or promotional interest rates to see which ones work best for your situation.

You will also want to check some of the most popular rewards programs, as well, as you may find a rewards-type credit card that best fits your needs and wants. For example, if you are a frequent traveler, then you may want to check credit cards that feature airline reward points.

1. Sort through credit card offers – After you have done your research and compiled your list of must-haves, you can begin sorting through the credit card offers you have received in the mail. Shred all offers that you don’t accept, and make a pile of credit card offers that you want to research further. You may also want to check online offers for credit cards, as well.

Once you have narrowed your choice down to one or two credit cards, carefully read the terms and conditions of the credit card and, most importantly, make sure that you understand all of the card’s small print before entering into a contract with the company.

Five Times You Should Avoid Using Your Credit Card

Credit Card Debt Credit Score

There is a time to use credit cards and a time to know when NOT to use credit cards. The responsible use of credit cards can help build your credit history and improve your credit score so that you are eligible to receive great interest rates on everything from car loans to mortgages.

However, the improper or irresponsible use of credit cards can damage your credit score and hurt your chances to obtain everything from car loans to jobs.

Always avoid using your credit card to:

1. 1. Pay other Credit Cards - Using one credit card to pay another credit card is the quickest way to disaster. If you use credit cards to pay your other credit cards’ monthly payments you are simply digging yourself into a hole and delaying the inevitable. If you find yourself in the situation where you simply do not have the cash to pay your credit card payments each month it may be time to contact an accredited consumer credit counseling service.
2. 2. Purchase Items you cannot Realistically Afford to Pay off Each Month – The quickest way to get yourself in over your head is to purchase things that you know you are not able to pay off each month. We have been conditioned to be an instant gratification society, although this may be the reason why there are millions of Americans in credit card debt. Simply put: if you can’t afford a flat-screen television, do not buy it!
3. 3. Purchase Items you Wouldn’t Pay Cash for (to shop impulsively) - Many consumers are much more likely to purchase items with their credit card that they normally would not pay cash for. So, the next time you make a credit card purchase, take a moment to consider whether you would pay cash for this item. If not, put it back!
4. 4. Get Cash - Cash advances are, by far, the most expensive purchases you can make. Cash advances usually come with much higher interest rates than credit card purchases, so think twice before taking out a cash advance!
5. 5. Act Irresponsibly – Unless you are prepared to pay your credit card bill on time, each and every month, and to use it only in a responsible manner, then it is best to avoid using a credit card altogether.