Credit Card

Knowing When to Get a Credit Card

January 27, 2016 by penn

There are times that we just have to tell ourselves “not yet.” Sometimes it just is not the right time to do some things. When it comes to deciding to get a credit card, we have a few things to consider first.

Pre-Credit Card Debt

When it comes to debt, no one wants to do go there, it just happens. Currently, if you go to college, it is inevitable. Graduates already know that they will be paying off thousands of dollars in student loans. Adding credit card debt to that would not be a financially sound move.

People who have other large debts like auto and mortgage also would not be making a financially sound decision to add credit card debt to their responsibility until they brought down their current debt.

When we have managed to bring these kinds of debts down to a more manageable liability (because that is what debt is) and our credit report reflects a rise in our credit score. Our payment history will have done that and then we may be able to think about what type will best fit our needs when we apply to get a credit card.

[Read: Credit Card Application Denied]

Recognizing that Bad Spending Habits Should Not Get a Credit Card

If we know that our spending habits are out of control then we should be wise enough to tell ourselves we should not get a credit card. It is very easy to overspend on a credit card, even if we know we are not making enough money to cover it. We first have to learn to ‘live within our means’ before we put ourselves in the position of ‘living beyond our means.’ Using payday loans is the same thing. We are just digging ourselves deeper into debt every time we try to cover one debt with another. “Robbing Peter to pay Paul” is never a good idea because eventually we will run out of people to “rob.” To get a credit card under these conditions is never a good idea.

We need to be financially responsible before we should fill out the application to get a credit card. If we cannot get out of debt then we should not get a credit card to help us get into more.

Don’t Get a Credit Card and Then Try to Understand How They Work

If you are unfamiliar with credit cards, it is not advisable to get a credit card until you have done some homework. You need to know how charges work, the credit limit, what the finance charge is and interest rate. Then there is the all-important due date that you should always make sure you pay in a timely manner without using too much if any of the grace period the credit company allows you. Finally, there is the minimum payment due, that you are required to pay by the due date. That is just covering the basics.

Is it Important to Get a Credit Card?

When we think about the ways that we can incur debt without a credit card, the question arises do we need to get a credit card. There are alternative ways to live without using a credit card. Many have gotten themselves into debt over credit cards and no longer use them. They use either debit cards or cash. It makes it a bit harder to secure rentals because there is usually a larger security deposit, but people tend to deal with that, rather than use a credit card.

How to Get Out of Paying Interest When You Get a Credit Card

This is an easy answer but you need to be super responsible. Always pay your credit card in full. That even sounds easy. The problem is, problems arise that can prevent that from happening. Emergencies occur. Someone could get sick, a lay-off or an unplanned trip. It could happen, and then what? You are left with a bill you planned to pay but cannot now. The first rule of thumb, get on the phone and call your credit card company to let them know. You should never leave credit card companies unaware. If you are just at that point where a credit card would be hard for you to pay off if an emergency were to arise, maybe now is not a good time to get a credit card.

[Read: How to Avoid Credit Card Danger]

Other Options When You Don’t Get a Credit Card

Another way to help you is to open an account with Payment Reporting Builds Credit (PRBC). This is another form of a credit report based on your payment history of your monthly bill payments. These payments include rent, utilities, cable and insurance. These are the payments that the other credit reports ignore and can help you get approved when you apply for loans. You manually add the accounts you want to be reported and your report is only shared when you give your permission. This report is called a FICO Expansion Score.

Insuring You Pay Off Your Credit Card

January 20, 2016 by penn

Most people who have credit cards and then life has thrown them a curve, dream of the day that they will have a zero balance on all of their cards again. The system of credit allows for this, but letting it go too long will wreak your credit history. And recovering from a credit crash is much much harder than building credit in the first place.

[Read: Why You Should Pay Off Your Credit Cards]

So what do you need to watch for if you are in this situation? These simple warning signs will point out if you are possibly in danger of creating a situation that will harm your credit. The earlier you catch these signs, the easier a cure will be. The accomplishment of being able to pay off your credit card is a great goal, and will help with your credit rating.

Making only the minimum payment

If you develop the habit of only making the minimum payment on your cards, you have chosen the slowest, most expensive method to pay off your credit card balance. Yes, you are still making the payments, but you are also impacting how much credit you have available (your balance is taken out of your available credit), plus adding penalties and other fees. And you may lose your rewards, and be turned down for an automatic credit increase. These are not fatal to your income, and you will eventually pay off your credit card. But do the math; using one of the various debt calculators, find out fast you are paying off your credit card, and the effect of paying only $5 more than the minimum per month. You may be willing to make your payments higher once you see these numbers!

Continuing to charge on your card

If you pay your credit card, and then go spend that money during the billing cycle, you are making it harder to pay off your credit card. What you have done is keep the balance exactly where it was- which is great if you are able to pay off your credit card that month, but if you aren’t sure that you can, you have only taken the money you spent on the payment, and not actually changed the balance. This is a good time for a credit card vacation- use it for one thing a month, and add that amount to whatever payment you already are making. You are continuing to use the card, and the payment you made actually reduces the debt.

Working without a plan

Having a plan to pay off your credit card is a needed first step, and will help you resist those impulse purchases that like to crop up once you have ‘extra’ money. Many of the best methods have been written about, but a simple one is getting your credit report, and finding the list of debts you have, along with all of your credit card statements. Budget carefully: you need to make the minimum payment on all of your debts. Selecting the one with the lowest balance and adding extra money to that specific debt. If you have many small debts, you may be able to pay them off quickly. Then, take that same amount (the minimum payment plus the extra money you have spent to pay it off), and apply that to the next-smallest debt. With multiple cards, choose the ones that have the highest interest rates to pay off first. And watch your budget to pay off credit card debt without making more problems!

Other warning signs include:

Multiple people on one card. Having two or more people on one card makes it more difficult to budget for payments, and to avoid going into debt. Communicating about when you spend money on the credit card is a simple way to make sure that you are able to pay off credit card balances together.
Having too many credit cards. This is a problem in two ways, not only does it make it difficult to pay off credit card balances, you can fall into the habit of using a higher-interest card to pay for something. This is a path to credit destruction- but be careful about closing out the cards! Simply putting them out of easy reach, and rotating the cards you use will keep your credit score healthy, and avoid getting balances out of the ‘golden zone’ of 30% or less of ALL available credit.
Using credit as therapy. Simply because you are offered the credit is not an excuse to use it: you need to make sure that you can pay off credit card balances at the end of the month. And planning on a one-time windfall isn’t good: a lottery win or other unexpected event may well not happen, and if you budget with this in mind, your entire winnings will be taken to pay off credit card balances and other debts.

The Rewards

One thing that attracts many people to one card or another is the rewards they ‘earn’ for using their cards. This, on many cards, is a problem to keep track of, and having multiple cards makes this task one that gets forgotten about quickly. If you are using a card specifically for the rewards, make sure that you have a simple, user-friendly way to track your rewards.

And in those emails or letters from your card issuer may be a way to increase the rewards, or a complete change in how they are calculated. A few minutes of scanning closely every letter you get from your credit card issuer is worth it.

[Read: The Best Credit Cards for Holiday shopping]

And the real reward? Having the credit card balances something that you can pay off, easily, every month. A plan to avoid problems will let you pay off credit card balances, your other debts, and still have some ‘fun’ money is the goal of a budget- you can do this!

Credit Card Application Denied

January 13, 2016 by penn

Often confusing and embarrassing, the denial of a credit card application can be sign of other things going on, some of which you can fix and some of which you can fix, but not easily. There can be literally hundreds of reasons why you got denied, but really only a few are the most common ways in which you get denied for a credit card. Lets explore some of the main reasons and delve into the ways to help fix them.

Major Factors to Consider

Charge – Offs
High Balances
To Many Accounts
No Credit History

[Read: Why You Should Pay Off Your Credit Cards]

There are major reasons why you are denied credit cards and the major ones are listed above, we will discuss them to follow, but in there will be peppered with many sub categories that have a related effect on why you credit application was denied. Often there are ways to fix them.

1. Charge-offs

Charge-offs are probably the worst thing that you can have on your credit report, they show a complete lack of payment, and collection to the point that your creditor just gave up, and charged it off. This alone can be the sole reason for a denial of a new card, why would they want to give out a new card to you if they feel, based on prior history, that you may not pay. Now over time these accounts will fall off and be out of view, but applying to soon after a charge-off without a real compelling reason, is sure to get you denied. A way to fix that is to pay it off in full, and then once paid off, ask the creditor to remove the negative report.

2. High Balances

High balances on other open accounts too will surely get you that denial letter in the mail, reason being is that you may be extending yourself to far and that you are not able to meet your financial obligations monthly. Or you may have to many inquires on your credit report, these can be from new applications or from existing accounts accessing your report due to a concern for creditworthiness. They may be monitoring your credit report in an effort to determine whether they are going to continue to extend credit, or increase credit. If you really want a new card, perhaps for a better interest rate, you should pay down your debt and apply again once that has been done.

3. To Many Accounts

Having to many open accounts even without high balances will result in a higher denial rate, reason is that if you already have access to open lines of credit, there really is no need for any additional accounts, and will result in the denial of the credit card application. Although, this may not seem like a risk factor in the denial process, it does show a history that could be deemed negative. Try closing out the cards that you no longer need or use, why keep them open if you are not going to use them anyway.

4. No Credit History

But on the flip side of that you may have a completely new or unknown credit history. Everybody has to start somewhere, and unfortunately, sometimes, applying for a credit card is not the place to start. You may want to foster a relationship with a bank or credit union, and establish a history there and apply for a card through them first, and get a record established. Or get an auto loan, which often times is easier to get than you may think, this is a wonderful way to establish your credit before applying for credit cards.

[Read: Reasons for Denials of an Increase in Your Credit Limit]

In Conclusion

As you can see, there are many reasons why a credit card application can be denied, but there are ways to fix them, in the short term, and the long term, some are easy to do, others not so much, but that is only going to help you in the long run. The four major areas are the charge-off accounts; having to many open accounts; to high of balances; and, no credit history at all. Intermixed with all of these you could have factors of late payments, public records (lawsuits, or bankruptcy) or you may have just not filled out the credit card application completely, which is a very common mistake.

But make sure that when and if you get denied, you take head of the denial issues in the letter they send you, it will give you the exact place to start your rebuilding process, and with some hard work and dedication to yourself you can regain your credit report and score to a respectable level, and in turn be able to apply in the future for accounts with the fear of it being rejected.

What You Need to Know Bout the New Chips In Your Credit Card

January 6, 2016 by penn

Security is an important issue with credit cards, and even more so in today’s digital age. Online shopping, swiping and otherwise non human points of sale make the traditional safeguards obsolete, the days when your card was compared to your identification to see if the user was the person who was using the card are long gone, even in those face to face situations the card rarely leaves your own hand and is slid through a machine at the point of sale. Couple this with inattentive sales people and fast paced service, it has been real easy to steal someones credit.

[Read: Hidden Credit Card Charges: Hints and Tips to Avoid Them]

There have been recent advancements in the safety and security of credit cards in the form of EVM chips, or Europay/MasterCard/Visa the companies spearheading the technology. There are things that you should familiarize yourself with when it come to this new technology and how it will effect your everyday life.

Factors to Know

It is safe, for now
It is PIN free, for now
It is easy to use
It is not universal yet

1. You Still Need to Protect Yourself

While the new technology is still being implemented you will still need to protect yourself and your card, and while the liability may be shifting from merchants to banks or issuers to networks and so forth, it is still incumbent upon you to take care of your cards and make sure that they do not fall into the hands of bad people and criminals.

And it is still solely upon you to report fraud if you suspect it, you need to call and immediately report that to them so they can shut down the card and prevent the continued use. If you wait for them to flag your account it may be to late.

2. The New Technology Is Not Everywhere Yet

Although technology spreads at the speed of sound these days, not all merchants are equipped with the new machines that will read the new chip cards. There are a couple of reasons for this, one is that the technology is new, and that the switch over is costly and time consuming, and the second is that smaller retailers may not be able to update to the new technology regardless of the required use, because of the sheer cost.

After the date required for the shift to the new required technology, a merchant could be held completely responsible for the loss due to credit card identity theft, so the shift to the new technology is an important step in the process and the elimination of credit card theft.

3. You Can Still Use Your Old Card

Don’t panic, if you have not been issued a new card yet, you are fine, you can still use your old card until your bank issues you your new one, this may not happen until your next renewal cycle on your card, or it may happen sooner. If you are in doubt, contact your bank and see if and when they are sending you an updated card. In the mean time, you can use your card as usual. There should be no issues.

4. Well, What is It

What is this new technology, and how does it work. This new chip is imbedded in your car, you slip the card into the machine at the point of checkout, and the chip has a new and unique code for every transaction, therefore, if there is technology skimming the machine it may be able to get your number, but the chip, or lack thereof, on future attempts to use the card by the would be thief, will not go through, and, in theory should alert the bank of a potential fraudulent transaction.

Slow to be implemented in the United States is the chip with a personal identification number requirement. It has been in use in other countries, but has not gained popularity here just yet. We are used to using a PIN in our debit card transactions but not so much in our credit card transactions. This form of “two factor” security can only help in the stop of credit card fraud.

[Read: Top Reasons for Credit Card Denial]

Conclusion

Banks and lending institutions need to stay one step ahead of the bad guys. And the EMV technology chip is their effort to do that, and for now this is a sure fire way to stop the thieves dead in their tracks, but the technology is only as good as the end users and their point of sale terminals. For now, it is easy to use, PIN free in use, and safe. It is ahead of the bad guys and will help prevent credit card fraud. But is is not universal and used by all banks and all end users.

Starbucks cashier admits her theft:

How to Avoid Credit Card Danger

December 30, 2015 by penn

Credit cards have the potential to be dangerous, especially for new users who may think of the money they’re spending as “free.” There are other credit card dangers that even the most experienced users can fall into. It’s important to note that there is a way to use credit cards responsibly in order to avoid those credit card traps. For more information on credit card danger, see this article.

[Read: The Best Credit Cards for Holiday shopping]

The Lure of Overspending

Consumers tend to be lured into credit card danger when they spend more money while they’re using their credit cards versus paying with cash, according to some studies. In one such study, participants spent more than twice as much when paying with a credit card versus the amount they would’ve spend if paying with cash.

You can avoid credit card danger and overspending by:

Setting a spending limit for yourself
Living within your means
Setting your limit in accordance the amount you can pay each month toward your bill

Difficult Interest Rates

If you want to avoid credit card danger and interest all together, the best thing to do is pay your balance each month. According to statistics from the American Banker’s Association, only 29 percent of cardholders pay their balance in full each month. I you’re one of the 71 percent who’s not practicing this tip, then a portion of your payments are going towards the interest rate, which increases the amount of time it’ll take to pay off your balance.

How to avoid credit card danger and interest rates:

Pay your balance in full each month
Consider spending less

Debt: Are You Risking It?

If you’re borrowing money, then you’re creating debt. Being in debt can lead to an array of problems that aren’t all associated with finances. Debt can lead to health issues, depression, and major stress.

Being in debt makes it harder for you to reach your other financial goals. You may have to delay your goal to go back to school or take that nice vacation because you need to pay your bills.

How to avoid credit card danger and debt:

Stop using your card
Focus on living within your means

A Bad Credit Score: Are You Risking It?

Its common knowledge that credit cards have a major impact on your credit score. If you use your credit card responsibly, then your credit score will reflect that. If you’re irresponsible with your credit card, like if you miss a payment, then that will put you into credit card danger and cause you to have a lower score.

How to avoid credit card danger and a bad credit score:

Pay your credit card bill on time
Keep balance 30 percent below credit limit
Make less credit card applications

The False Hope of Minimum Payments

You’re only required to pay the minimum payments, but other than making no payment at all, minimum payments are actually the worst way to pay off your balance. By making the minimum payment, you’re sending more money toward your interest than you should, meaning less of your money will go towards the amount that you owe.

How to avoid credit card danger and minimum payments:

Pay your balance in full
Or pay above the minimum payment

Confusing Credit Card Lingo

Although the Credit CARD Act of 2009 has made credit card terms much clearer, the lingo can still be confusing. One credit card has the potential to have many different interest rates. Understanding which rate applies can be puzzling and can have serious consequences like increased fees and/or lower credit scores.

How to avoid credit card danger and confusing lingo:

Understand balances and rates on your credit card
Read through credit card information carefully
Contact customer service if you have questions

Difficulty with Multiple Credit Cards

In order to be financially responsible and avoid credit card danger, it’s important to track your spending. Having multiple credit cards can make this important task difficult to accomplish. This is even truer if you’re using other methods of payment in addition to using multiple credit cards.

How to avoid credit card danger with multiple credit cards:

Create a journal or spreadsheet to track spending
Use personal finance software to track spending
Use fewer credit cards

[Read: 3 Reasons To Break Up With Your Credit Card]

The Risk of Credit Card Fraud

Everyone who has a credit card is at risk of being a victim of credit card fraud. Whether your credit card or credit card information is stolen this can be detrimental to your credit score. Luckily, you’re not always liable for fraudulent credit card purchases, but it’s important that you report these charges in a timely fashion.

How to avoid credit card danger and fraudulent charges:

Closely monitor your credit card activity
Report fraudulent charges immediately

For even more information on credit card dangers, check out this YouTube video:

Why You Should Pay Off Your Credit Cards

December 8, 2015 by penn

Most people have a credit card of some sort. Most likely you use that credit card, alot. They do come in very handy, especially if you find something you want to buy online that you couldn’t find in stores. They also come in handy when you are short on cash and you need to pay a bill. Most companies accept credit cards as a payment. Infact, alot of companies only accept debit or credit cards. But what happens when you charge way to much on the card? What happens when you can’t pay off your credit cards? After all can’t you just get a new one and start using that one?

[Read: The Decision to Pay off a Mortgage Early]

What Kind of Credit Cards Are There?

FIrstly lets go over the different kind of credit cards you have to choose from. There’s a wide variety of credit cards available for you to choose from. Let’s take a look at a few if them.

Chase.
Visa.
Capital One.
Master Card

Why Should I Pay Off My Credit Cards

Now you need to decide whether or not you should get one. Will you be able to pay off your credit cards. Can you afford it? We have went over the various types of credit cards out there you can explore and choose one that seems rights for you. If you decide getting a credit card is the right dedication for you why should you pay them off? Why is it so important?

1. Build Credit.

Ahh yes, here’s a good reason to pay off your credit cards. This is perhaps the easiest way to build your credit and maybe then more options will be available to you. Interestingly, the more credit cards you get and pay off the more it improves your credit score. It’s most likely got something to do with being consistent with your payments. Pay off your credit cards regularly in a timely fashion and watch that credit score go up.

2. No Loan.

So you have found the the perfect home for you and your family to settle down in. It’s perfect, it’s got enough rooms for all the children and the perfect view. You go down to the bank to take out a loan only got find your application has been denied. Why? Well they proceed to tell you that you have an outstanding credit card balance from way back when. You ment to pay off your credit cards, but our just never got around to it. Now you can’t buy that beautiful home for you and your family.

3. Interest

Who doesn’t know that credit cards charge interest fees the longer they are left unpaid. Your balance when you checked it last could have been only twenty dollars. But if you let it go a few months without paying on it, depending on the interest rate and the time you have went without paying on it, you could possibly end up with a two hundred dollar bill. It would be a good idea to pay off your credit cards as soon as you can to avoid this issue.

4. More Opportunities.

Once you pay off your credit cards you will begin to notice alot more opportunities opening up for you. You will notice that alot more companies will be more than willing to approve you for more credit cards. This is a good thing in itself, yes, but be sure you can pay off the other credit cards too to keep this good streak going.

[Read: How Soon Should I Use A Credit Card After Paying Off Debt?]

5. Avoid the Bad Reputation.

If you don’t pay off your credit cards the bank amongst other companies we all use daily look down upon that. Phone and cable companies, cellphones companies, you get a bad reputation for not paying your bills. This makes it hard for you to get even the most basic luxuries most of us get to enjoy. Even your electric company looks at your credit, and if they see that outstanding credit card balance they will see that you have a reputation for not paying off your credit cards or any bills they will assume. The thing with big companies or any random human being for that matter, is they go by first impression. First impression is huge, we know this, so if you go into a bank, or a cellphone company knowing you haven’t paid off your credit cards, even if that is the only outstanding bill you have, that will give the impression you are horrible with money. So why then, would they consider a contract with you knowing, or assuming rather that they won’t get paid? They won’t. So make sure you pay off your credit cards to set yourself up for success, not failure that most see when they decide to get a credit card.

When Life Goals May Mean a Lower Credit Score

November 18, 2015 by penn

Your credit score is going to be the number that can either help or hurt you in life. This is the number that lenders are going to use and decide whether to let you have that mortgage you so desperately want. It is also the number that is going to get you lower insurance rates, a better deal on entertainment and the like. You are warned from a young age that your credit score is going to be the basis for which your entire life will be played out. You never want to let this score drop, and you never want to do anything that is going to make this score change in the slightest. However, is this really practical? There are always going to be things that are going to be times in which your score is going to take a hit. But, the good news is that even with this hit, it is okay.

[Read: Ways to Fix Your Credit Score]

There are times in which you have to let your score take a hit. We will discuss three of the main reasons why, along with why these situations are okay for your credit rating.

Seeking Multiple Loan Terms

There are times in which you may feel that you need to get information on multiple loans. This is often the case when you want to ensure that you are getting the best rate out there and the lowest payment that you can possibly get. When you are looking in this manner, you are going to find that having multiple loan inquiries on your report can and will affect your credit score. However, keep this facts in mind:

The score is only going to lower by a few points
This request will be a hard inquiry on your credit report, which signals to lenders you have been shopping around for the best rate, rather than raking up credit
The points that are lost can usually come back after a short period of time as long as you are paying on time

Starting a Business Lowers Credit

When a person is starting a business, they are going to find that there are several hits that their credit score is going to take. Starting a business is a huge endeavor. Not only are nerves tested and stress is accumulated with this decision, but there are affects against the credit rating that a person has. Why is this? There are several reasons why opening a business is going to affect the score of your credit, leading to your overall number lowering. These reasons include:

Many business owners open up business lines of credit as a way to start out, they may utilize several different banks and lenders to find the best rates and terms, thus they are going to have several hard inquirers onto their credit
Credit cards are often used to help start up a business, which is going to lower the overall credit score as the person uses more credit
The debt to income ratio is going to increase when starting a business as the person is doing many things with credit, this ratio can greatly affect the overall score that a person has

Learning to Manage Debt with Debt Management Programs

There are times in which a person’s credit score is low due to the amount of debt that they have. We all understand that there are times in which having too much debt is going to adversely affect your score. Lenders view you as a risk for lending to and overall your score begins to drop. When this is the case, the person may be looking for help with dealing with their debt, which is a noble thing to do. However, through getting help through debt management programs, the person’s overall score is going to take a hit. Why is this?

Enrollment with a debt management program automatically signals that you have debt issues
Many times these companies negotiate your terms and repayment balance to get something that works better for you, resulting in you benefitting but your score losing

Why it’s Okay to Let Your Score Lower

These three scenarios mentioned beforehand are the times in which it is okay to let your score drop slightly. Consider these aspects:

If you are seeking multiple loans to find the best one for you, you are saving money in the long run with taking this hit to your credit
A new business is a great venture that could mean you succeed even more in the future. And as many people have pointed out, if you are successful it will take no time to get your credit back to where it was
If you have too much debt, it is best to take the hit to your credit score than to let this debt get the best of you and result in bankruptcy or other situations.

[Read: 12 Surprising Ways You’re Sabotaging Your Credit Score]

Though it is great to have a high score on your credit, it is not always something that you can control. Though these three scenarios would lower the score, they are great things to happen in your life if they are needed.

3 Reasons To Break Up With Your Credit Card

November 11, 2015 by penn

It’s no secret; all credit cards are not created equal. Nor are the all credit cards right for every consumer. You work hard for your money, and so you want to spend it wisely and get the most out of your cash flow. Subscribing to the wrong credit card can drain your bank account unnecessarily. Evaluate these 3 problems people often run into with their card and see if it’s time for you to break up with your credit card.

[Read: Reaping Credit Card Benefits]

You’re getting charged an annual fee, and you barely use the card.

Almost all credit cards charge an annual fee; there is no getting around it. But if you’re subscribed to a card with an annual fee that outweighs the benefits you’re getting from owning the card in the first place. It’s time to break up with your credit card. Here are some things to consider:

You have to spend a crazy amount of money to break even with your fee.
Your lifestyle has changed and the fee no longer fits into your budget.
If a card is draining your funds with no rewards, it’s okay to close it. So long as your credit score is generally healthy and you are making regular payments on any debts you may have.
Remember, if you choose to break up with your credit card, be sure to have at least one account active to keep a healthy credit score on file.

[Read: The Most Credit Card Debt: The Top Ten States And How It Affects You]

The rewards program is no longer rewarding.

Let’s face it, most of the time what attracts a consumer to choosing a card is the rewards program. However, if you are no longer in need of these rewards, are they really rewards? It might be time to break up with your credit card and consider a new card with a rewards program that better fits your current needs. Consider these situations you may find yourself in to see if it’s time to change it up:

You have a miles card and aren’t planning on traveling any time soon.
Your card rewards you when you go out to eat but you find yourself rarely dining out.
You used to have a long commute so you got a card with gas rewards but now you take the train.
Your card has a revolving rewards program and after the first rotation the rewards are no longer fitting into your lifestyle.
You move to a new state or country where the stores, restaurants, or gas stations that you get rewarded for don’t even exist.

If you find yourself identifying with any of these scenarios, it’s time to break up with your credit card and find a program that you can actually benefit from. Not sure where to start for finding the card with the right rewards? Check out this list to help determine which rewards might be right for you.

You’re spending beyond your means.

It’s a common problem with using cards over cash; something about plastic makes us feel rich. That ‘out of sight, out of mind’ mentality takes over and you think ‘it’s fine I’ll just charge it’. This state of mind can get you in some trouble, not to mention with a lot of useless stuff you bought out of convenience or boredom. If you find yourself swipe happy, it might be time to break up with your credit card. Take a look at some of these common pit falls and see if you are guilty of over spending:

If you’re spending more than you make then it’s definitely time to break up with your credit card.
You’re struggling to meet your minimum payment.
You’re buying things you don’t need, or even really want that badly.
You’re online shopping out of boredom (we’re all guilty).
You avoid looking at your credit card statement out of fear.

[Read: Top Reasons for Credit Card Denial]

So there you have it 3 reasons to break up with your credit card. If you found yourself identifying with any of the above scenarios then you might want to consider a change. It’s never too late to make the change, and it’s never too late to start recovering. If you’ve gotten yourself into some debt for whatever reason, start making a dent in it today! There are always steps you can take to redeem yourself, and breaking up with your credit card if it’s not the right fit is one of the first and easiest steps you can take to a more responsible financial future. If you’re still unsure what to do with your current credit card situation, keep researching. Check out the informative video below with more information about breaking up with your credit card. You can never be too informed about your finances and knowing all the options you have to change is a great place to start.

12 Surprising Ways You’re Sabotaging Your Credit Score

October 30, 2015 by penn

People today are very concerned about their credit scores. A good credit score can be the difference between receiving a loan, a credit card, a mortgage — it’s the deciding factor between financial success and ruin.

[Read: Ways to Fix Your Credit Score]

720 or higher is considered a good credit score, but every lender has a different standard. If you’ve been actively working to improve your credit score, you may want to take a look at these factors that could actually be sabotaging your credit score!

You Didn’t Pay that Ticket

Many municipalities, in order to encourage offenders to pay their fines on time, will turn the debt of a parking or traffic ticket over to a collections firm, who in turn report the debt “as a collection account to the credit report companies.”

You Didn’t Pay that Library Fine

Knowing what you now know about parking tickets, it shouldn’t come as a surprise that late fees from libraries can also impact your credit score – and yet it does! Nobody expects the sweet little old lady librarians from their local branch to enforce late fees by reporting to credit bureaus, but it’s becoming a commonplace tactic for underfunded libraries across the country.

You Applied for Too Many Credit Cards

According to myFico, “checking your credit report won’t affect your FICO Scores, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.” However, the same principle doesn’t apply to actually applying to new credit cards. When you apply, the lender looks into your credit score, and such inquires can sabotage your score for up to two years.

You Took Advantage of In-House Financing

In-house financing is “a type of seller financing in which a firm extends customers a loan, allowing them to purchase its goods or services.” Although this option is an easier route that cuts out the middleman in a large purchase, this type of lender tends to arbitrarily issue credit, and the poor reputation of the loaner can actually sabotage your score.

You Closed That Idle Account

Some people today have been caught up in the less-is-more mentality. While that may stand true for things like nicotine, it might actually sabotage your credit score. As it turns out, closing a credit card reduces “the average age of all of your accounts [so…] closing a credit card account and incurring more debt have the same negative impact on your credit score.” In this case, if you have to close an account, try to close one that opened most recently or that has an annual fee.

You Connected a New Service

Services such as home utilities, cable, and cell phones might look into your credit in order to determine whether or not they should demand a security deposit for your account. This can have an adverse affect on your credit, especially when you relocate and have to acquire multiple entirely new accounts all at once.

You Opened a New Account

Not all banks do this, but some companies will order a credit report when determining whether or not to do business with you. In this case, an inquiry “takes place when a company has a legitimate business reason to look into your credit report.”

You Rented a Car

The next time you rent a car, don’t use a debit card, which could end up backfiring on you. Many rental agencies “have policies that allow them to run credit checks on customers who use debit cards” in order to ensure that their customers are trustworthy and will follow through on payment.

You Didn’t Pay that Medical Bill

The current healthcare system in America is outrageously expensive. However, if you avoid payment on bills from doctors visits, hospital procedures, or any sort of treatment, that “medical debt goes to collections and shows up on your credit report, [and] it will hurt your credit score.”

You Skipped A Payment

Skipping a payment for a service, a loan, or a credit card can sabotage your credit. In fact, “payment history information typically accounts for nearly 35% of your credit score, making it one of the single most important factors in calculating your score.”

You Have a Tax Liability

Like a parking ticket and a library late fee, a tax liability will accrue interest and fees. After a certain point, “the IRS will automatically file a Notice of Federal Tax Lien, which will appear on your credit reports as a seriously negative item.”

[Read: How Debt Consolidation Takes Care Of Your Credit Score]

You Abandoned a Membership

Make sure that when you cancel your Hulu account or your Gym membership you actually take the steps to properly terminate any sort of contract or agreement. If you don’t, the company could continue to demand payment, even if their service goes unused.

The Best Balance Transfer Credit Cards

September 27, 2015 by penn

There are many individuals in debt, but not many understand the various ways to get out of debt; using the balance transfer credit cards is a not so obvious way to pay off debt. The balance transfer credit cards are a great way to pay debt off and save money while you’re getting out of debt. Below are a few highlights to answer your concerns and questions about balance transfer credit cards.

Why get a Balance Transfer Credit Card

Reduce the amount of interest you pay on your debt
Make a payment on a purchase in the future
Avoid interest payments
Consolidate credit card debt to one card

Scenario to get a balance transfer credit card

Consider a large debt that you have from a current credit card with 20% interest, let’s say you owe $10.000 AUD. You’re minimum payment is $166 for the interest. So in one year you’ll pay approximately $2.000 AUD which is a lot of money on the interest alone.

Now, let’s consider the alternative with a debt on one of your current credit cards of $10.000 AUD. The best reason for a balance transfer credit card is to eliminate the on-going interest from one credit card and move it to a credit card that offer 0% APR for 12 months to save you $2.000 AUD in interest.

Additionally, a balance transfer credit card makes it easier for you to consolidate credit card debt by moving it over to one card to only have one credit card debt to keep track of.

What you should know about Balance Transfer Credit Cards

It’s not a quick fix for debt related issues, but it will help to put you back on track to pay off your debt while reducing interests for on-going credit card debt. Below is a list of highlights to think about when you’re in the market for a balance transfer credit card:

A range of 3% to 5% fee is usually mandatory to transfer debt.
Typically, good to excellent credit is a requirement, so check your credit score before applying to a balance transfer credit card.
The 0% interest is usually only good for a limited time period, the range is typically between 12 to 18 months and is an introductory offer before the rate resets. Read the fine print.

Two suggested cards for Balance Transfer Credit Cards

Nerdwallet.com provides a rundown of balance transfer credit cards to consider: from Chase credit cards to American Express with the lowest fee at 0% to the highest at 5%.

Chase Slate

Chase Slate this is the highest ranked option for a balance transfer credit card without a fee. However, the rate is an introductory rate for the first 15 months is a great offer. In order to obtain and qualify for the offer, the transfer must be complete within the first 60 days after opening the account. If the deadline of 60 days is surpasses than Chase applies an automatic 3% transfer fee with a minimum charge of $5.00 AUD).

Once the 0% APR introductory period expires then it automatically adjusts between 12.99% up to 22.99% based on your credit score. However, there is no annual fee on the credit card and that remains for the lifetime that you own a Chase Slate credit card.

The perks to owning a Chase Slate card are well worth it: free monthly FICO Score, zero liability protection, fraud protection, fraud alerts and purchase protection.

Citi

Citi takes second places because of its 0% APR offer for 21 months. This is the lengthiest duration of time for all existing balance transfer credit cards available. However, the condition is to complete the balance transfer is within four months with a 3% balance transfer charge (minimum transfer fee of $5.00 AUD).

Citi Simplicity Card the credit card offers a 0% credit card balance transfer and on purchases with no annual fees, late fees or penalty rates. After 21 months then it re-evaluates the interest rate depending on your credit score.
Citi Diamond Preferred Card There is many similarities to City Simplicity Card, offers 0% for balance credit card transfers and purchases. No annual fee, late fees or penalty rates. Then it re-evaluates the interest rate after 21 months, depending on your credit score. However it’s 1% lower than the Citi Simplicity Card at 11.99% to 21.99%.

The Benefits of Citi credit cards

$0 liability on unauthorized charges
Citi Identity Theft Solutions
Extended warranty of 5 years/$10.00 AUD per year (limited to purchases, worldwide car rental insurance for theft or damages and capped at $50.000 per year).
Travel and emergency assistance before and during your travels
Connected to Apple Pay
Citi Price Rewind: Citi will search for a reduced price for 60 days after a purchase and refund each item up to $300 with a limit of $1.200/annually.

[Read: Chase Sapphire Preferred vs. American Express Platinum]

Final Thoughts

Finding a balance transfer credit card is an option to pay off debt quicker and reduce interest. However, it means that more money goes towards the principal. So as a result your money is working for itself.

Last, keep in mind a balance transfer credit card is not a quick fix but an alternative to set yourself to a healthier financial position, and if you can change your mindset to believe in it then a balance transfer credit card is a suitable option for you.

Here’s what you need to know more as well: