There is much truth in the advice that credit cards should not be used as a substitute for having no money. Every time you use a credit card you should be aware of this concept. And you would do good to remember the following advice too . . .
Do’s.
You should always plan ahead for purchases that you need and want, and distinguish between the two. You need the essentials, and you want everything else. The ability of making a distinction can help you plan more wisely.
If you get caught up in financial difficulties, it’s always good to talk to the card issuer who might re-schedule your payments. If you simply default, that only helps to build up an unfavorable credit history and you might find yourself being denied credit next time.
Unless it is an emergency, staying within your credit limits will help you a great deal. If you must spend over the limit, ensure you are within the manageable levels, say within 30 percent. It is usually a good idea to inform the card issuer beforehand if you are likely to go over your limit.
And if your mails are packed with more favorite deals than you currently are enjoying, you may approach your issuer for a better deal. They want to retain you as their customer, so they will listen.
Dont’s
Do not use your credit card to make house-hold purchases. It’s expensive in the long run.
Do not just pay the minimal amount. You will end up paying exorbitant interest. The quicker you clear the debt the better.
Do not use the credit card to purchase things you can’t afford.
Tuesday, June 8, 2010
Sunday, June 6, 2010
Credit Card Types
Credit cards are ubiquitous in most people's lives these.
There are 3 main types of credit cards that are common in America. They first type are travel and entertainment cards such as American Express or Diners Card. These have to be paid in full at the end of the month and are liberal on spending limits.
The second major type of cards are the bank cards such as Master Cards, Visa, GM, and Ford cards sponsored mainly by the banks. The bank defines the spending limits on these, which in the bank parlance is known as the credit line, and each offers different terms and conditions. Banks offer a choice of payment methods, either pay the balance in full with no interest or pay a minimum part or some part of the balance with a finance charge.
The other major type of card are retail store cards such as Sears, J.C. Penney, Shell or Mobil. These cards, known in some countries (the ones from gas companies) as fuel cards are only accepted in specific countries and usually do not have annual fees. There is a wide disparity in the terms and conditions for the cards.
Different types of credit cards offer several different options, depending on what your needs are. Some are geared toward individual consumers, while others are set up in ways that work best for small business needs. To know what type of credit card fits your needs, you should review a few of your options.
There are 3 main types of credit cards that are common in America. They first type are travel and entertainment cards such as American Express or Diners Card. These have to be paid in full at the end of the month and are liberal on spending limits.
The second major type of cards are the bank cards such as Master Cards, Visa, GM, and Ford cards sponsored mainly by the banks. The bank defines the spending limits on these, which in the bank parlance is known as the credit line, and each offers different terms and conditions. Banks offer a choice of payment methods, either pay the balance in full with no interest or pay a minimum part or some part of the balance with a finance charge.
The other major type of card are retail store cards such as Sears, J.C. Penney, Shell or Mobil. These cards, known in some countries (the ones from gas companies) as fuel cards are only accepted in specific countries and usually do not have annual fees. There is a wide disparity in the terms and conditions for the cards.
Different types of credit cards offer several different options, depending on what your needs are. Some are geared toward individual consumers, while others are set up in ways that work best for small business needs. To know what type of credit card fits your needs, you should review a few of your options.
Saturday, June 5, 2010
Credit Cards Warnings
Does your credit card work for you or do you work for your credit card? Most people’s answer to that question will depend on how they treat their cards.
Many with burned fingers will tell you they didn’t realize that things had gotten so bad until very late in the game, because most credit card offers try much to sound like they are actually running a charity. Well, they aren’t!
This is not a hate campaign against credit cards.
They certainly have their benefits - in America if you want to rent a car, you have to have a (major) credit card.
But, consider this scenario :-
You receive an offer in your mail that sounds good, maybe it’s a new generation TV or a fridge. But it costs $2000. Oh, but you have a credit card with a $5000 limit, and you immediately purchase your merchandise. Typically, here is how your repayment schedule will play out. Most credit cards charge a minimum of total balance (usually 2 percent) of the total per month. Assuming the interest rate is 18 percent and you choose to repay the minimum amount of $40, $30 of that will go towards interest and only 10 percent towards the principle. As a result, you will take 30 years to repay and end up paying over $5000 interest.
Sounds scary. It doesn’t have to be. The moral of the illustration is . . . Use the credit card the same way porcupines make love; very, very carefully.
Many with burned fingers will tell you they didn’t realize that things had gotten so bad until very late in the game, because most credit card offers try much to sound like they are actually running a charity. Well, they aren’t!
This is not a hate campaign against credit cards.
They certainly have their benefits - in America if you want to rent a car, you have to have a (major) credit card.
But, consider this scenario :-
You receive an offer in your mail that sounds good, maybe it’s a new generation TV or a fridge. But it costs $2000. Oh, but you have a credit card with a $5000 limit, and you immediately purchase your merchandise. Typically, here is how your repayment schedule will play out. Most credit cards charge a minimum of total balance (usually 2 percent) of the total per month. Assuming the interest rate is 18 percent and you choose to repay the minimum amount of $40, $30 of that will go towards interest and only 10 percent towards the principle. As a result, you will take 30 years to repay and end up paying over $5000 interest.
Sounds scary. It doesn’t have to be. The moral of the illustration is . . . Use the credit card the same way porcupines make love; very, very carefully.
Friday, June 4, 2010
Choosing a Credit Card
Credit cards have become a part of everyday life for most people living in the western world. It’s becoming increasingly impossible to avoid them especially for those involved in business. So if it is the first time you are seeking to enter into the world of plastic money, here are some of the basic things you should look out for.
First, compare the interest rates for all the credit cards for which you are eligible. While the rate may not remain fixed indefinitely (read the small print for conditions), it’s always advisable for first timers to go for the one charging lower rates. Some cards have 0% interest for an initial period, which is a valuable offer.
Read the fine print, especially on the other charges that may be charged on you, like late-payment fees, annual fees, and whether there is a grace period which is normally given before the finance charges kick in.
Decide what limit is appropriate for a person of your income. Also the fewer credit cards you have, the better placed you are to track your spending.
Compare the services and other features such as the cash back incentives, or warranties, rebates and the like.
Check whether the card is widely accepted to enable you to pay for your needs.
You will do yourself a favor by familiarizing yourself with the following terms.
Annual Percentage Rate (APR). This is the measure of the yearly cost of credit.
Finance Charges. These are the total charges involving the transaction. This is the period the issuer gives you before he starts charging you interest on new purchases. Note that not all credit cards have a grace period.
First, compare the interest rates for all the credit cards for which you are eligible. While the rate may not remain fixed indefinitely (read the small print for conditions), it’s always advisable for first timers to go for the one charging lower rates. Some cards have 0% interest for an initial period, which is a valuable offer.
Read the fine print, especially on the other charges that may be charged on you, like late-payment fees, annual fees, and whether there is a grace period which is normally given before the finance charges kick in.
Decide what limit is appropriate for a person of your income. Also the fewer credit cards you have, the better placed you are to track your spending.
Compare the services and other features such as the cash back incentives, or warranties, rebates and the like.
Check whether the card is widely accepted to enable you to pay for your needs.
You will do yourself a favor by familiarizing yourself with the following terms.
Annual Percentage Rate (APR). This is the measure of the yearly cost of credit.
Finance Charges. These are the total charges involving the transaction. This is the period the issuer gives you before he starts charging you interest on new purchases. Note that not all credit cards have a grace period.
Thursday, June 3, 2010
0 APR Credit Card Advantages
A 0% APR credit card is a card where there is no interest at all charged for an initial period. Such 0% offers are very common these days and many of them charge zero interest for a whole year. These cards can be very valuable if used wisely. This article will tell you how to use them to your advantage!
There are 2 main ways in which these zero interest offers can be used to great advantage if the offer is applied to balance transfers. The first way can save you money on existing debt and make a huge difference to your personal financial situation. The second way can make you a significant and genuine profit very easily from just a few minutes work.
The first approach is much more common, and can be a great advantage to anyone with existing debts. The method is simple, quick and straight-forward. What you do is you transfer existing debt onto the new card for the duration of the initial zero interest period. This means that you don't have to pay any interest on that amount for that period and your monthly repayments can be used to pay down the debt principle itself.
For many people, the standard required monthly repayment barely pays off a little more than the interest owed on the debts, so it is easy be mainly paying off the interest each month, spending what is available on the card, and still end up owing the same amount of debt in total. This can go on for very long periods and be a significant financial problem for some people.
By transferring your existing borrowing onto the new account, you can avoid any interest payments at all so the monthly repayments you make are all applied to the amount owed rather than to interest. For many people, the whole debt can be paid off in the initial 0% period simply by paying the same monthly repayments they were paying on the debt beforehand.
The second method is much less well-known and is of more value to those who don't have existing debt. How it works is very easy and straight-forward. What you do is you use the funds available on the new card to transfer into an interest-bearing savings account. Then just before the end of the 0% interest period you pay off the new card and keep the interest as pure profit for yourself!
A 0 APR credit card can be of great benefit to your financial situation if you use it as described in this article.
There are 2 main ways in which these zero interest offers can be used to great advantage if the offer is applied to balance transfers. The first way can save you money on existing debt and make a huge difference to your personal financial situation. The second way can make you a significant and genuine profit very easily from just a few minutes work.
The first approach is much more common, and can be a great advantage to anyone with existing debts. The method is simple, quick and straight-forward. What you do is you transfer existing debt onto the new card for the duration of the initial zero interest period. This means that you don't have to pay any interest on that amount for that period and your monthly repayments can be used to pay down the debt principle itself.
For many people, the standard required monthly repayment barely pays off a little more than the interest owed on the debts, so it is easy be mainly paying off the interest each month, spending what is available on the card, and still end up owing the same amount of debt in total. This can go on for very long periods and be a significant financial problem for some people.
By transferring your existing borrowing onto the new account, you can avoid any interest payments at all so the monthly repayments you make are all applied to the amount owed rather than to interest. For many people, the whole debt can be paid off in the initial 0% period simply by paying the same monthly repayments they were paying on the debt beforehand.
The second method is much less well-known and is of more value to those who don't have existing debt. How it works is very easy and straight-forward. What you do is you use the funds available on the new card to transfer into an interest-bearing savings account. Then just before the end of the 0% interest period you pay off the new card and keep the interest as pure profit for yourself!
A 0 APR credit card can be of great benefit to your financial situation if you use it as described in this article.
Wednesday, June 2, 2010
Advantages of Credit Cards
The concept of the credit card began with early American capitalists.
From the times of John Biggins, the inventor of a first bank issued card, had his first eureka moment in 1946, credit cards have developed into one of the most versatile ways of paying, for good reason . . .
Once you are issued with one, the need to carry around unsafe, dirty and bulky cash is significantly diminished. I say diminished because some small scale merchants (who perhaps are scared of technology) will still insist on being paid in cash. Further, credit cards enables you to build up a credit history, but only if you always pay on time.
In some countries such as UK, if you buy goods using a credit card and the goods turn out to be faulty, they are usually insured for a period of time, say two months, and you can be indemnified even for total loss. Credit cards are safe, and even if gun-totting miscreants help themselves to your wallet, you can make hit back by simply calling the credit card company and canceling the stolen card. Another thing going for credit cards is that you can keep track of your transactions, and it’s thus easy to keep track of your expenditure.
I could go on and on, and whatever the doomsday prophets say, plastic money is here to stay. Cards can be very valuable if used wisely, but equally damaging if used unwisely, like any powerful tool, careful and intelligent use is necessary!
From the times of John Biggins, the inventor of a first bank issued card, had his first eureka moment in 1946, credit cards have developed into one of the most versatile ways of paying, for good reason . . .
Once you are issued with one, the need to carry around unsafe, dirty and bulky cash is significantly diminished. I say diminished because some small scale merchants (who perhaps are scared of technology) will still insist on being paid in cash. Further, credit cards enables you to build up a credit history, but only if you always pay on time.
In some countries such as UK, if you buy goods using a credit card and the goods turn out to be faulty, they are usually insured for a period of time, say two months, and you can be indemnified even for total loss. Credit cards are safe, and even if gun-totting miscreants help themselves to your wallet, you can make hit back by simply calling the credit card company and canceling the stolen card. Another thing going for credit cards is that you can keep track of your transactions, and it’s thus easy to keep track of your expenditure.
I could go on and on, and whatever the doomsday prophets say, plastic money is here to stay. Cards can be very valuable if used wisely, but equally damaging if used unwisely, like any powerful tool, careful and intelligent use is necessary!
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