Credit Card Quick

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.

Have you put your Balance Transfer Checks to Good Use?

Introduction

If you have a strong credit score you have likely received balance transfer checks with your monthly credit card statement. If you’ve never put these checks to use, you could be missing out on some great opportunities.

The best balance transfer checks from your credit card come in the form of 0% APR. You may also receive balance transfer checks with three or six percent APRs, which are also nothing to sneeze at. The great things about balance transfer checks are that you have the luxury of lower APRs, even if your credit card APR is considerably higher. Another great benefit to balance transfer checks is that you are often awarded the lower interest rate until that purchase is paid off.

Paying off High-Interest-Rate Loans

Credit card balance transfer checks are therefore great for paying off other higher-interest rate loans. From car loans to other credit cards and personal loans, balance transfer checks can be used for nearly any other type of loan, provided you have the credit limit to accommodate the transfer.

Many people also use balance transfer checks to pay for large things, such as home improvement projects, college tuition or vacations. Still, others simply write the balance transfer check to themselves, deposit the money into their bank account and use the cash for a wide variety of things.

Your Alternative to Personal Loans

One of the advantages of balance transfer checks over personal loans is that they usually come with much lower interest rates and they can be used on virtually anything you want or need. In addition, because you are already a credit card customer, you need not go through any type of loan application or approval process.

Balance Transfer Fees

One of the downsides of balance transfer checks is that you may have to pay a balance transfer fee or other type of fee. Keep an eye out for these fees, as they can often be steep. However, also consider the money you will save if you transfer your higher-rate balances to one with a 0% APR.

In conclusion, it is always best to weigh your options when it comes to balance transfer checks, as they may be able to provide with a low-interest loan to do any number of things.

Credit Cards: Your Best Bet for a Personal Loan

Credit Card Debt

Personal loans are often a convenient means for getting fast cash for a variety of expenses and purchases. A personal loan can best be described as any unsecured loan that does not have collateral attached to it. Because of this, personal loans often come with higher APRs than other types of loans, like automobile or home loans, for example.

Although you can expect a personal loan to have a higher APR than a secured loan, you still can find plenty of good rates. To get a personal loan, you must first consider where to look. Although you can certainly head to your bank for a personal loan, many individuals are instead turning to their credit cards for personal loans.

The Convenience of Credit Card Personal Loans

Personal loans through your credit card are often rather convenient, as they are typically easy to get because you are already an established customer. Unlike traditional credit card purchases, a credit card personal loan will provide you with a set period of repayment and set repayment terms.

You may also want to use a credit card for a personal loan for a number of reasons, such as a vehicle purchase, a vacation or home improvements. Personal loans, because they are unsecured, can be used for nearly anything at all, including debt consolidation and college expenses, just to name a few.

Learning about your Personal Loan Options

If you need a personal loan, consider contacting your current credit card company and asking them about their personal loan options. If they don’t have personal loans available, you may want to consider using one of the convenience checks that often come with your credit card bill. Convenience checks are, in fact, quite convenient because they allow you to write the check for whatever you desire; you may even want to write the check to yourself and deposit it into your bank account so that available cash to meet your financial needs.

If you have high interest rate debts to pay off or you simply want to finally finish the backyard deck you’ve been dreaming of, consider the many advantages of taking out a personal loan through your credit card.

Are Credit Card Convenience Checks all they’re Cracked up to be?

Credit Card Rewards

Most of us are aware of those credit card convenience checks often sent to us by our credit card company. Sometimes they come with special rates and incentives, and many are sent right along with our credit card bill.

The checks are blank and ready to use. Sounds tempting, doesn’t it? A new pair of shoes, a weekend getaway or even a new vehicle is just a check away.

But before you start spending with your credit card’s convenience checks, you may want to take a step back and consider the advantages – and disadvantages – of credit card convenience checks.

Advantages

• Writing out a convenience check is often much easier than applying for a personal or car loan.
• Ideal for situations where a credit card would not or could not be used, such as paying a contractor.
• Often times, they come with promotional rates that are much better than the current interest rate on your credit card.
• Convenience checks may be an ideal way to consolidate your debt.
• Convenience checks may be useful for paying off medical debt, student loan debt or any other type of consumer debt.
• Convenience checks may be deposited into your bank account for cash.

Disadvantages

• Promotional rates on convenience checks are often short-lived. If you receive a great promotional rate on a convenience check, chances are you will not be able to pay off the debt before the promotional period ends.
• Convenience checks often come with fees. These fees can equal a percentage of the check’s total, or can be a straight fee, depending on the creditor and the offer.  Keep these fees in mind when writing convenience checks, as they may outweigh the benefits of the promotional rate.
• Convenience checks may give the consumer a false sense of security when it comes to being able to pay off the debt. In other words, the sheer convenience of convenience checks may cause consumers to overspend when they might not have otherwise overspent.

The Three Most Common Ways Consumers Handle Their Debt

Credit Card Debt

If you find yourself in the middle of too much debt and are looking for ways to manage that debt effectively and practically, then you may have a few options. Provided your credit is strong, you still have a variety of options when it comes to handling your debt.

• Personal Loan – A personal loan is still a popular form of debt consolidation. Personal loans require no collateral, and are therefore a bit more difficult to get than other types of loans. Because personal loans are considered unsecured debt, they may also come with higher interest rates. However, if your credit score is still strong and you’ve always paid all of your debts on time, then you will likely still qualify for a personal loan. Personal loans are often offered through credit card companies, banks and other lenders.
• Credit Cards – If you have debt from a variety of lenders, many of which have high interest rates, then consolidating your debt using a low-interest credit card may be right for you. Many credit cards offer great deals on balance transfers, thereby allowing you to consolidate all your debt onto one, easy-to-manage credit card. Be careful about balance transfer fees, however, as well as introductory rates, to be sure that you’re getting the best deal on your balance transfer credit card offer.
• Home Equity Loans/Lines of Credit – For many homeowners with equity in their homes, a home equity loan or line of credit may be an option when consolidating debt. These types of home loans generally offer low interest rates and a longer repayment period, thereby making them a popular loan for homeowners. However, it is important to remember that these types of loans use your home as collateral; in other words, if you are unable to repay your loan, your home may be used by the lender to repay that debt.

Whichever type of loan you use to repay your debts, it is important to always consider all of your options. And, as always, develop a game plan, right from the start, regarding the repayment of your loan so that you can plan your budget accordingly.

Taking Responsibility – How the Credit Crisis has Changed the Way we Use Credit Cards

Introduction

It seems like it was just yesterday when the economy was strong, the housing market was booming and credit was flowing like water. Credit was not only easy to come by, but downright effortless at times.

Even those individuals with poor, little or no credit were being inundated with credit card offers. Fast forward to just a few years later and we find that the economy is weak, the housing market is flat and credit isn’t all that easy to come by anymore.

The recession has affected us all in one way or another. Even if we are fortunate enough to have our jobs and our home, we are all discovering that obtaining credit isn’t for just anyone anymore.

Credit card companies, having been burned in the past by easy credit and delinquent credit card holders, are now recognizing that they must become more choosy with whom they will extend credit.

How the Credit Industry has Changed:

• Don’t expect to obtain personal loans and auto loans without providing documentation regarding your income and your credit worthiness.
• Don’t expect to receive credit of any kind without a strong credit score. If your credit score is weak (anything below 700, according to many industry standards), order a copy of your credit report from all three of the credit reporting agencies and make it a point to begin repairing your credit.
• Don’t expect to miss your credit card payments without being penalized. Credit card companies have adopted much stricter rules and regulations regarding delinquent credit card holders in an attempt to encourage individuals to pay their credit cards on time every month. In fact, many credit card companies now raise a card holder’s interest rate if he or she misses just one payment.
• Don’t expect to obtain loads of credit if you have too much debt. Now more than ever, credit card companies are especially aware of an individual’s debt-to-income ratio. In fact, they are using this number as a guide when extending credit.

Calculate your debt-to-income ratio (take your current income and consider how much of that goes toward paying debt each month) and, if it’s above 30 percent, consider ways in which you can pay down your debt before applying for a credit card or personal loan.