• Posts Tagged ‘credit’

    3 Financial Management Tactics You Can Start Using Today

    by  • June 28, 2016 • Tagged: , , ,  • Comments

    Financial management is about more than just balancing your checkbook and making sure you don’t spend more than you make. Let’s take a look at some of the financial management tactics you can start using today that can help you achieve your long-range goals.

    Before we do, let’s make an important distinction between tactics and strategy. A strategy represents a goal or big picture plan of action; tactics are actions you are going to take to achieve the goal described by a strategy. For instance, one strategy might be to own your own home. The tactics you might use to achieve the strategy could entail cutting expenses, making more money, saving up, exploring financing options, borrowing from family or friends, liquidating assets, etc. In turn, some of these tactics become strategies that entail tactics of their own (such as those you would use to make more money).

    You will need to take this type of tactical approach if you want to move from simplistic to a level of complexity in order to achieve the strategies described below. Here are three financial management strategies to consider.

    1. Reducing Your Debt-to-Income Ratio

    Your debt-to-income ratio is the total amount of money that goes out each month for mortgage, auto loan, student loans, credit cards, personal loans, business loans (for sole proprietors), etc., compared to the income you earn during the same month. As a formula, it’s expressed like this: Total Monthly Debt Payments / Gross Monthly Income. Here’s an example of how to calculate your debt-to-income ratio:

    $10,000 Monthly personal income from all sources
    $3,200 Mortgage
    $500 Car payment
    $200 Student loan payment
    $200 Business loan payment

    Debt-to-Income Ratio: 41 percent ($4,100 / $10,000)

    It’s important for you to know your debt-to-income ratio, since this ratio is often a key contributor to your credit score and impacts decisions lenders make about whether to extend credit to you personally. If you’re a business owner, your personal debt-to-income ratio can also affect your company’s credit rating and ability to obtain working capital. Bankrate.com’s debt-to-income ratio calculator can help you calculate your own score.

    The 36 percent rule suggests that your debt-to-income ratio should never surpass 36 percent. A high debt-to-income ratio (43 percent or above) might even automatically disqualify you from financing while a lower ratio makes you more attractive to financial institutions. Plus, the more you can reduce your debt-to-income ratio, the more you become less susceptible to financial problems. For instance, if your debt-to-income ratio is low, you have more ability to take a cut in pay or weather temporary job loss.

    2. Improving Your Credit Score

    Most credit score rating systems have a scale that ranges from 300 to 850, broken down into five results:

    • 750+ – Excellent Credit

    • 700-759 – Good Credit

    • 650-699 – Fair Credit

    • 600-649 – Poor Credit

    • Below 600 – Bad Credit

    Your credit score impacts your ability to obtain personal financing such as a home loan (mortgage), credit card, retail store financing, auto loan, etc. In addition, your credit score can also impact your cost of financing; for instance, a low credit score might mean financing companies offer you money at a higher rate of interest than they would offer if you had a high credit score.

    Reducing your debt-to-income ratio is one obvious tactic you can execute in order to improve your credit score. However, simply making your payments on time (or early) and making payments on debt in excess of minimum monthly payments required can also help you improve your credit score, especially over time.

    Given the number of financial data breaches where hackers have obtained personal identification information from retail and financial institutions during recent years, it’s important to check your credit score periodically. Monitoring your credit can help ensure that no one has “stolen” your identity and used it to rack up debt which can not only hurt your credit score, but even result in creditors pursuing you for repayment.

    There are several credit score monitoring services that offer the ability to check your credit scores; however, many offer “free” credit score results only after you agree to another fee or subscription. Your bank or another financial institution may also provide both credit reporting and monitoring services at no cost.

    3. Planning for Retirement

    Just because you have enough money now doesn’t mean you will always have enough money to live the lifestyle you want. Planning for retirement – those years when you are not likely to have any income except for social security – is important for everyone. You can use tools like CNN’s retirement planning estimator to see how much money you should put away into savings or investments at the age you are now, in order to retire by a specific age and maintain your lifestyle (live in the same type of home, spend the same amount on discretionary items, etc.)

    Make sure your financial management strategy goes beyond the basics. The more you understand how to optimize your financial position and avail yourself of tools that can help you find out where you are right now, the better you will be able to plan a strategy that gets you to where you want to be in the long run.

    3 Tips for Paying Off Credit Card Debt With a Personal Loan

    by  • June 21, 2016 • Tagged: ,  • Comments

    Credit cards are both a blessing and a curse. On one hand, they expand your purchasing power. On the other, you need to pay off the balance when it comes due. Paying off the bill every month is the best way to avoid being saddled with interest, but it’s not always possible. Add other purchases and the balance starts to climb. Interest compounds quickly when there are several credit cards that carry balances every month. Getting out from underneath the debt tends to get difficult, but a personal loan might be the answer. Following are some tips for using a personal loan to eliminate debt.

    Compare the Interest Rates

    Credit Card Debt

    Image via Flickr by Got Credit

    If your credit cards have interest rates in the 18-to-24% APR range, you’re paying a lot to rent that money from the lender every month. An $85 purchase comes with around $5 of interest on the higher end of that interest rate range. Not paying this off and carrying a balance means the interest compounds, putting you further into debt. The issue is made worse when the interest rate is variable, meaning it fluctuates whenever the market interest rate changes, and you never know when your interest rate, and your payment, may spike.

    A personal loan is everything a credit card is not. It has a single interest rate that gets fixed at the time the loan is initialized, and it’s usually at a much lower rate than the average credit card. This makes paying down the debt more predictable, stable, and finite in its duration. Avant, a personal loan lender, is an example of a lender who offers competitive interest on consolidation loans.

    Make Every Effort to Pay Back the Loan

    It takes fiscal discipline to take out a consolidation loan to pay off the credit cards and then avoid using the credit cards. The consolidation loan takes the debt off multiple cards and rolls it into one monthly payment. Those empty cards may sing a siren song of temptation to be used, especially for a coveted item.

    Instead of giving in and using the card to buy something, ask yourself if you really need the item. If you find it’s a must-have, use the savings you realize from not paying multiple cards every month for the purchase. Don’t use your cards unless absolutely necessary. The idea is to short-circuit the impulses that created the high balances in the first place.

    Examine the Terms of the Loan

    It’s always a wise move to examine the terms of the loan, and a consolidation loan is no different. This is especially important if you decide to use an online lender.  With an online loan application, a human being may not be immediately available to explain the terms and conditions, and you are on your own to learn about the penalties for early repayment (if any) and whether the interest rate fluctuates.

    Getting out of credit card debt with a personal loan can lift the financial burden off your shoulders, simplify your bill paying process, and save you money, but only if you use it wisely. You must remember to stay away from your now empty cards, pay off your loan, and exercise restraint going forward so that another loan isn’t needed down the road.

    Bad Credit Alternative Lending Solutions

    by  • May 4, 2016 • Tagged: ,  • Comments

    For a large part of America’s population, times are tough and taking out the occasional loan is a must. Without a steady job or a great credit history, they may end up looking at alternative lending solutions.

    Payday Loans

    Payday loans are the most expensive short-term loans available. Offered on practically every street corner in poorer neighborhoods, and even online, getting a payday loan is fast and easy.

    Say you need money to buy a new fridge because yours has broken down and your children need to eat. In a perfect world, you could go to an appliance store and purchase a new fridge with cash or store credit. People who don’t have that option though will find a payday loan to be the best option.

    A $500 loan will cost around $600 after a month of interest has accrued.  This is an expensive alternative.

    Short-Term Mortgages

    For the lucky Americans with home equity, an emergency is a little bit less scary. Instead of visiting a bank for a second mortgage or HELOC, try a private lender. The interest rates will be higher than at a traditional bank but money can be had quickly and easily – oftentimes even without a home appraisal.

    Private lenders also allow you to borrow smaller sums of money and to repay the money over a shorter period of time. While a bank wants to lend a lot of money over a great number of years, private lenders will give you a second mortgage for a couple of thousand dollars and a 3-year repayment schedule – perfect for someone looking to borrow money to buy a new car or replace the roof.

    Car Title Loans

    For people who own cars, there’s a third alternative lending option available. Car title loan companies are places where you can get money and still keep driving your car. There are quite a few options.  For example, car title loans Fort Lauderdale is a company that knows what the competition is offering and promises the most cash at the best rates and it’s been around for over a decade.

    Car title loans end up being cheaper than most private mortgages and practically all payday loans.  In the end, there are options for those with bad credit.

    Things to Note when Considering the Effects of loans on your Credit Score

    by  • February 23, 2016 • Tagged: , ,  • Comments

    It is well known that installment loans are typically a great way for people with bad credit to still acquire a loan; however, it is good to understand how these loans may affect your credit so that you can get back on track towards having good credit once again. Below are three major things to note when it comes to considering your credit future while paying off an installment loan:

    Low risk equals low score impact

    Firstly, the debt from installment loans are typically stable relative to other types of loans over time; however, the early effects on your credit score of paying the fixed rates are also more modest. The stability of the installment loan comes both with good and bad news. In fact, it is the stability of the loan itself that actually explains why the debt payoff does not significantly improve your credit because it simply never lowers the score in the first place. The logic is that when a creditor is not worried about being paid back, there is less reason to incentivize you through a score deduction. It is not un-heard of to have a score between 650 and 750 or higher despite holding a six figure installment loan. On average the recipients of installment loans actually do hold a six figure amount of this debt, and there is no indication that this is a particularly more risky.

    Prioritize making regular payments

    Installment loans are unique because the total amount you receive has far less of impact on your credit score than the overall payment history does. Your history is considered in a more holistic way which can be an advantage to many with lesser but steady income streams. This means that making those regular payments in a timely way will ensure that when your history is reviewed you end up better off than you were before.

    Have Patience

    One should not shy away from installment loans due to the worry that they will not improve your score; in fact, it is actually very likely to improve. There is no disputing the fact that by lowering your balance by paying off your installment loan, that your credit will improve overall. As long as you pay careful attention to the advice above and use a steady income to ensure timely payments, your score will begin to better, however, in a relatively slow way compared with many other loans. It is therefore important to understand the importance of patience when improving your credit through an installment loan as they often are set to mature after a few or perhaps even a dozen years.

    In general, installment loans are a very safe alternative to other options for those seeking to acquire money and improve their credit while doing so. It is important to understand that with these loans it is far more important to focus attention on the management of regular payments and a steady stream of income rather than paying off a dauntingly high balance. This is because with installment loans, a steep balance should simply not daunt you, including those with poor credit scores. Educate yourself further on the specific type of installment loan before receiving one so that you can cover the necessary steps to slowly and steadily improve your credit score.

    How to Handle a Lingering Holiday Credit Card Bill

    by  • February 11, 2016 • Tagged: , ,  • Comments

    We might be a month removed from the holidays, but for many Americans, the effects of gift-buying, travel plans, and holiday feasts are still very much present. The average American carries around $15,000 in credit card debt, and that doesn’t even begin to delve into the hefty interest rates that will also require payment. If you find yourself facing ever-mounting holiday debt, use these steps to get yourself back on the right track.

    Plan a New Budget

    Before digging yourself out of a debt hole, you have to ensure you’re not worsening it in the meantime. The best way to do this is to create a 12-month budget that will take you all the way through the next holiday season to ensure you don’t find yourself in a financial pickle again. Use an online service like Mint.com to make it easier on yourself, or enlist the help of a financial planner if you’re in need of specific guidance.

    Use the Avalanche Method

    If you’ve got multiple debts, you’ll have to make some decisions on which way you want to pay off first. While you should always be sure to pay the minimum dues on every account, you’ll also want to start getting rid of accounts completely. Many experts recommend the avalanche method, in which debtors list their debts in order of highest interest rate charge to lowest. Whatever excess money you have leftover for bills after paying the minimums each month should be dedicated to the top account on the list. Once that’s paid off, move to the next, and so on. Not only will this help you avoid terrible interest rates, it will also give you more peace of mind when you have less debt accounts to worry about.

    The Great Purge

    You may have money sitting around in your closet—literally. Make sure you purge items you no longer need and hold a garage sale to make some extra cash that you wouldn’t have had otherwise. These items aren’t limited to clothing. Consider old furniture, appliances, and any other items piling up dust. The more you can part with, the fatter your wallet will be. If items are too worn to sell, consider donating to charity. Often, you may be able to use these donations and tax deductions. You have to stop spending until you have your finances completely under control. This doesn’t mean denying yourself the necessities, but it does mean cutting out the non-essentials, like your morning coffee or gym membership that doesn’t get used. Cancel any subscriptions you don’t use or need, and check on automated payments to ensure you’re not paying for things you don’t need to be.

    Put Your Card Away

    If you have an issue with spending, leave your credit card at home. Simple and to the point. It may be convenient and get you what you need right away, but it’s only going to hurt you in the long run. Delete your credit card information from your web browsers to avoid frivolous online shopping that might be done on a whim, and always take a minute or two to determine whether or not you truly need an item, even if it’s a small expense. Don’t let the siren’s call of rewards or points inspire you to pick up that card.

    Transfer Your Balances

    Some choose to transfer their credit card balances over to a zero percent interest rate card from a company like Citicards.com. Check to be sure that you qualify for such an offer, and if accepted, pay it off as quickly as possible. You’ll need to determine whether or not the balance transfer fees will be worth this step.

    Get Some Tax Help

    If your holiday bills are piling up on pre-existing debt, and you’re worried you may find yourself in hot water with the IRS, see what a tax professional can help you work out. Using the services of a company like www.communitytax.com can help you navigate the fresh start initiatives the IRS put in place a few years back and determine which course of action is best for your individual needs. Whether it’s an offer in compromise or an installment plan, tackling your tax issues head on is the best way to deal—ignoring them could result in some serious consequences.

    If you’re dealing with a financial hangover from the holiday months, now’s the time to start tackling your debt.

    How to Handle the Stress of Bad Credit Through the Holidays

    by  • December 11, 2015 • Tagged: ,  • Comments

    Bad credit seriously reduces your financial options. There are many reasons why you may have bad credit, including a previous bankruptcy or a lack of employment. It can take five years or more to turn a bad credit record good. The holidays are a problem because it usually means a sudden spike in spending. That’s bad news for credit companies, which is why your score goes down as a result. There are ways you can handle the stress of bad credit through the holidays, though.

    Spend Less

    This is the most obvious solution. You shouldn’t go over 35% of your credit limit if you want to avoid a penalty on your credit score. Anything over 35% is a sign that you may be relying on credit. Whether it’s right or wrong, you have to stick below this number. By spending less, you can do just that, while still covering most of your Christmas spending.

    Save in Advance

    There are only limitations on your credit spending. There’s absolutely nothing wrong with saving in advance and spending as much as you like. It’s what we recommend for anyone suffering from the stress of bad credit during the holidays. Open up a separate savings account and put a small amount into it every month or so. This will quickly build a nest egg you can use without eating up your credit limit.

    Use a Layaway Program

    Many retailers place a lot of faith in their layaway programs. These are schemes where you can pay in advance for items over a specified period without going into any debt at all. Some stores only offer them during the holidays, but with others, you can start paying for Christmas months in advance.

    How does it work?

    • Buy the item you like without using a credit card.
    • Make the first down payment.
    • Pay off the amount over a specified period.

    Big brands like Kmart, Sears, and Walmart are just some of the companies offering the layaway program.

    Use a “Bad Credit” Credit Card

    Credit cards specifically for bad credit are an option if you have no other ones left. Sometimes you don’t have any credit at all if you’re coming off a bankruptcy, or you simply can’t get a card from anyone else. These “bad credit” credit cards have extremely low limits, but they allow you to spend without having a high credit score. You should use these strategically. Try not to use more than a few dollars or you could find yourself with an even lower credit score because you have gone over ‘acceptable’ limits.
    A similar option is to find a company that provides loans for people with poor credit.  The interest rates will be much higher but you can usually get loans up to $2,500. Tip; try selling items around the house that you don’t use first to avoid these bad credit loans.

    Get Creative with Your Gifts

    Alternatively, the ideal solution can be to avoid using any credit at all. Christmas isn’t about the expensive gifts you buy. It’s about family, friends, and spending time with them. Those are the moment’s people remember long into the future. If money is a problem, you don’t have to buy things you can’t really afford. Get creative with your gifts and make them by hand. Handmade soaps and cakes say far more than the latest games console. You can even get the kids involved and do it together.

    Last Word

    Holiday stress is increasingly common, and bad credit is a sad part of it. Nevertheless, you don’t have to let it ruin the festive season. Through proper planning and understanding what you should and shouldn’t do, you can have a very merry Christmas.

    When Should You Buy Your First Home?

    by  • November 20, 2014 • Tagged: ,  • Comments

    Are you thinking about purchasing your very own home for the first time? Perhaps you’re sick of renting or you’d just like a permanent place to call your own. Whatever the case may be, make sure you’re certain that you’re ready to buy your first home and are doing it wisely. Follow the helpful tips below and your first home buying experience should be a breeze.

    1) Check Your Credit

    One of the first things that banks will do when offering you a loan is check your credit. If your credit is poor, they will either deny you a loan entirely or they’ll hike up your interest rate and down-payment amount to protect themselves in case you default.

    Before you even head to your bank or credit union (or HomeStart Perth for that matter), do yourself a favor and check your credit yourself. CreditKarma.com is a great place to do this since they’ll provide you with a free report from Transunion (one of the major three credit report companies) and they will tell you why your score might be low and what you can do to improve it.

    2) Save Up 20%

    If you really are serious about buying a home and making it your long-term residence, then I would suggest that you save up 20% for your down-payment. With this 20% you can basically insure that your home value will never fall below what you owe the bank and you can therefore avoid PMI payments to the bank as well!

    I understand that saving up 20% of the purchase price might take quite a long time, but this process will teach you to scrimp and save and to live within a budget, which is very important for when you own a home and have unexpected items that are in need of repair. Make a plan to sock a large amount of money away each month and save up that 20%!

    3) Find a Deal

    So during what time of the year should you buy a home? The absolute best time is when demand is low and house prices can be found for cheap. For many areas in the north, this means winter time. Nobody wants to buy a house during the holidays and they certainly don’t want to move their stuff in the snow. If you don’t mind this and would be willing to make a purchase in the winter to save a few thousand bucks, then I would certainly encourage you to.

    If you want to find even more of a deal, don’t be afraid to find a fixer-upper home. Ideally, you’d like to find a home that is appealing on the outside, but could use a few updates on the inside (ie. carpeting or flooring, vanities, etc). If you are fairly confident that you can repair or replace the rundown areas of the house, then that means you can probably do fairly inexpensively as well. By purchasing a fixer-upper, you can save yourself another 10%-20% off the fair market price.

    Are you ready to buy your first home?

    Budgeting for Traveling and Using a Great Rewards Credit Card to Help Along the Way

    by  • July 8, 2014 • Tagged: , , ,  • Comments

    Learning about different cities, cultures and customs is educational and exciting! Everyone loves to visit different places, whether it is to visit friends or family or for a vacation. You may be wondering if it is possible to travel more without spending a lot of money. It is possible, with careful budgeting and using a travel credit card to its fullest potential. The best way to do this is to analyze your needs and then look for a credit card that will benefit you the most.

    The card that should place itself at the top of your list is the Southwest Airlines Rapid Rewards Credit Card since it got the received the most rave reviews on comparison portals like MileCards.com. It is a useful credit card that offers plenty of perks and benefits, and when combined with good budgeting and smart shopping, it will allow you to travel more often with your hard-earned money. One of the biggest perks for cardholders is the Southwest Airlines Companion Pass, which allows you to travel with a companion free for at least one year, wherever you go!

    backpacking
    Just for applying for the Southwest Rapid Rewards credit card and spending $2,000 in the first three months of opening the account, you will be awarded with 50,000 points. This is enough for two round-trip, economy class tickets with Southwest Wanna Get Away fares in the continental United States. The only cost to cardholders is the government taxes, which can be as low as $10 per ticket. This is definitely one of the best bonus offers available.

    When purchases are made directly with Southwest Airlines or AirTran, you will earn double points for each dollar spent on travel, another budget bonus. Double points are also awarded at A+ Rewards and Rapid Rewards Hotel and rental car partners. Purchases made directly while traveling with Southwest Airlines, such as inflight meals, Wi-Fi sessions or movies and video games will earn you double miles as well.

    Budgeting involves living within your predefined spending limits. You can use coupons, shop sales, dine at home instead of eating out and shop with a grocery list so that you don’t over spend and are not tempted to buy items you don’t need. Just cutting out a coffee every morning on your way to work can save over $300 a year! Using your Southwest Rapid Rewards credit card to pay for everyday purchases, like gas, groceries, dining out and movies will earn you one point for every dollar spent. Large purchases, such as furniture for the house, insurance for your home or car and telephone and cable or utility bills can help you accumulate more points. Make sure ahead of time that you can pay for large purchases with the credit card so that you earn points.

    Savvy cardholders will want to enroll in the Rapid Rewards dining program. Just for registering the Southwest Rapid Rewards credit card, you will earn 300 bonus points. There are thousands of participating restaurants, bars and clubs across the United States that participate in the program. Every time you pay with the Rapid Rewards credit card, you will earn four reward points per dollar spent. This is another great way to earn additional points. You may think this goes against your budgeting plans, but it is okay to eat out every once in a while, especially if you are earning bonus points that can be used towards free travel!

    happy
    The Companion Pass with Southwest Airlines is one of the best airline perks available. When you earn 110,000 points with Southwest, you are awarded the Companion Pass. The pass allows you to travel with a selected companion, such as your mother, a friend or spouse every time you fly with Southwest! It is based on a calendar year, so if you earn the 110,000 points in September, you will have the pass for the remainder of the current year, as well as for the entire following calendar year! The 50,000 bonus points earned for applying for the card count towards earning the pass too. Earning the pass can be straightforward. Points earned through Rapid Rewards partners qualify towards earning the pass. If you qualify for the card and spend $2,000 with Southwest Airlines on your Southwest Rapid Rewards credit card in the first three months of having the card, you will have 54,000 points. This gets you more than half way there! By budgeting your travel and eating expenses to make the most of your card offers, you can save money on future travel with your companion.

    Research the different card offers to find the right one to help with your particular budget. There are several offers that could be helpful at keeping your travel spending in check.

    Paying Off Credit Card Debt and Improving Your Credit Score

    by  • April 10, 2013 • Tagged: ,  • Comments

    There is no doubt that having credit card debt is stressful – especially when you know that it just keeps on growing day after day. Paying down credit card debt can be just as stressful as trying to ignore it, however, paying off your debt is recommended – ignoring it is not!

    There are a number of options open to you if you have decided it’s finally time to get rid of that debt. We’re going to look at balance transfer credit cards, to see if that is the right route for you.

    Balance Transfer Credit Cards

    Transferring the balance from your current store or credit cards onto a balance transfer card can give you a great opportunity to pay down debt, without having to worry about interest. Transferred balances will attract low or no interest for a given period of time, giving you a chance to pay off more of your actual debt, while taking a break from interest.

    To do this properly, it’s important to choose the right balance transfer offer. Offers vary according to the card provider, so you could get a card with 0% on balance transfers for six months, or another card with 3% on balance transfers for 12 months.

    To choose the right offer, you will need to work out how long you need to pay off your debt. If you’re certain you can pay it off quickly, go for a card with the lowest possible interest over a shorter period of time.

    If you think you will need longer to pay off your debt, you may need to choose a longer offer. Bear in mind that longer offers can sometimes charge higher interest – but, you will still be paying a lot less interest than a standard credit card.

    Try using a balance transfer calculator or a credit card calculator to work out what you can afford, and what is the best option for you. Also be aware of the card’s reversion rates, what happens when the offer ends, and be sure to read the terms and conditions of the card.

    After You’ve Paid Off Your Debt

    Congratulations, you’ve paid off your debt! Now it’s time to think about whether the balance transfer card is still the best card for you. You may find that the card has reverted to a much higher interest rate, in which case, you need to decide if it’s still affordable.

    If you pay off your balance at the end of the month, you shouldn’t need to worry too much about the card’s interest rate. However, if you have trouble paying it off each month, then you may want to switch to a low interest credit card. This will help you keep a lid on the amount of interest you’re paying on your debt.

    While you may not always be able to pay off your balance each month, it is certainly something to aim for. Never just pay the minimum repayment, or it’s likely you’ll end up in trouble with your credit card again sooner rather than later.

    Again, it’s a good idea to use a credit card calculator and a comparison site, to find the best credit card for you, and to ensure you get what you need from your card.

    Improving your Credit Score

    Treating your credit cards with respect can help to improve your credit score. This means, always pay your bills on time, try to pay off the balance in full each month, don’t apply for more than one credit card at once, and keep a good relationship with your credit card provider.

    How Plastic Can Actually Help

    by  • February 22, 2013 • Tagged:   • Comments

    In the financial services industry, experts often give credit cards the lion’s share of the blame for consumers accumulating debt. Although credit cards can definitely cause problems if they are not used correctly, they can actually be good when in the right hands. If you’re concerned about how credit cards can hurt your financial situation, here are a few positive aspects to consider about cards.

    Building your credit

    If you’re in need of boosting your credit score, credit cards are one of the best tools to use for that purpose. When you charge purchases on your card, and then pay off the balances quickly, this boosts your credit score. Every time you make a payment on time to your credit card company, this is reported as a positive on your credit history. When you keep your balances low, this also helps boost your score. By using credit cards, you’ll be able to really get your credit score moving in the right direction.

    Rewards

    When you use a credit card, you’ll also get to take advantage of the rewards program. Most cards today offer some kind of reward for all of the money you spend on your account. For instance, you might get one point for every dollar spent on the card. This makes it possible for you to get something for things that you would have purchased anyway.

    Choosing a card

    If you are going to use a credit card to help your financial situation, you must choose the right card. You need the absolute best credit card for your situation. For instance, you might want to look for the best reward cards if you plan on using your card to make many purchases. This way, you can get the most bang for your buck. If you plan on periodically leaving balances on your card, you should try to find one that has a low interest rate. This way, you’ll be able to minimize the amount of money that you have to pay in interest charges.

    Considerations

    Regardless of what type of card you choose, you’ll have to use it correctly if you want to maximize the benefits. Otherwise, you’ll probably end up accumulating debt and actually hurting your financial situation in the long run. Once you master the use of your credit card, you’ll be able to take control of your finances and forget about the problems that come with too much debt.

    Credit Karma’s Free Credit Report Monitoring – Great For Busy Parents

    by  • September 13, 2012 • Tagged: ,  • Comments

    Completely Free Credit Score - Credit KarmaAs you know, I’m a busy guy. I have a gregarious toddler running around and both Her and I work full-time. I don’t have the time to worry about any delinquent activity on my credit report. And now, with Credit Karma’s Free Credit Report Monitoring, I don’t have to.

    With identity theft being the most received complaint by the Federal Trade Commission in 2011, protecting your identity has become a hot topic. While we’re entitled to three free credit reports a year (one from each bureau from AnnualCreditReport.com), spaced out evenly there’s four months between check-ups. That’s a lot of time for someone to wreak havoc on your credit accounts. There’s other circumstances in which you can get a free credit report, but those methods are generally unavailable until something bad actually happens, and then it’s too late.

    I was admittedly skeptical at first when I first heard about Credit Karma. Free credit score? AND free credit monitoring? What was the catch? So far I haven’t found one.

    Credit Karma actually gives you three scores: a TransUnion Score, Auto Insurance Score, and a VantageScore. While these aren’t bonafide FICO scores, I can assure you that these scores are only a few points off from the real deal. For a free service, that’s more than I can ask for.

    If you’re a set-it-and-forget-it kind of guy like I am, they’ll send an email every so often telling you that there’s a new score available. If you want it your-way-right-away, then you can manually update your score on the website.

    The main reason I signed up for Credit Karma is for the free credit report monitoring. Imagine that I had the money and time to get a credit report everyday and check for any wrongdoings. Credit Karma does all that work for me. They’ll alert me by email if there’s been any significant activity on my credit report, such as a new account opened or if a creditor posts a delinquency. Fortunately I don’t know what that email looks like, and I hope to never see it. Getting notified right away allows me to take immediate action, instead of finding out whenever the next time I remember to get my free credit report.

    Protecting my family has become a big deal since I’m now a father. Credit Karma helps me to ensure that my family’s financial future are safe. What are you waiting for? Sign up for Credit Karma now!

    Breaking the Financial Rules – Co-signing Loans

    by  • March 7, 2012 • Tagged: , , ,  • Comments

    Break rule

    I have no idea.

    image: Eason41

    Don’t spend more than you earn. Don’t buy too much house. Don’t forget to pay your bills on time. There’s quite a few financial rules that are floating around that we’re told to follow, or else. Just like rules in your everyday life, sometimes you need to know when breaking them will benefit you more than following them. One of the “rules” I often see is to never co-sign a loan. However, I’ve twice been a part of the breaking of this rule.

    Co-sign Me Out of Debt

    When I was in graduate school I had a plan: consolidate all of my debts so that I can get a better overall rate and more manageable monthly payments. That plan didn’t work out so well as some parts of the plan involved getting a payday loan and locking my keys in my car and myself out. Eventually I figured everything out and applied for a personal loan from the credit union associated with my university. Although I had been keeping up with the payments for my various debts, the loan officer was reluctant to give me the loan because of past missed payments. She told me that I could get a loan if I could get someone to co-sign the loan.

    After careful consideration, I decided that my brother would be the perfect sucker co-signer for my loan. He is seven years older, he had a great job, a house, and high income. I called him and asked for him to co-sign my loan, with the promise that since the payments would be deducted directly from my paycheck (which was true), so as long as I was a graduate student getting a stipend I would never miss a payment. After a heavy sigh and what seemed like a 20-minute pause before giving me an answer, he agreed.

    The loan was eventually paid off in full without any missed payments before I completed graduate school. A few years later, I told him over drinks, “See? You had nothing to worry about.” He made me buy the next round.

    Co-sign Her Out of Debt

    A few years after my first co-signing incident, Her and I were living together and had just combined our finances. Of course, I did this with great reluctance as I was also agreeing to help pay of Her’s enormous student loan debt of ~$130,000, of which was half federal student loans and the other half private student loans. The private student loans were the most egregious, with the interest rates at just under 10% with a monthly payment of around $750. Although we used a bunch of methods to decrease our balance and pay off the loans ten years sooner, it was still an enormous burden. Her received in the mail a letter from the private loan company stating that the interest rate could be lowered if she were to get a co-signer. Of course I was hesitant to agree to this, but I figured that it’s our student loan debt now, and that anything we can do to mitigate its financial effects would be good. I agreed to co-sign the loan.

    Me co-signing the loan did decrease the interest rate by a percentage point or so, but didn’t change the way we attacked the loan. Our saving grace came when we transferred $11,000 of the balance to a card at 1.99% for life and when Her’s godmother paid off the rest of the balance of $50,000. We laid those loans to rest, which freed me from my co-signer responsibilities.

    Have you broken any financial “rules?” What were the circumstances for that decision? Let us know in the comments!

    Credit Card Conundrum

    by  • June 17, 2010 • Tagged: ,  • Comments

    ccards.jpg

    photo: Andres Rueda

    Over the past few months I’ve chosen to close a few credit card accounts. I think that in each case, the card carriers were going to start charging an annual fee unless we started using the card. The most recent example was my Citibank card, as they wanted us to spend at least $2400 per year to have them waive a $60 fee.

    The problem with all of the recent cancellations are that 1) the cards were among the oldest that I had and 2) they had pretty high credit limits. Cancelling those cards has reduced the average age of my credit history and has decreased my overall credit limit. I do still have a relatively high overall credit limit around $35,000 and my oldest card was opened in 2000, with others opened from 2005 to 2007. But still, it sucks that I had to cancel those cards.

    Of the remaining credit cards that I have, I use two of them regularly. Both are rewards cards, but one of them has a $45 yearly fee. Oh, and Her also has that card as well. So yes, we’re paying the $45 annual fee twice.

    So naturally, I’m contemplating closing that card as well so that we don’t have to pay the annual fee more times than we need to. The problem is that card is also the second oldest card that I have and has the second highest credit limit; closing the card would effectively halve my overall credit limit. I don’t want to take another ding on my credit score. I’ve had this card for almost 5 years, so we’ve paid $180 in fees so far – soon to be $225. We have definitely received much more in rewards (5-star hotels in Europe are a very nice perk), and so far have accumulated enough points to go on more awesome vacations.

    Do you think it’s worth it for me to still have this card? What alternatives could you think of instead?

     

    Oh Nos! Credit Card Thefted!

    by  • May 4, 2010 • Tagged: , ,  • Comments

    theft.jpg

    photo: 10b travelling

    This past weekend I was dillegently reviewing the week’s transactions on Quicken, when I noticed two charges made to Newegg.com on my Chase Freedom Card. I’m a huge fan of Newegg and have purchased items from there before, but I was pretty sure that I didn’t buy anything from them last week.

    Coincidentally, I was reseraching computer parts and wondered if I accidentally added stuff to my cart and then went through with the purchase. I checked my account on Newegg and confirmed that I hadn’t bought anything from them, at least not since February 2009.

    I called Chase to talk to a customer service representative, and was transferred to their Disputes department. They asked if I called Newegg to ask why I was being charged. I told them that I hadn’t, but I should maybe do that. The person transferred me again to another guy, who offered to call Newegg on my behalf. He did and conferenced me into the call since Newegg needed my permission to get more information. I confirmed that I did not buy the items in question, and also learned that the fraudsters were able to input my home address to actually use the card but have the items shipped somewhere else.

    The Disputes representative then gave me two options. Since the total charges were under $500, I could either file a dispute or a fraud claim. If I filed a dispute, then Chase would only work with Newegg to reverse the charges. If I filed a fraud claim, Chase would close the account and re-issue me another card with another number. Obviously I didn’t make those purchases, so I decided to make a fraud claim. The Disputes representative then transferred me over to their Fraud department.

    Of course the Fraud representative had no idea of the conversations that I just had, so I had to reiterate the whole story to her. I asked to close the account have have a new card issued to me. She processed the request, and had me listen to a recorded message about their fraud claim process. I guess it’s cheaper to do that than to have the representative read it to me from their script.

    This morning I was relieved to find that the charges on my credit card have been reversed. It took about 48 hours since I originally call to have all of this taken care of. The communications were a little frustrating, but I’m glad everything worked out.

    Have any of your accounts been compromised lately?

    Do NOT Subscribe Me to That Service!!!

    by  • October 20, 2008 • Tagged:   • Comments

    Due to my recent marriage and subsequent name change, I have spent the last several weeks calling financial institutions to change my name on my accounts. The new credit cards have been piling up in my mailbox and today I dedicated an hour to calling to activate all the new cards. Previously when I have activated a credit card, I have been badgered to sign up for unnecessary “services” such as credit protection or account monitoring. I always, always decline. So you can imagine my surprise when two card companies automatically signed me up for these services without even asking! They included notice of this in their canned, rushed legal-speak. “As a courtesy to you we have automatically registered you to receive our credit monitoring service free for the next fifteen days blah blah blah.” It was thrown in there so subtly that I almost missed it! I cut the representative off and demanded they not subscribe me to anything. Both times the representative continued on, telling me I was already signed up and could call to cancel in fifteen days. I was furious! I ended up shouting “Do NOT Subscribe Me to That Service!!!” twice before they agreed not to sign me up. What a scam! Watch out for this, since it happened at two different companies I assume this is the new trend. Don’t let them bully you into thinking you already agreed to something you didn’t.

    None of My Credit Card Companies Fought to Keep me as a Customer

    by  • October 10, 2008 • Tagged:   • Comments

    Last night I closed six store credit accounts and one Visa account that I rarely use. It’s part of the credit clean-up we’re doing to start our marriage off. I was all geared up to argue with the credit card companies and decline their repeated offers to entice me to stay. I thought it would probably be like trying to close an AOL account (anybody else ever live through that nightmare?).

    Boy was I surprised when not one of them tried to get me to keep my account open! I have excellent credit so I thought they would want to keep me around. Guess not!

    I have read that banks are trying to reduce the credit they have made available to customers, so maybe this was why.

    Anybody else get hit with the door on their way out recently?

    Two Styles, One System: Communication and Money

    by  • September 24, 2008 • Tagged: , , , , , ,  • Comments

    Laura is a twenty-something woman out of school and happily married. Eliminating credit card debt has energized her to knock out her car loan and student loans. She blogs at Green Panda Treehouse about reducing debt, building savings, and working with her husband on finances, as well as her successes and failures.

    Many people worry about discussing finances when they have different views. Avoiding financial talks can lead to disaster in relationships. It can build resentment and escalate into fights that tear down and could lead to divorce. Money isn’t the root of the problem, it’s lack of communication.

    If you share openly and honestly your thoughts and feelings with your fiancé or spouse, you are missing out on a great opportunity. Relationships are mutually defined and both need to share to make it work.

    Here are a few examples of how my husband and I handle money in our relationship. Is it perfect? No. Does it work? Yes, because we’re willingly to talk about our common thoughts and our differences.

    Budget

    We keep a Google Spreadsheet to display and organize our monthly bills. This allows us to see what our joint bills are and gives a snapshot view of our individual accounts. I can see how much he puts in his 401(k) and he can see my Roth IRA deposits.

    He’s great at setting up the spreadsheets and I love playing around with them.

    Goals

    Some of my personal goals are to pay off my car loan and my student loans. We also set aside money in our budget for saving. We’re working together: our ‘extra’ money goes to joint savings and to paying down the car loan.

    Investing

    My husband puts aside money for retirement, but is only semi-interested in following his accounts. When he changed jobs and was rolling over his old 401(k) to an IRA, he asked me to look at investments to put them into.

    I get a kick out of learning new things about index funds, stocks, ETFs, etc. While I explained why and how I came up with my suggestions, he just agreed and made the changes. He’s more conservative with his money and his investments are a reflection of that. I tend to invest more in international funds than him, but the volatility is within what I can handle.

    Credit Cards

    I have two credit cards (I’m closing one) while my husband has no credit cards. After learning the hard way about high credit card interest rates, I’ve paid my debt. I generally pay it off each month.

    I use credit cards mainly for convenience and rewards. I normally keep it at home with me. If we go on trips, I use my credit card. He is very adverse to debt and has not found a credit card that ‘he likes yet’. He generally saves until he can buy it, like his car.

    Paperwork

    I’m the paperwork queen. It basically falls to me to organize bill payments and documentation requests. Due to our basic system, it doesn’t take up to much time (5-10 minutes). If there are any issues we’ll discuss in the evening.

    I show him where I keep the files, in case something happens and he needs quick access.

    Conclusion

    It’s an imperfect system to be sure, but we make it work. The best advice we received? Talk it out and figure out what’s right for you two.

    Talking it out can help you to understand your partner so much better and help you to build a stronger foundation on future communication, not just with money. Remember also that you’ll discuss these issues as your circumstances change. It’s not set in stone.

    Keeping each other in the loop is essential to a successful marriage. Two different viewpoints can lead to a stronger system.

    How different are the two of you? What do you two agree and disagree on?

    How I Got Comfortable Sharing Money With My Husband

    by  • September 19, 2008 • Tagged: , , ,  • Comments

    Hannah blogs about money and marriage at Monogamoney.com. Topics include saving, budgeting, investing, travel, and The Dark Knight.

    In honor of the nuptials of Him & Her, I thought I would harken back to, lo, those many months ago (October, 2007) when Jon and I tied the knot.

    After our wedding and honeymoon, we immediately hunkered down and cut back on spending, so we could pay off our credit card bill. And we started discussing how we would max out our Individual Retirement Accounts for 2007, and contribute the full $4,000 each. That’s when Jon said, “If, at the end of the year, I still need an extra $2,000, you can give it to me.” Wait a minute, I thought. You want me to GIVE you $2,000? Just GIVE it to you? And you won’t even pay me back?

    You see, Jon’s parents have always completely shared their finances. My parents, by contrast, don’t even have a joint checking account. That’s partly because Jon’s father was always the primary breadwinner, so a joint account was necessary. My parents, by contrast, have always made roughly the same amount of money, so there was no need to combine everything into one account. But the funny thing is, I grew up on a commune. You’d think I’d be the one advocating that we share money.

    Of course, I knew I should give him the $2,000. I had made more progress putting money into my own IRA, thanks in part to a generous gift from my grandmother. And in the long run, it’s obviously better for me if we’ve saved as much as possible in BOTH of our retirement accounts. I just had a little trouble, the first month or so after the wedding, adjusting to this new mindset, in which “we” replaced “me” when it came to financial decisions. Unlike Him & Her, who have clearly been a financial team for a while, Jon and I didn’t start thinking about these issues until after our wedding. (That’s when I started our blog, Monogamoney.)

    A few weeks after our initial discussion about the IRAs, the thought finally occurred to me: “You’re either in it for the long term, or you’re not. And if you’re in it for the long term, give him the money.” And since I’m in it for the long term, I gave him the money. We use our joint account to pay rent, but everything else is paid for out of our individual accounts. And we no longer keep track of every dollar we spend.

    Do you share and your partner share all your finances? Why or why not?