Rule #1: Pay your account on time, every time.
You may think that because your statement just arrived, you have a few days before you need to deal with it. Until the new regulations go into effect, that’s not necessarily true.
After July of 2010, credit card issuers will be required to send your bill 3 weeks ahead of the due date, giving you plenty of time to get your payment in before the deadline. But right now, that bill could be due just a few days from the time it lands in your mailbox.
So open the bill the day it arrives, and if it looks like there’s not time to get postal delivery by the due date, pay on line. This can also be tricky, because if you read the fine print, some card issuers require your on line payment to be made by a specific time of day. For instance, your bill may be due on July 3, so you assume you have until midnight – but the fine print clearly states that the payment must be made by 3 p.m. Eastern Standard Time. If you pay at 3:15 – you’re late!
Most card issuers do give you the option to schedule your payment ahead of time, so if you’re apt to forget on the due date, enter your payment ahead of time and schedule it for the due date. Be sure to write the deduction in your checkbook on the date you entered the payment. Don’t wait for the due date, or you may “forget” and spend the money that’s already spoken for!
Rule #2 – Never, ever, go over limit.
You’ve read that to preserve the highest possible FICO scores you must never exceed 30% of your available credit. Some experts say not to exceed 10% – but sometimes life happens. If the transmission goes out of your car, you go ahead and exceed the 30% because without the car you wouldn’t get to work – and wouldn’t have money to pay any bills.
This is the second reason to read your mail – carefully.
Panicked credit card issuers are lowering credit limits on cards and raising interest rates – even for some of their best customers. That means, unless you read everything you receive from your card issuer, you might think your credit limit is $5,000 when it has actually been reduced to $2,000.
So every time you receive a credit card statement, open it that day and look at the due date, the credit limit, the available credit, and your interest rate.
Going over limit not only costs you money in fees, it almost guarantees a large hike in your interest rate, and harms your FICO scores - so take the extra minute to read that statement.
I don’t own credit cards” is a statement we’ve all heard uttered with pride, but it really isn’t a very smart move on the part of the speakers.
For one thing, at some time in life everyone could be in a position to need credit. Few people can pay cash for a house, or even a car, and in today’s world, a high FICO score is necessary to get funding for those items.
Consumers who have always paid cash for everything do have a reason to feel proud of themselves, but lenders look at them as high risk, simply because they have no track record that shows how they pay their bills.
In the past, mortgage brokers were able to use items such as utility accounts and rental history, but that practice could disappear. Mortgage lenders are tightening up restrictions, and while the attitude once was “let’s make this work” the new attitude is much the opposite. They don’t want to lend to anyone who doesn’t look like a rock solid, low-risk borrower. They want to see high FICO scores.
Owning a credit card and using it responsibly – never exceeding 10% of your available credit and always paying on time – helps raise your FICO scores considerably.
The second reason is, of course, convenience and a “fall back” in case of emergencies. Even though you don’t use it regularly, a credit card can be a comfort if, for instance, your furnace blows up on a Friday night.
It’s also a handy tool to use to reserve a hotel room or a rental car, not to mention the most inexpensive means of paying for goods in a foreign country. When you pay with a credit card you get the most favorable exchange rate – which is far more favorable to you than exchanging your traveler’s checks at a currency exchange desk.
Credit cards are also considered a good form of identification when you want to write a check and the business insists upon 2 forms of ID.
If you choose a rewards card and use it wisely, you can also put cash in your pocket. By paying your balance in full each month, you pay no interest charges – yet your rewards dollars still grow. For some consumers, the year-end rewards can become a several hundred dollar “gift” at year’s end.
Lastly, by owning a credit card you are able to make purchases on line – often at a considerable savings. A variety of merchants offer the same goods on line and in their stores – but at a savings of up to 33% on line. The assumption is that they’re saving on the cost of a storefront and passing it on to their customers.
BestRateforCreditCards.com your resource for credit cards, business credit cards, student credit cards, secured credit cards, and prepaid credit cards. We also provide a weatlth of information about the importance of having credit cards and how they will benefit you.
You need a good
credit score – that is a given in today’s financial climate.
Your FICO score no longer affects just your ability to buy a home, a car, or a house full of furniture. Now it affects your ability to purchase a cell phone, obtain satellite TV service, and even to buy car insurance at a reasonable rate. In addition, prospective employers and landlords are checking credit scores as a way of screening individuals.
Your credit card can help you build that high score – but only if you use it wisely.
If you’re just starting out you may qualify only for a very low line of credit. That’s OK, because you’re not going to use this credit card for any purpose except to build your credit scores and establish a solid financial reputation.
That means you’ll use it sparingly, and pay the entire balance each time a statement arrives. Preferably, on the day it arrives, so you don’t risk slow mail and a late arrival. Paying on line can also alleviate that problem – and if your paycheck won’t arrive for a day or two, most cards will allow you to schedule your payment for a later date. (Just remember to deduct the payment!)
While the rule of thumb has been to use no more than 30% of your available credit line, credit expert Emily Peters says that 10% is the way to the best score. So, if you begin your credit card use with a card limit of $500 – you should charge $50 or less each month. Or rather – in each statement period.
Remember that your cut-off date may or may not coincide with the calendar. Don’t charge again until you’ve paid the previous balance.
As you begin to shop for your new credit card, look over the offers carefully. Apply only for those that offer cards to individuals who hold scores similar to yours, because credit inquiries and rejections from “good credit – credit cards” will harm your scores.
If your scores are too low to qualify, then consider a secured credit card. Yes, this is in effect using your own money, but as long as you follow the guidelines set forth here, your credit will slowly build – enabling you to qualify for better and better cards as time passes.
Your new credit card should be a tool – as such, use it wisely and soon you’ll see credit scores that enable you to buy that home at the best possible rates.
BestRateforCreditCards.com your resource for credit cards, business credit cards, student credit cards, secured credit cards, and prepaid credit cards. We also provide a weatlth of information about the importance of having credit cards and how they will benefit you.
Persistence is the key to a lower
credit card interest, says Pamela Yip, writing in the Dallas Morning News.
With interest rates rising, consumers facing layoffs or reduced work hours can have a hard time making monthly minimum payments, let alone paying down their debt to any significant degree. When interest suddenly escalates from the 9% range up to nearly 20 or 30 percent, the effect on monthly minimums can be drastic.
The answer is to get that interest rate lowered – something many consumers believe is an impossibility.
Not so, says Ms.Yip. Most consumers make one call, hear the word “no” and give up. But that’s a mistake.
Here’s what to do instead:
Make your first call about 3 days before the end of the month. That’s when customer service representatives are under pressure to meet monthly goals. If the first representative says no, wait a while and call back. You’ll probably reach a different representative.
If the second representative says no, respectfully request to be put through to a supervisor. Then be prepared to wait. The wait could be a long one because:
1. They’re hoping you’ll get tired and hang up
2. The supervisor is probably talking to another customer, and may have more ahead of you on hold.
Traditionally, the odds are 3 in 4 that talking to a supervisor will result in a lowering of your interest rate. But, if he or she won’t readily agree, suggest a 6-month period of lower interest to allow you to catch up.
They don’t want to hear the word “bankruptcy” so should be willing to work with you if you tell them the situation is serious. Explain that you’ve been a good customer and ask them to review your record to verify that you’ve always paid on time.
Tell them you like the company and would like to remain with them, but that their failure to reduce your rate will result in you transferring their balance to a different company. They should “get it” that in that case they’ll earn NO further interest. If your credit score is still good, it won’t hurt to mention that fact, along with your history with their company.
Be sure to call before your account has gone into arrears – and do educate yourself on the going rate for credit cards before you ask for a reduction. Studying the offers on this site should give
you a good idea of a fair number to request.
Credit cards and
debit cards appear to have replaced cash and checks for many consumers, but this change comes with risk.
Some financial experts say that use of credit cards leads consumers to spend more, because it’s so easy. They say if you must use plastic, use a debit card so you’ll spend only what’s in your account. The danger there is in going over limit, just as it is with writing a check for more money than you have in the account.
How to use your debit card:
At the checkstand, you always have an option of using your debit card as a credit or a debit. When you use it as a credit card, it’s called an “offline” or “signature-based” transaction and like a check, it will take a little longer to post to your account. Using your PIN number and calling it a debit is an “online” transaction and it is withdrawn from your available balance immediately.
While this time difference is so slight that most consumers would hardly notice, it makes a difference to the retailer. When you use the credit button instead of the debit, the merchant pays a higher fee to accept the card. On the other hand, some card issuers reward you for such use by crediting you with a small rebate. Additionally, some card issuers charge you a fee every time you use your PIN and make an “online” transaction.
The dangers of using a debit card:
Credit cards have more protection under the law. While you can dispute a credit card transaction and get your money back, when you use a debit card it becomes more difficult. Merchant mistakes, double billings, or fraudulent billings are sometimes impossible to resolve. The merchant already has your money and you’ll have to convince him to give it back, whereas with a credit card, you can have the charge reversed and “charged back” to the merchant.
Theft is a different matter. Under the Electronic Funds Transfer Act you’ll be responsible only for the first $50 if your debit card is lost or stolen – as long as you report it within 2 business days. This is also true with credit cards, except the 2 day time limit does not apply.
Using a debit card for car rentals can harm your credit scores! Some companies will check your credit each time you use a debit card to rent a car – putting a potentially score-damaging inquiry on your credit report.
Businesses that require a credit card to hold a reservation present another danger… Car rental agencies and hotels can cause the worst damage, because the dollar amounts can be large. Each puts a “hold” on your bank account for the amount they expect you to eventually owe – tying up money you might have planned to use for other purposes, such as a trip to the grocery store. You could innocently write checks that will bounce, not realizing that you have essentially
already paid for a vacation you’ll take next month!
Save money and maintain your excellent credit by being an informed consumer. balance transfer and cash offers starting at 0% for a few months or a lower interest until paid”Good credit” credit cards now offer interest rates starting at 7.99% – but with periodic in full. Typically, the lower interest will be 4.99% to 5.99%
Some cards offer low introductory rates from the time you sign up, while others will send you promotional offers after you have been with the credit card issuer for a time. These offers are sent to selected consumers with excellent credit, in order to keep your business.
Most credit cards for good credit carry no annual fee, although some rewards cards do.
Your choices as a consumer with good credit are:
• No frills – lowest interest
• Cash back rewards
• Points rewards
• Miles rewardsuse a business card
As an individual with good credit, you have the ability to pick and choose from all the cards available. By owning more than one of these cards, you also have the ability to transfer balances between them to obtain the lowest possible interest on balances you must carry from month to month.
Of course you can and should use different cards for different purposes. For instance, use a rewards card for personal purchases you pay in full each month, and a “lowest interest” card for balances you’ll carry. If you own a business, for all business-related purchases. This will simplify your bookkeeping and could allow you to deduct any interest paid on business purchases. Check with your tax preparer to learn the regulations for deducting business interest on credit cards.
In order to maintain your “excellent” credit status, keep your balance below 30% of your available credit – even if you pay the balance in full each month. If your expenses are higher than that, ask for a credit line increase, or obtain a second card to carry the additional charges.
Your mailbox is probably filled with offers, but do be careful. The offer in your mailbox may not be the best offer. With excellent credit, you can have any one you choose, so click here to compare. Click on the link to “view rate and term details” for those that interest you most.
You’ll find differences in more than the interest rate and rewards. For instance: the grace period. Some cards charge interest from the day of purchase, while you’ll pay no interest at all on other cards when you pay the balance in full each month.
• As gift cards
• For employee expenses
• For kids away at school
• For travel
• For individuals without checking accounts
A pre-paid card is nothing more than a debit card, to be used against an amount that has been deposited into the account. As such, it is not reported to the credit bureaus and has no value in building or re-building credit.
The terms and fees vary drastically from one card to the next, so it pays to take a careful look at the cards offered and choose the one that suits the way it will be used.
Some have activation fees, some have “load” fees which are paid every time you add funds to the card. Some have monthly fees – and even those differ from one card to another. One might charge a flat rate for the month while another charges based on the number of times you use the card.
Like most debit cards, all have ATM fees for cash withdrawals.
Pre-paid cards can be a convenience for individuals who receive government checks each month and who don’t want the bookkeeping involved in keeping a checking account.
Some of these cards are tied to a long-term agreement and have fees for inactive accounts. So read all the details before choosing your card.
Click here to see and compare an assortment of pre-paid card offers.
Cash-back rewards credit cards are a favorite among consumers with excellent credit who pay their balance in full each month. It only makes sense to get something back for the money you spend!
These cards typically carry higher interest rates than standard, no-frills credit cards. That makes them a poor choice for consumers who carry credit card balances from month-to month. 1% or 2% cash back will not make up for an extra 5% or 10% in interest fees.
Some also carry an annual fee, so before you choose, consider how much you spend each year. Will you get back an amount greater than the annual fee?
As with the non-cash rewards credit cards, offers vary with regard to the cash back given on different kinds of purchases. Some even offer big bonuses for making a purchase within a set time after receiving your card.
Many cards offer double or triple cash back on gasoline, entertainment, or grocery purchases, while some offer cash back only on those purchases.
For instance, Discover offers a credit card with cash back on all purchases, but additional cash back on categories which change periodically. One quarter it might be grocery purchases, while in a different quarter it will be entertainment. They also offer a card that gives 5%-20% cash back on purchases made through their on-line shopping site.
The HSBC Weekend card offers 1% back Monday through Friday, and 2% back for week-end purchases.
With such a wide choice of options in cash back credit cards, it pays to take your time and compare. Choose the card that fits your lifestyle, so you get the maximum amount back.
If you have purchases, such as gasoline, that you pay in full each month, use a cash back credit card for those purchases while using a low interest “no-frills” credit card for large purchases that must be paid off over time.
Click here to see the wide variety of cash-back and non-cash back rewards cards available to you.
Informed choices are a sign of wise money management, so compare before you choose. And remember, offers change, so double-check your information on the day you apply for your new credit card.
BestRateforCreditCards.com your resource for credit cards, business credit cards, student credit cards, secured credit cards, and prepaid credit cards. We also provide a weatlth of information about the importance of having credit cards and how they will benefit you.
Student credit cards are available for students with no credit, fair credit, good credit, and excellent credit – with rates and terms to match the credit ratings. Rates start at 11.99% and go up to 19.8%.
The rewards also vary between cards, and are generally geared toward the interests of the younger generation.
For instance, the
Citi® mtvU™ Platinum Select® Visa® Card for College Students offers 5 Thank You Points for every dollar spent at restaurants, bookstores, record stores, movie theaters and video rental stores, while offering 1 Thank You point for all other purchases.
Students earn 250-2000 extra points twice a year for maintaining a good GPA. These points are redeemable for gift cards, MTV events, and airline tickets.
While one card offers points redeemable toward the purchase of a new or used car, others offer airline miles or merchandise.
Cash back student credit cards offer an extra percentage for such expenses as gasoline, groceries, and drug store purchases. Discover offers a choice of cards that give 5% or more cash back on purchases from their on-line store.
For students with no credit or poor credit, Capital One offers a choice between a card with an annual fee of $29 and 16.9% interest, or a card with no fee and 19.8% interest.
Students with no credit or poor credit can also obtain a
secured credit card, which will help them build credit.
As with all financial decisions, the choice of a credit card should not be made lightly. Examine all the choices and decide which offers the most advantages to you before making application.
Be sure to check the rate and term details listed with each card before making your decision. Then, as you make your application, read the more extensive terms to be sure that this is the correct card for you.
Responsible student credit card use will go a long way toward building your credit rating, so be sure to make all payments on time, and try not to use more than 30% of your available credit at any time – even if you pay the balance in full each month.
As your credit rating builds, your credit expenses will go down. Responsible credit card use and on-time bill payments during college years will put you in a good position after graduation. You’ll get lower interest rates on everything from a car to the purchase of your first home.
Business credit cards are much like standard credit cards in that the interest rate offered will vary with your credit scores, and no-frills credit cards generally carry lower interest rates than cards that offer miles, points, or cash back.
However, they do offer some additional options.
For instance, as a business owner, you can order extra cards for your employees – some with pre-set spending limits. The cards are imprinted with the employee’s name and the monthly bill also breaks out who spent what and where. Some cards also offer year-end reporting that summarizes the year’s purchases. This can be a valuable tool for both accounting and budgeting.
Rewards programs are geared toward business, with several cards offering miles for business travel or extra points or cash back for business-related purchases.
The Capital One business card, for instance, lets you choose which of the following categories will earn triple points: travel and lodging, gas and service stations, building supplies and hardware, computers and electronics, office supplies and furniture, advertising and shipping.
Advanta offers a card with a twist – the interest rate is high, but the consumer gets the first 90 days interest-free on purchases. Thus, there’s plenty of time for accounting and bill paying before any interest is due. The rewards program with this card is an added bonus.
Advanta also offers a “points” card with a customizable option. Your cards can be imprinted with your business name and logo.
Most business cards do not charge an annual fee. However, the two that offer the greatest benefits in terms of airline miles and extra “perks” charge both an annual fee and a high interest rate. Consumers must weigh the value of the rewards against these fees.
As with other credit cards, the consumer should read the details and study the offers carefully before choosing a business credit card. If the balance will be paid in full each month, then your preference for miles, points, or cash back should be the consideration. If the business will need to carry a balance, then the annual percentage rate should be the prime factor behind your choice.
Click here to compare business credit cards.
An often overlooked business card:
As both a convenience and a financial safety feature, some businesses choose to issue pre-paid cards to employees who travel or shop on behalf of the business. This not only limits the amount an employee can spend, but reduces the danger from a lost card. A thief will be limited to the balance on the card, and it will be useless as a tool for identity theft.
