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.
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.
. . . To be Continued tomorrow!
There are many components to your personal finances that are important areas to monitor and manage. Typically, it is best if you can treat your finances like a business and focus on your Cash Inflow and your Cash Outflow.
Many of us have fixed incomes whether it is in the form of a salary or even if it is an hourly rate, there are only so many hours you can work and multiply it by that rate. We typically have a limited capability to increase our cash inflows unless your boss is a push over and will give you a bonus on demand!
Our Cash Outflows are usually much more flexible. In the age of credit cards, it can be extremely flexible. An average consumer can spend everything they have in the bank and everything they will earn in disposable income over the next couple of years if they max out a couple credit cards in one shopping venture. Fortunately, not too many people fall victim to this kind of spending.
That doesn’t mean the rest of us might not fall victim to Binge Shopping habits. Often if we go shopping for items, we will buy a product at the spur of the moment (usually enticed by something the savvy retailer has done to sell us on it.) We may not max our credit cards out in one shopping spree, but it is all too common for people to max their cards out over a couple year period and much of this comes from buying more than they set out to buy and more than they need.
This week I will cover a series of articles on Controlling Cash Outflows to help you control your cash outflows and find ways to:
We may not be able to directly and rapidly impact our Personal Earnings, however we often have a great deal more control over our Cash Outflows. By the end of the week, we will work to empower you to maximize your ability to control your Outflows and maybe just in time to make for a more enjoyable holiday!
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
Indirect Benefits
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
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
Steps to take
This is the most popular type of mortgage which has a fixed rate of interest and monthly payments. Fixed rate mortgage is offered for two periods - 15 years and 30 years. The popularity of a fixed-rate mortgage stems from the fact that borrowers do not like to repay their loans at a fluctuating rate of interest. Besides, with a fixed-rate mortgage, you can get a great deal if you apply for the mortgage when the rates are low. To get an idea of mortgage rates in the US, go to this mortgage calculator.
The advantages of a 30-year mortgage include having a lot of time to repay, low monthly payments, more money in hand for other expenses, and greater tax deductions. The disadvantages include a higher interest rate as compared to a 15-year mortgage, in the initial phase; the money goes into paying for the interest charged and not the principal.
With a 15-year mortgage, the biggest advantage is that you build equity at double the speed and reduced overall interest rates. Disadvantages include high monthly payments, reduced tax deductions, and often buyers are restricted to purchasing a smaller home.
Widespread check fraud has forced banks to adopt stricter postures with respect to cashing checks. The number of checking accounts that have been “closed for a cause†has been increasing at the rate of 20% per annum. Other reasons for banks being forced to close accounts include sudden financial difficulties that can leave people with little money to withdraw and their checks may bounce. The increased use of debit cards is another reason why checking accounts are being closed.
Go here for an in-depth review of the situation.
