Credit Cave

An informative audio on “Spend to save” credit cards, the ones which round off your purchase to the next dollar. Learn about what to look for in a good “spend to save” credit card scheme.

This sounds absurd, but according to a report from Reuters it appears to be true. Are you sitting down?

An Australian bank has issued a cat with a credit card. The Bank of Queensland was found lacking after a security-conscious customer, Katherine Campbell, decided to test their security system that controls who is eligible for a bank account based on identity. I assume that the Bank of Queensland employ the usual money laundering checks, but they slipped up on this!

Soon after applying for a secondary credit card on her account under the name of Messiah, her cat, the credit card came through. Since Mrs. Campbell went public with her story the credit card has since been canceled.

“I just couldn’t believe it. People need to be aware of this and banks need to have better security,” said Mrs. Campbell in an interview with local media on Thursday.

I think the takeaway from this is not so much the security slip-up, but it is indicative of just how keen the banks are to get credit cards into our wallets.

Controlling Cash Outflows Series

Today we pick up where we left off yesterday running down ways that you can avoid maxing out your credit card. To revisit the First part of this series see How to Avoid Maxing Your Credit Line Part 1.

These are hard times for all of us, there is a global resource crunch and the thinning ozone layers are not helping matters either. So, what does one do? Well, at least the credit card companies have found a way out and that is to charge high interest rates on its unsuspecting customers whenever and wherever it can.

Basically, credit card companies are now always on the lookout to increase credit card rates at the slightest pretext; for example if you hold more than one credit card and you’re approaching the limit on one card, it makes you fair game for an interest hike in the other cards.

You can actually take a knock of as much as $40 if you are so much as a day late in paying your credit card dues. What’s more many credit card companies are now shortening their turnaround times and you do not have as long to pay as you once did.

Be careful when shifting to a low-interest card. Teaser introductory rates are tempting but you need to keep an eye open for the transfer rates. Also, it is no longer easy to toss a credit card aside once the introductory period is over, you may invite a stiff penalty if you try to do so. So do ensure that you read the fine print and check the rate you will pay at the end of the introductory offer.

Credit cards are also becoming more selective on what their low rates can be used. Check if such conditional low rates are worthwhile for you. Try to go for a low-rate card that gives you an introductory period of at least six months.

Credit card companies would like to talk to you if you’re a high school fresher for whom budgeting is meant to be done by the finance ministry. Also, if you have just emerged from a bankruptcy you are a candidate for a visit or phone call from credit card marketing companies. Conversely, if you pay off your credit card dues unfailingly every month, you’re not going to endear yourself to the card companies and they may make their displeasure known by slapping an annual fee even if you had signed you for a no annual-fee card. Similarly, conscientious credit card holders do not get to enjoy grace periods for purchases made on credit cards. Your card will start accruing interest from the very first day of your purchase.

Don’t let credit card companies entice you into taking a cash advance because when you do, they are not above lowering your credit… just like that! You will be left facing fines for being above your credit limit.

You can be charged by credit card companies in a number of creative ways; for example you can be charged for account inactivity, transaction fees while taking a “free” cash advance, transaction fees when calling a toll-free number to check your accounts, etc.

These are some of the low-down tricks that credit card companies are not above using. It’s up to you to be alert and not get suckered into a credit card deal that is as hollow as a scooped pumpkin.

Controlling Cash Outflows Series

Yesterday, we discussed our intent to help people learn how to control their Cash Outflows. There is no genie in the bottle of the Credit Cave that will fix all of your problems however we will now start to empower you to tackle or prevent credit issues.

As a credit card holder or borrower you never ever want to Max out your credit, your credit lines and not even a single credit card. Having the ability to access a line of credit is extremely valuable and can definitely help you when you need it, however this resource can also be squandered and too often get very good people into a lot of trouble. When you max out your line, your credit rating will go down, your interest rates will go up, you will be more likely to default on payments and get into serious financial trouble and more.

Here are some tips to help you avoid this situation:

• Do not go shopping with your credit card
• Take Cash, Take your check book, take a debit card for your bank account, you can even take your PayPal Card - DO NOT TAKE YOUR CREDIT CARD!
• If you absolutely must take your credit card, do not use it, use something from point 2 above.
• Leave all of your other cards at home, preferably locked up safe in a safe or vault or secure location. If you are not carrying the cards, you will not be able to succumb to temptation.

. . . To be Continued tomorrow!

Sounds a little convoluted but that’s exactly what banks are helping their customers do. Spending done via credit and debit cards are linked to a savings component. For example, American Express offers a credit card where one percent of the amount spent goes into a high-return savings account.

A similar program by Bank of America for its debit cards works something like this. Every time you make a purchase, the amount gets rounded off to the nearest dollar and the extra money gets transferred to your savings.

However, all said and done this does appear to be a case of penny wise and pound foolish, it is illogical to expects any real savings this way. In fact, consumer activists warn that there is a real chance of us overspending for that feel-good saving. We need to factor in the fee that the credit card transactions attract and the interest on any card payments that you may default in your eager haste to save.

I have a secret. Well actually if you have read the title of this article, I had a secret.

I am making and saving a lot of money with my PayPal MasterCard, and you can do the same thing.

Who is PayPal?

PayPal is a company originally setup in 1998 to make online transactions easier. PayPal is owned these days by EBay after an acquisition in 2002.

What does PayPal do for me?

It’s really pretty simple. PayPal is like an online savings account for me.

Direct Benefits

• They currently pay me 5.15% interest on all funds in my account.
• I get 1% cash back savings on all purchase I make with my PayPal MasterCard
• I can transfer money from my primary bank account to or from my PayPal savings account with a direct deposit (ACH)transfer.

Indirect Benefits

• My PayPal MasterCard is not a credit card. It is debit card that is accepted anywhere MasterCard is accepted. This enables me to make purchase with the convenience of a mastercard without having to run the risk of making a credit card charge.
• Paying for small items with a credit card is convenient, but if you do not pay your bill in full you end up paying 5% to 10% to 20% to 25% interest on those small purchases and that interest can add up quickly.
• When I make small purchase with my PayPal card I never run the risk of getting a credit charge. The funds come straight out of my PayPal account, where they were previously earning 5.15% interest.
• I immediately get 1% cash back on the charge instantly!
• As I am charging through MasterCard and not debiting, the vendor selling the goods must pay the fee to MasterCard. This is good for me as I am not paying a debit fee myself.
• In addition to all of those great things, I use my PayPal card as a buffer against my normal bank account. I only keep enough money in my PayPal account for my monthly charges or internet purchases. So if I were to ever lose my PayPal card or become the victim of identity theft if someone hijacked my number, then only the small amount of funds in my PayPal account would be at risk.
• Plus I would get the full protection offered by MasterCard covering that small amount of risk. My primary bank account and other credit cards remain safe!

To sum it up, I get 5.15% interest, I get 1% cash back instantly, I do not pay any interest fees on purchases, I have the convenience of a MasterCard without the expense, and I have protected my identity with an added layer of protection!

It’s related to money and money on a bigger scale than your personal finance. It’s related to your business, so if you want to select a business credit card, do it after considering the pros and cons of going for a particular credit card. You can begin by asking these questions.
1) Does this business card give my business any real savings?
2) I am a small-business owner, what does this card have in it for small businesses?
3) Are there any tax benefits to be had?
4) Would my personal credit card suffice, why do I need a business credit card?
5) Can I go for a combination of cards, how will this affect my bottom line?

Credit reporting Agencies such as Equifax, Experian, and TransUnion can and are sometimes required to provide you with the option of turning on fraud report related to your credit. This is not a negative or bad thing for a person’s credit.

In general fraud reports give a warning to lenders and merchants that are thinking of providing credit that someone or group may have access to your identity.

When a business sees the alert on your credit report, they must verify your identity before issuing you credit. As part of this verification process, the business may try to contact you directly. This may cause some delays if you’re trying to obtain credit.

Providing a cell phone number, where you can be reached easily can expedite this process so that you personally are not impacted by the fraud alert. If someone has stolen your wallet or identity these alerts can tip you off to the potential fraud and provide the businesses an alert to be extra diligent about issuing credit.

Two Types of Fraud Alerts

1. Initial alert: Lasts for 90 days on Your Credit Report.

Steps to Take

1. Contact your credit reporting agencies and ask that an initial fraud alert be placed on your credit report Use In these Situations
2. If your wallet has been stolen or if you’ve been taken in by a “phishing” scam.
3. If you suspect you have been, or are about to be, a victim of identity theft.

What Happens?

Tip! When you place an initial fraud alert on your credit report, you’re entitled to one free credit report from each of the three nationwide consumer reporting companies.

2. Extended Alerts: Lasts for seven years on Your Credit Report.Who is Eligible

• Victims of Identity theft are eligible to have extended alert placed on their credit reports.

Steps to take

• Provide the consumer reporting company with an “identity theft report.”
• Benefits
• After setting up the Extended Alert, you’re entitled to two free credit reports within twelve months from each of the three nationwide consumer reporting companies.
• The consumer reporting companies will remove your name from marketing lists for pre-screened credit offers for five years.
• You may ask them to put your name back on the list before then if you choose.

A good credit score brings so many pluses into a man’s life that it really is worth working for. If you’re married, you gain your wife’s respect; if you’re single there’s a better chance that you will get the girl you take to a fancy dinner when you flash your card; your peers envy you because you always have money at the end of the month for the tickets to the series-deciding game.

Yes, great for the ego and actually useful for your finances, it helps you get around in this world. So how do you do it? Well, here are some pointers for you.

1. Ensure that there are no glaring mistakes in your credit card report. This is particularly important if you’re planning to apply for a loan. Correcting an anomaly in your credit card report can take between 30-90 days so act as soon as you catch a wrong entry in your report.

2. Inculcate the habit of paying your bills on time, it improves your standing with your banks, a missed payment can set you back by crucial points in your credit score.

3. Your spending and repayment cycle also affect your credit score because in your FICO score, significant importance is given to the amount you owe on your credit card vis-à-vis your credit limit. Try to keep your balance around 25% of your card limit.

4. Strive to repay your loans; do not keep shuffling it from one card to another. It will not take you anywhere and you will only end up lowering your credit score. If you close one or more of your credit cards, you will end up increasing your balance to limit ratio which will hurt your score.

5. Keep a credit score from all three credit reporting companies, Experian, TransUnion, and Equifax. This is because the information about your score will vary with the reporting company and each may have a different credit score to offer. Lenders may or may not refer the score from each company, so it is in your interests to ensure that the feedback they give is as accurate as possible.