Category: Credit

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Credit Financial

How to Reduce the Interest on Your Credit Cards

Heres How to Reduce the Interest on Your Credit Cards

Are you paying a lot of credit card interest? Do you even know how much interest you are paying each month or year? Some credit card users receive quite a shock when they finally see those totals. Consumers spend over $1,000/year on just interest each year.

So what can you do about this? Can you reduce the interest on your credit cards? Yes, you can.

3 Ways to Reduce Credit Card Interest

1.     Pay off your balance in full each month.

By paying your entire balance each month, you avoid interest entirely.  This is easier said than done.  If your goal is to pay zero interest, you will need to make a plan that includes budgeting all credit card purchases.  Even if many find it difficult, this is achievable.

2.     Ask your Credit Card Company for a rate reduction.

Is this even a thing that credit card companies are willing to do? Of course, it is. 

Credit card companies like to let consumers think that some higher power decides interest rates.  They want you to believe there is nothing anyone can do to change your number. Not questioning your interest rate always works out in their favor because it means your likely to pay more money directly to them.

Your credit card company’s primary focus is to keep you as a customer and paying interest as long as possible.  If they think you might leave because of a higher interest rate, they can be surprisingly willing to discuss reducing it. 

How to ask:

  • First, consider what your goal is.  Just trying to save money? Have a unique situation that’s making you do this? Different goals might require you to take different approaches.
  • Next, gather some potential offers or options. Can you get approved for a 0% balance transfer? Is there any other way that taking your business to someone else might help achieve your goal?
  • Finally, call customer service.  Let them know about your options.  Tell them why you are considering making changes.  Say you would rather not go, but that they need to give you a reason to stay.

3.     Transfer your balance to another card.

A surprising number of credit cards offer 0% APR as an introductory offer for new customers.  Transferring all (or some) of your balance to one of these accounts could give you just the time you need to pay down that balance with no interest adding to it.  Just be fully aware that you will end up right back where you started if you fail to pay down the balance.

Of course, you can be stuck with your current interest payments.  Occasionally the circumstances just don’t make that rate reduction possible. Those occasions are much rarer than most people realize, and even when they do occur, it is only temporary.  By simply being aware of the options you have as a consumer, you can control how much it costs you to use credit cards.

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Credit Financial

How to Get Credit Card Approved

How to Get Approved for a Credit Card

You’ve probably heard your friends and family talk about the benefits of having a credit card. There are definitely perks to having a credit card, but how do you get approved for one? If you have no credit or poor credit, it may seem like it would be impossible to be approved for a line of credit.

There is no way to guarantee you’ll be eligible to get a credit card but there are some ways that may improve your chances of approval.

Get Started on the Right Foot

Building good credit can be done if you stay on top of your bills from the beginning. Credit card companies look at your payment history as well as the following:

  • Only apply for what you need. You can always apply for an additional card or two down the line if you decide they’re needed, but acquiring multiple loans and credit cards in a short time frame makes lenders think your finances have taken a turn for the worse.
  • Stay below your credit limit. In fact, you should aim to keep your overall credit utilization ratio under 30% for each of your lines of credit.
  • Always check your statements to ensure they are accurate. You want to do this so that your score isn’t negatively affected by incorrect information. This is also helpful to keep an eye out for suspicious activities and potential security risks.
  • Pay more than the minimum if you can. If you can only afford to pay more than the minimum once in a while, that’s fine. Any higher payments will look good for you.
  • Know your credit score and make sure to check your credit report. Credit reports are usually accurate, but errors do happen. You can get one free copy of your credit report per year through the 3 major credit reporting companies.

Monitor Your Credit

Before you get a credit card, you should get a copy of your credit report so you can see your score and the information that is impacting it. You’ll be able to access information like your payment history, previous credit checks, and recently acquired accounts. When you apply for a credit card, the bank will check your credit score to see how likely you are to make your payments on time.

Don’t Use too Much Credit

In order to ensure you don’t end up with a credit card you can’t afford, it’s important to understand your debt to income ratio. This comparison of your income versus what you owe will help you figure out what kind of monthly payments you can afford.

Be Patient

If your credit isn’t at a point where you are able to get a credit card, it is not the end of the line. Fixing credit and establishing credit from zero takes time. If you need to increase your approval chances quickly, consider becoming an authorized user on a friend or relative’s account, get a secured card, or getting a loan with a co-signer.

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Credit Financial Savings

Creating a Budget with a Credit Card

How to Create a Budget with a Credit Card

Introduction

Though credit cards make it easy to overspend, they also make it easy to keep track of and control your spending. If you have a hard time balancing your finances, there are many methods you can use to create a realistic and effective budget with a credit card.

General Tips

Most major credit cards group purchases by category and allow you to search through transactions and get detailed spending reports. This includes:

  • The option of viewing spending reports for any given period of time within your account (ex. for the week or monthly)
  • This allows you to not only devise a budget based off of when you get payed, but also make any necessary adjustments due to unexpected expenses

Establishing and Estimating Your Expenses and Income

Expenses

A good way to do this is by making a note of everything you pay each month, including:

  • Mortgage/rent
  • Insurance payments (auto, health, home, etc.)
  • Utilities
  • Cable, phone, and/or internet
  • Food
  • Non-essential purchases

It is important not to dismiss small purchases, as these can add up quickly. If you are not actively paying your credit card balance off, you must include an additional charge for interest from the card issuer. Try your best to avoid this by paying the account balance off at least once or twice per month.

Income

Calculate exactly how much income you generate each month. This includes your base salary and any extra money you have from other sources. It is a good idea to consider how often you get paid, so that you do not end up with bills you cannot cover before your paycheck.

  • For example, if you know your next paycheck does not come until the end of the month, do not schedule any major expenses on the last week of that month
  • If this happens, you can easily get behind on your bills

Comparing Expenses and Income

The next task is to analyze your income versus your expenses. If your spending is more than your income, it is likely that you will run into debt. However, if your income is greater than your spending, you should end up with money left over.

There are services available that can do this for you and make it easier to see where you are overspending. The difference between the two values will show the excess/inadequacy of your funds. When considering your budget, it is always a good idea to set aside a contingency fund for any unexpected costs that you may incur.

Some of these service capabilities include:

  • Grouping your expenses by category
    • These can include retail shopping, dining out and other food costs, rent, and insurance payments
  • Some of these programs allow you to set a budget per category and may even notify you when you are approaching the set limit

Alternately, you can do it yourself by going through your bank and credit card statements:

  • Group your purchases into your own categories and calculate the total for each month in each category
    • You may want to use the same or similar categories that are generated automatically by credit card services, but you may want to use others instead
  • Compare the values to see where and on what you are spending the most money and make any necessary adjustments, such as wanting to shop online less

Both of these methods have pros and cons. Using services is:

  • Quicker and easier
  • But there is always the chance that programs will make mistakes:
    • They could input incorrect values or group expenses into the wrong category
    • Though these problems are uncommon, it’s not a mistake you want to make

Conversely, doing it yourself has its own pros and cons:

  • It is more thorough because you have the ability to nitpick through your expenses
  • However, it is tedious and takes much longer

Conclusion

The bottom line is that looking at a visual breakdown of your expenses is the most effective way to determine your budgetary status. Your goal, whether you are in debt or have surplus, should always be to save money and cut expenses.

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Credit Financial

Here Are The Best Credit Cards of 2021

best credit cards of 2021

There is a literal sea of credit cards out there, with hundreds of different features, rates, cashback perks, and discount programs spread across the entire spectrum of credit providers. There are cards to fit just about any type of lifestyle from active to digital to anything in between. But sometimes the research needed to come up with the best cards can be difficult.

While there are cards for any and every niche you can think of, we’re going to stick to some of the best cards. Most people can get some use out of the ones we have listed. There are going to be some similarities and some differences, but there should be something useful to almost everyone.

Chase Freedom Unlimited Card

The Chase Freedom card is one of the best cashback cards out there for this year. Customers can earn 5% back on all travel purchases through Chase Ultimate Rewards. As well as, 3% back at drugstores and restaurants including takeout. They can even earn 1.5% on all other purchases. They even offer a $200 cashback reward if you join and spend $500 in the first 3 months.

American Express Gold Card

Not only is the American Express Gold one of the best travel cards out there, but it is also one of the leading rewards cards as well. It earns 4x points per dollar at all restaurants worldwide, as well as US supermarkets and grocery stores. Travelers also earn 3x points from flights booked through the AmEx Travel portal, or directly with the airlines. The downside to this card is the $250 annual fee.

Discover it Secured Credit Card

Too often when looking at the best credit cards available, the consumers needing some credit help are left out. Well, we see you, and if you are in the market to start rebuilding your credit this year, the Discover it Secured credit card is an ideal way to do that. Like most other secured cards, there is the minimum requirement of a $200 deposit. However, after 8 months there is the chance to move to an unsecured card and have the deposit returned.

Consumers can earn 2% cashback at all gas stations and restaurants up to $1,000 per quarter, reduced to 1% after that. Additionally, you earn 1% back on all purchases no matter what. Discover also provides a “welcome bonus” of a dollar-for-dollar matching of your cashback for the entire first year of new cardmembers. Another downside is the relatively low limit compared to other cards.

Titanium Rewards Visa Signature Card from Andrews Federal Credit Union

The Titanium Rewards Visa® Signature Card from Andrews Federal Credit Union offers a variable rate as low as 8.49% and up to 15.49%, which is a pretty amazing spread compared to some other similar cards. They also offer a balance transfer, but they cost a 1.5% fee per transfer. While you are required to join the credit union in order to qualify for this card, the membership is free.

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Career & Education Credit Education Financial Loans

Can You Pay Off Student Loans with a Credit Card?

paying off student loans with a credit card

Introduction

Though it may sound tempting, as the average person with student loan debt has about $30,000 of it, paying with a credit card is a bad idea long-term. It is technically possible to do this, but it comes highly unrecommended by any financial professional.

What Happens When You Try to Pay Loans with a Credit Card?

First off, federal student loan services don’t let you pay directly with a credit card; you must use an intermediary, which is essentially a middle man for lenders and buyers. The private loan services let you pay directly, but there is often a sizeable fee for doing so.

When you pay student loans with a credit card:

  • You give up student loan protections
    • Includes consolidation, deferment, forbearance, or loan forgiveness
  • Potentially move your debt to a credit product with an even higher interest rate than your student loans
    • Credit card rates sun substantially higher than student loan insurance rates—sometimes by 20% or more
  • You will likely be charged a fee (with interest)

Credit card companies do not design plans that let you pay off debt quickly because it is not lucrative. If you make a student loan payment and don’t pay it off by the time your credit card bill comes, you’ll be charged for interest both through the card and the student loan service.

What are the Best Ways to Use a Credit Card to Pay off Student Loans?

Some cards offer cash back rewards points that you can then use towards your student loans:

  • Look for cards with long-term cash back benefits (these are best for people with excellent credit)
  • If you are paying through an intermediary, make sure your credit card’s rewards program exceeds the intermediary’s fee
    • For example, Plastiq has a 2.85% fee for every transaction, so your card’s rewards program would need to be greater than 2.85% of your total payments
    • As most cards only give 1% to 2% on your purchases, this is fiscally unwise

You also have the option of making a balance transfer, which moves your payment over from the student loan lender and the credit card company.However, you do not often earn rewards with balance transfers.

  • Though you could get a temporary 0% interest rate, it often just buys time until you would have to pay even higher interest
  • Another downside to doing a balance transfer is that there is, of course, a fee—usually near 5%!

If a balance transfer isn’t an option, another is to use a convenience check:

  • These are drawn against your credit limit instead of your bank account
  • The student loan service processes this similarly to any other payment
  • But, you’ll still have to repay the money, and fees start at 3% to 4%

Conclusion

The only time it makes logical sense to pay your loans with a credit card is if you are, beyond a shadow of a doubt, able to pay off your balance in full every month. Or, if you find a card with a no-fee balance transfer that starts off with a 0% APR (annual percentage rate; the amount you pay each year to borrow money) financing, you may also benefit from this practice.But again, this must be paid off immediately lest the costs outweigh the benefits—make sure to stay on top of your loans and credit to avoid paying even more in the long run!

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Credit Financial

8 Tips to Make Credit Cards Work for You

credit cards work for you not against you

Your credit cards can be some of the most powerful tools in your financial tool belt. But if you don’t use those cards carefully, they can do a lot of damage. Knowing how to use those tools properly can be a great way to prevent damage that can take years to undo. Following these eight tips can give you an excellent foundation for using your credit responsibly.

How to Take Full Advantage of Your Credit Cards

1.     Pay the Bill in Full

Don’t be tempted to skimp on the payment no matter how appealing the minimum payment looks. Using too much of your available credit can quickly lower your credit score. 

2.     Use it With a Budget

Now that you are paying your bill in full each month, it’s time to keep your spending within a manageable budget. Small totals can add up quickly and even make it difficult to pay the total bill. However, if used properly, they are a great way to track and control your spending in specific areas.

3.     Check Your Accounts

Seeing how much you are spending and where you are spending it will make it much easier to stick to that planned budget.  Use online tools to check your credit card’s accounts weekly.

4.     Take Advantage of “Perks”

Most credit cards these days have some extra protection built into them. While all cards should be protecting you against fraudulent charges, others will offer you bonuses such as extended warranties on certain items. Knowing what those perks are is a big help when deciding which card to use and when to use it.

5.     Use Your Rewards

Do any of your credit cards offer cashback rewards? Be sure you are taking full advantage of those. Like other perks, these can vary a lot from company to company or card to card. One card might give you 3% back at restaurants, while a different one gives you 2% back with hotel stays.

6.     Save Them for Big Purchases

Saving your credit for big purchases can be a huge help when an emergency happens. Everyone is eventually going to face an unexpected problem sooner or later. This advice isn’t just for emergencies, however. Rather than paying cash, use a credit card with a great cashback rate. The reward can shave some of the cost off the purchase.

7.     Stay Under Your Limit

Not only should you take extra care to stay well below your credit limit, but you should also be aware of what all of those limits are. If you’re not sure you can handle the temptation that can come with a high credit limit, you can always ask for a lower limit.

8.     Don’t Pay the Bill Late

Late payments are another item that can potentially wreck your credit score. They can also cost you a lot. Many cards charge steep fees anytime your payment is late.

Overlooking something that affects your credit score can have lasting consequences that can make your financial life far harder than it needs to be. It’s never too late to develop better habits with all of your accounts.

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Credit Financial

How Do You Calculate Credit Card Interest?

credit card interest

It can be quite shocking to suddenly realize how much you are being charged in interest suddenly. It can be even more surprising if you look at it over 12 months. With the average American household paying over $1,000/year in interest alone, it is vitally important that every credit card consumer knows precisely how much they are paying in interest.

What Is Interest?

Credit card interest is simply the amount of money a bank charges for access to a credit line. It is calculated differently for different items. Rates can vary considerably depending on what kind of credit you are using.

Out of all of the different credit types used in the economy, credit cards typically require you to pay the highest amount of interest. They are also usually offered at a variable rate (APR), which means they fluctuate over time with the markets. Rates can be wildly different from person to person. The interest rate you pay is typically based on your creditworthiness. So the higher your credit score is, the lower your APR.

How Do I Find Out How Much I’m Paying

Many consumers only pay attention to the APR on their accounts when they sign up for a new one.  Then they get a sticker shock months or years later. Your credit card statement clearly shows how much you are charged month to month but rarely gives you any indication of how that figure is calculated.

Thankfully the process to calculate your credit card interest is very straightforward. All you need is your statement and a calculator.

How to Calculate Your Credit Card Interest.

1.     Figure out what your APR means to you daily.

This is called the Daily Rate. Interest is compounded daily rather than based on your balance at the end of the month. No, your credit card company isn’t adding charges to your account every single day. Interest is still added in one lump sum at the end of the month but its compounded interest.

2.     Find your average daily balance

Make a note of each day of your billing cycle and the balance on that day. Remember, you pay the same compounded interest on the old balance as you do on any new charges. Then add the balances from each daily total, subtract any payments made, and then divide by the total number of days in your cycle

For example, if your cycle has 22 days: day1+day2+day3+…divided by 22days= average daily balance. Be sure to include the amount carried over from your prior billing cycle.

3.     Calculate your Interest

Calculate your interest by multiplying the average daily balance by the daily rate. Then you multiply by the number of days in your billing cycle. That final total is your average amount of interest.

Learning how to calculate the interest on your accounts can help you catch potential mistakes. It can also make you aware of exactly how much your credit accounts are costing you. Staying aware of all of your accounts is a vital part of managing your money effectively.

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Credit Financial

Will Multiple Credit Cards Hurt My Credit Score?

multiple credit cards will affect your credit

Everyone’s been there. You are standing at a checkout counter when the clerk tells you that “today only” you can get a great discount on the purchase you are making. All you have to do is open an account for a great new credit card. Of course, you want 40% off, who wouldn’t.

Or maybe you check the mailbox and discover you’ve been pre-approved! Get this great new card loaded with rewards and perks. Who doesn’t love mail telling them how awesome they are?

With all of the options out there, who hasn’t wondered, “Is it good to have multiple cards?” or “Will this hurt my credit score?”

How Too Many Cards Can Hurt You

Having too many credit cards can hurt your credit score.

  1. Some creditors might think you are a risk if you have too many open lines of credit. This is particularly true if you carry a significant balance from month to month.
  2. Too many accounts that you are regularly using can make it more challenging to manage your spending. Having your purchases split between multiple cards can also make it more challenging to follow your ideal budget.
  3. You can quickly lose track of when each payment is due. Late payments can be particularly harmful to your credit as 30% of your score is depends on making payments on time.
  4. It is much too easy to use “too much” of your available credit. If your overall credit utilization goes up over 30%, your credit score will begin to drop.
  5. Applying for too many cards too quickly can also hurt your credit. Every time a new hard credit inquiry appears on your report, it affects your score. Those hard inquires stay on your account for 12 months.
  6. Often once you realize you might have too many accounts, it is easy to be tempted to close one or two of them. Closing accounts can also damage your credit, particularly if you close the accounts you have had the longest.

How Multiple Can Help

Of course there, are ways that having multiple cards can help. Receiving a new credit line increases your total of available credit and can improve your overall credit utilization.

Having multiple cards can also increase the amount of credit you have available to use when an emergency arrives or can even be a big help when you need to make a big purchase. In fact, it is always a good idea to purchase big-ticket items with a credit card so that you can take advantage of any cashback perks you might have.

There is no concrete answer to this question. Ultimately how you manage your credit will always be far more important. It is possible to keep a good credit score no matter how many accounts you have.

Any time you are considering opening a new account, you should have a solid plan for exactly how to use that card.

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Credit Financial

Credit Card Fraud And How To Protect Yourself

credit card fraud

Credit card fraud is becoming so incredibly prevalent these days. It can seem overwhelming trying to prevent it with all the different ways it can happen. While you can’t prevent every case, you can certainly be prepared and vigilant against abuses, and put some challenges in the way for potential criminals to profit from your private information.

All it takes is a few minor practices and safeguards incorporated into your daily life can go a long way toward keeping your financial information safe from fraudsters. Here is a list of things you can do to help protect against credit card fraud:

1.   Do Not Give Out Your Information

This one might seem obvious, but many people will still lose their privacy by simply giving out their credit card details to people who sound convincing on the phone. Social engineering is as old as fraud itself, so do not give out your details to anyone unless you called them specifically to make a purchase.

2.   Don’t Keep All Your Eggs In One Basket

Do not keep every credit card you own in the same purse or wallet. Make sure you have one or two that you carry with you, and one or two that you leave at home or otherwise carry separately. This can reduce losses in the event of a theft of the wallet or purse. If you will only need one card, bring only that one with you.

3.   Keep Your Cards In Your Sight

When you hand your card to a retail or dining establishment associate, you are trusting them to handle your card properly. Nevertheless, make sure you keep your eye on the card the entire time it is out of your possession. Criminals can swipe and scan a card in a fraction of a second.

4.   Only Sign Your Cards’ Accurate Receipts

Make sure your total is correct and shown on the receipt. It may sound silly, but don’t sign a blank receipt, and make sure that any unused blank lines above the grand total are crossed out or otherwise made unusable by anyone who may get possession of it.

5.   Monitor Your Accounts For Changes In Behavior

Be sure to keep an eye on your account balances, bills, and statements. Even small changes can signal that your card is compromised. Many times a criminal will try to charge only a dollar to a stolen card to see if it is noticed, and if it goes unnoticed they will then begin making larger and more numerous charges until the account is empty.

6.   If You See Something Say Something

Time is of the essence once you find out you have been the victim of credit card fraud. You will need to advise the card issuer as soon as possible, many of them have a 24/7 stolen card hotline that will let you report your card as compromised, anytime anywhere. When you report fraudulent charges, the law absolves you of any further liability for subsequent unauthorized credit charges.

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Credit Debt Financial

6 Tactics for Handling Piles of Credit Card Debt

credit card debt

If you have a significant amount of credit card debt, you are not alone. You want to figure out how to improve your situation, or you wouldn’t be here. That is the best first step to climbing out of a deep hole of credit card debt, you have to want it.

Once you want it, and you are ready to work for it and fight for it, then you need a strategy. We’ve pulled together a robust list of the 6 most effective things you can do to put a dent in your credit card debt.

1.   Buddy Up

This is something that most people do not think about. They underestimate the power of having someone for support while facing their debt problem. This can be anyone from a variety of roles in your life. Some people prefer a financial advisor, while other people are more trusting with a friend or family member. Another benefit to not going solo is it helps boost your accountability as well as your chances of reaching each goal you set.

2.   Hide The Credit Card

Stop using your credit card or cards for financial emergencies, that is likely a contributing factor to how you got into debt. Instead, build a savings reserve that you would use for emergency dental or vehicle work. This way you can catch up on your debt, and lower your credit utilization as well, which makes your credit score look better. For an emergency fund, make an initial goal of one month worth of expenses, and work your way up to a 6-month cushion.

3.   Pay High-Interest Debts First

This is another one that people overlook. After you get smaller debts out of the way, focus on your highest interest rate, and pay that down as fast as possible. Pay a much over the minimum as you can, while still staying current on your other obligations. This can save you thousands in interest alone on higher limit accounts and will reduce the time it takes you to pay it off.

4.   Ask Your Lender For A Lower APR

This is another tactic that few people think to utilize, or realize is even possible. Simply call your lenders and ask them if they can reduce your APR. Not only will this save you money every month, but it will allow you to pay debts down quicker since you won’t need to make nearly as many payments over the life of the debt.

5.   Budget Firmly

This is always one of the obvious ones, so we put it at the end, but it’s still so important that we couldn’t omit it. Budget and stick to it as much as you can. This goes for not only your spending but your debt repayment. Once you know your current bills are accounted for, figure out how much you can then use to pay off credit card debt. Your budget will be another tool of accountability, only you answer to yourself.