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When Not To Use A Credit Card

Credit cards are a great convenience in our everyday lives, allowing us to easily buy products online and by telephone, and freeing us from having to carry large amounts of cash when making purchases in the bricks and mortar world. However, there’s a potential dark side to plastic, with some unfortunate account holders getting out of their depth and building up debts that become a problem and cause of worry.

This is obviously a situation that’s best avoided, and knowing when it’s a bad idea to use your card can help you avoid getting into difficulty.

- Withdrawing cash at ATMs

Most cash machines these days will let you draw out cash using your credit card. This might seem an attractive option if you’re short of cash towards the end of the month, but it’s a bad idea for two reasons. Firstly, cash withdrawals will attract a fee of a small percentage of the amount you withdraw. This in itself makes it an expensive way of getting your hands on cash, but advances are also usually charged at a much higher rate of interest than purchases.

What’s more, under a system known as ‘allocation of payments’, the repayments you make to your account are applied first to the parts of your debt which attract the lowest rate of interest. This means that so long as you are carrying some debt from purchases, your cash withdrawals will sit in the background, being charged a high rate of interest, and never getting any smaller.

- Credit card checks

These allow you to use your credit cards in situations where you normally can’t, such as paying a bill by post. However, the interest rate charged on them can be as high or even higher than with cash withdrawals. This means you should avoid them for the same reasons, as given above.

- Covering the cost of everyday bills

Paying your energy bills, for example, using your card is convenient and easy, but is only a good idea if you repay the debt in your next payment. If you’re using your card because you can’t afford to pay the bill, this is a clear sign that you need to take a harder look at your personal budget.

- Expensive impulse purchases

Of course, we all like to treat ourselves from time to time, and no one would begrudge that. However, before handing over your card, bear in mind that the interest you’ll pay over the months it takes to repay the debt will make your impulse buy much more expensive than it appears. Is it still worth it?

- To make repayments on other debt

Credit cards aren’t usually the cheapest kind of borrowing available, so you should never use your card to service another, cheaper debt. The only exception to this is if you make use of a balance transfer facility, either to get a 0% rate for a limited number of months, or to lock in a permanently low rate.

As we can see, most of the above advice is simply common sense, but following these rules will give you the best chance of staying in control of your credit card, and avoiding running up unneccessary or excessive debts.

What to Look Out for in Low Interest Rate Credit

What to Look Out for in Low Interest Rate Credit Cards

When looking for low interest rate credit cards, there are many factors you need to take into consideration in order to ensure you are really getting a great deal. Many people do not realize that low interest credit cards may not really be as low as they think they are. In fact, these supposedly cheap credit cards may be costing your more than you think.

Finance Charge Calculations

So, you think you have found a great credit card with a low interest rate, right? Well, this might be true, but it may not be as cheap as you think it is. Be sure to read the fine print on the credit card and learn more about how the finance charges are calculated. The traditional method for determining finance charges is the Average Daily Balance method. This method best when it comes to saving you money. The Two Cycles Average Daily Balance method, however, can become quite costly if you carry a balance on your card from month to month. And, since you are looking for low interest credit cards, you most likely intend to carry a balance.

With the Two Cycles Average Daily Balance method, finance charges are determined two times during your billing cycle rather than just once. Therefore, you are actually accumulating finance charges twice in your billing cycle. So, while the APR may be low, your finance charges are not because you are paying twice.

Pay Attention to the Grace Period

The grace period is how long you have to pay back what you have borrowed from the credit card before finance charges start adding up. Therefore, the longer the grace period, the less finance charges you have to pay. When looking at low interest rate credit cards, be sure to find out how long your grace period is before you have to start paying. Twenty-day grace periods are the most common. So, if you find a credit card with a low interest rate that provides a grace period for this long, or longer, then you have probably found a good card. If the grace period is shorter than this, continue your search until you find one with an acceptable grace period. Obviously, a low interest rate doesn’t do you a lot of good if the finance charges begin piling up from the instant you make a purchase!

Consider Annual Fees

Some low interest rate credit cards have annual fees. This is the credit card company’s way of compensating for the low interest rate it provides. For the most part, paying annual fees to receive a low interest credit card is not worth it to the cardholder. Shop around some more and see if you can find some cheap credit cards with the same APR that do not include an annual fee. Chances are, you will be able to find one that doesn’t make you pay to be a cardholder.

If you cannot find a low interest credit card with the same low interest rate, then you might want to take a closer look at the card charging an annual fee. In this case, you will have to weigh the annual fee payment against your potential interest rate savings. If the annual fee and interest rates are both low enough, then it might be worth your while to apply for the card. Be sure to provide yourself with an honest assessment of your spending habits and how much money you will be able to send to the credit card each month in order to pay off your debt. The last thing you want to do is just give your money away to a credit card company in the form of an annual fee if it doesn’t ultimately benefit you financially.

What To Look For In A Balance Transfer Credit Card

What To Look For In A Balance Transfer Credit Card

When shopping for a new balance transfer credit card, take the time to compare a number of credit cards, as the terms and conditions of these offers varies greatly. There are numerous things to consider before you take this step of choosing a new card. Be sure to read the fine print.

First, you need to have a plan on why you’re applying for this new balance transfer credit card. If it’s to consolidate two or three credit card balances from higher interest credit cards to a card offering an introductory 0% APR, there’s more you need to know. Some issuers charge a fee for each balance transfer transaction. This can amount up to 3%, or a flat fee of 35.00 for each transfer. So if you have a number of account balances you want to consolidate, you need to figure this charge in also.

Some financial institutions only offer the 0% APR on the balance transfer amount and not on new purchases. So if you’ve transferred balances to this new credit card, and then you use the credit card for new purchases, when you make a payment it is applied toward the lower APR balance and you’re assessed interest on your new charges. It isnt until the balance with the lower interest rate is cleared, that your payments are then applied toward the newer charges with the higher interest rate.

Another thing to take into consideration is the balance limit on the new balance transfer credit card. Is it enough to cover those other credit card balances you want to consolidate? If the credit limit isn’t high enough, they won’t transfer the whole amount. In addition, you wouldn’t be able to use the credit card as it would take you over your credit limit. Again, read the fine print. Going over your credit limit would take you out of the terms and conditions of the credit card, thus voiding the special introductory offer. The penalties can be steep.

You also need to know if there is an annual fee for this new balance transfer credit card. If there is a fee, that would have to be taken into consideration when determining any savings you might realize by consolidating your debts into a new balance transfer credit card.

Now, don’t get me wrong, a balance transfer credit card can be a good thing and work to your benefit. With a definite purpose of eliminating some of your debt and then sticking to your plan, a balance transfer credit card with a 0% APR valid for several months, can save you a lot of money in interest payments.

What To Expect When You Complete A Credit Card Application

What To Expect When You Complete A Credit Card Application

You can find a credit card application in your daily postal mail, in your email and you will find all types of credit card applications online. If you want a credit card, if you want a new credit card or even if you are seeking another credit card for your wallet, you can find credit card applications for that particular type of card you want to get. Complete a credit card application to obtain a new line of credit for yourself, your business or even for a child you are sending off to college.

You should know there are different types of credit card applications, such as balance transfers, low interest rate, and you will find special cards for special rewards and needs. Some special reward cards are travel rewards; cash back rewards and low interest rewards. You will find credit card applications for those with bad credit, or you can also find credit card applications for those who are seeking high credit lines. A credit card application can be used to obtain the type of credit card you want to have for your financial security and future.

A credit card application should be filled out completely. You will need to include your name, address, phone number, work information, information about your wages, and your annual income. You will need your credit card information if you are going to transfer balances, and you will need to have your spouse sign the application if you are opening a joint account. A credit card application is not going to take more than a few minutes to complete, online, offline, or in person.

You can complete a credit card application without waiting on the phone or online, and you will get a response to your credit card application in just seconds. When you mail in a credit card application, you have to wait a longer time to get a response, which is generally about two weeks. A credit card application does not take long to fill out, but you determine which method you would like to complete to get a new credit line.

After applying for a credit card, and you find that you are denied, you will get a letter stating that you are not eligible, or perhaps you will get a reply stating that you are qualified but only for a certain savings deposit type credit card. You will on that letter, find a name and address of a company where you can request a free copy of your credit report. You are entitled to that free credit report because you were denied credit, and this is the law.

If you were accepted, you will receive a letter, stating what your new credit line is, what type of credit card you are being issued, and you will be notified in a separate letter with your actual credit card. In still another letter, you should receive your pin number for that credit card. These separate letters are for your protection, so that in case the card was stolen, the person will not have the pin number. If you receive one letter without receiving the others, you should call the credit card company and tell them that there is a problem with that account, and they will reissue you a credit card, and cancel the one that is lost so there is no problems at all with your new account.

Get A Credit Card With A Low Interest Rate

Before you choose a credit card it would be wise to first find out the interest rates offered by all the credit card companies and banks. While you compare credit card companies and banks, take note of the ones with low interest rates and offer the best benefits. Dont miss the fine print as that is where the most important information is usually given. Fine prints almost always specify the conditions applied on using their service.

It is generally a wise decision to go with a credit card that has a low interest rate. A low interest rate would almost always mean that using the credit wouldnt eat up your savings.

One of the strategies of many banks and credit card companies to attract members is to offer an introductory low interest rate then hike up the rate after a certain period. It is therefore advisable to inquire how long the initial low interest rate would last.

To switch to them, some credit card companies and banks would waive fees if you transfer balances to them from your old card. The fees asked by banks for transfers are actually interest rates in disguise. Make sure that a low fee, which is equivalent to a low interest rate, is charged to you when transferring or you could end paying much more than you actually have to for clearing your debt.

One thing you could do is pay for balance transfers through pre printed checks. Your best option is to transfer balances to over the phone by calling up the customer service line of the bank or company. Doing such would cost a lot less or nothing at all and because you chose a card with a low interest rate you know your expenses would be lower the next time.

It is al important for you to know that incentives such as short term low interest rate will eventually rise even without due warning from your bank or credit card company.

You could always ask the bank or company to give you a low interest rate provided that you have a decent credit history with the company or bank. If they refuse to give you a low interest rate then you can always switch to a service that offers you a better deal.

Remember to use your credit card wisely. Keep a tab on your expenses while using this card, ensure your dues are cleared regularly and ensure that the low interest rate remain low.

For Reality: What Is A Low APR Credit Card

Shopping had never been lousy since the advent of credit cards. Since then, people had always been indulging into various cashless shopping due to the convenience of the credit card.

However, most people get credit cards only for the sake of shopping. They do not even read the fine print on their credit card and the least that they have considered is the one with the low annual percentage rate or APR. Most of them did not even know how interest rates could affect their billing.

On its general since, low APR credit card are those that have lower APR. This means that the cost of the interest rate will be according to the purchases obtained by the customer.

Normally, APR vary from 6% to more than 30%. Of course, it would be clear that the card with the lowest APR credit card is those that have 6% or lower.

But consumers should remember, that APR can be very tricky especially if the consumer have no idea what interest rates mean.

Basically, credit card companies would offer the consumers very low APR credit card so as to get the consumers on the hook. In fact, credit card companies could lower their APR to as much as 0%.

Low APR credit cards are usually expressed during the introductory rate so as to entice new credit card holders to sign up to them; and once they are all hooked up, the credit card company would start changing and increasing their credit cards.

People should know what makes a low credit card really low and the best option for retaining that low APR even if the introductory offer is over.

First, they should know that APR has two faces: the fixed and the variable.

The fixed APR has more stable interest rates than variable rates. Variable rates, on the other hand, can start really low but it all depends on the prime rate of the Federal Reserve. This means that at any point in time, it may increase.

Needless to say, there are really quite a few credit cards that have low APR. The reason behind it is that APR is actually where the credit card companies get to earn a living. If they continue to give people the low APR that they used to claim, chances are they wouldnt be in the business for so long.

The bottom line here is that consumers should be really conscious on their APR and other interest rate. Low APR credit cards will not be very beneficial if it will only last for 6 months or so.

Flat Rate Credit Cards

When credit cards were first introduced, they were a pretty simple proposition: use your card for purchases, and be charged a single rate of interest on your unpaid balance.

Then came the rise of the ATM (cash machine), and credit card issuers realised they could lend money by allowing their cards to be used to withdraw cash on account, and could earn more this way by hiding away a higher interest rate for cash withdrawals in the credit agreement small print.

Next came the balance transfer offer, with either long term low rates or an introductory 0% deal, closely followed by introductory deals on purchases too. Not to forget the different interest rate often charged for overseas use.

All these different rates for different kinds of card use can easily become confusing, and survey after survey showed that many credit card users were unaware of how much their card use was actually costing them.

In many respects, this suited the card companies down to the ground as they could advertise eye-catching rates for purchases and balance transfers while quietly imposing more lucrative charges on other kinds of card use.

Amidst all the confusion though, some card issuers spotted a gap in the market – how about a simple, easily understood credit card with no offers or benefits, just a single low rate charged however the card was used? These cards became known as flat rate cards and their names usually reflected their transparency and ease of understanding, for example Barclaycard with their ‘Simplicity’ card, or the Co-op Bank’s Clear.

Whether you’re using one of these cards for spending, transferring a balance, or even withdrawing cash from an ATM, you’ll always be charged a single rate. And what’s more, most cards can offer a great low APR as the issuers aren’t having to fund expensive introductory deals or cashback schemes.

So is a flat rate credit card for you? The benefits are obvious – it’s easier to understand how much your card use is costing you, and you’ll also usually get a great rate.

If you have a large balance to transfer, it might be more sensible to go for a card with traditional 0% introductory offer or one that features a low rate fixed for the life of the transfer.

Likewise, if you use your card for purchases a lot but usually clear your balance every month then the interest rate doesn’t really matter to you, and you may prefer a card with a cashback or rewards scheme.

If however, like most of us, you use your card for purchases and cash withdrawals while carrying a balance from month to month, then a flat rate card could save you a lot of interest.

Fixed Rate Vs. Variable Rate Credit Cards

Although it is mostly industry practice to charge a variable rate of interest on outstanding credit balances at a certain percentage rate above Prime Lending Rate, it is possible, these days, to obtain a fixed rate credit card. So, when would you want to apply for a fixed rate credit card over a variable rate credit card?

The answer to this may not actually sound as simply as you may think. Two factor need to be borne in mind: first, what is the Prime Lending Rate at the moment; and second, what are the chances of the percentage rate plus Prime Lending Rate going above the fixed rate?

If you feel that borrowing rates are cheap at the moment and that it is unlikely that Prime Lending Rate is going to go up in the near future, then in all likelihood having the variable rate credit card is going to be more of a benefit to you than having a fixed rate credit card. However, if the opposite is true, and you believe that there is a good chance that Prime Lending Rate is going to up in the near future, there may be a very good reason for you to want to lock-in your interest rate at the current fixed rate being offered by the card provider.

One exception to the fixed rate vs. variable rate credit cards debate comes into play if you can manage to obtain a fixed rate with a card provider on the transfer of your credit card balance to a new card provider. In this circumstance it could prove to be a very useful money saving policy to agree to the fixed rate for the initial 6 or more month period as, traditionally, fixed rates for transferring balances are very low. You do, however, need to be extremely careful that any variable rate that comes into play following the fixed rate period is not excessive.

Alternatively, you need to ensure (a) that you have made as much of a repayment as is possible during your fixed rate term that you only have a minimum outstanding balance on the day the balance transfers over to a variable rate; or (b) you have the option of transferring the credit card balance outstanding to another new card provider who is also offering a very low fixed rate of interest.

In any case, these days the debate over fixed rate vs. variable rate credit cards is certainly more interesting than was ever the case previously!

Five Simple Ways To Regain Credit Card Control

Credit cards easily get out of control. You simply don’t realize how much you are charging and how little you are paying. Before you can even think about paying your card off entirely, you have to simply regain control of your credit card debt.

Here are five simple steps that will help you regain control, and eventually pay off your debt. Follow them step-by-step and you will find that they aren’t overwhelming or too difficult. In fact, they don’t take much time at all.

1. Pay more.

You shouldn’t carry a balance on your credit card from month to month, but you probably are anyway. If you are only paying the minimum payment, you are slowly killing yourself. This will stretch your payments out for decades. Yes, decades. You need to start putting extra money to each credit card payment. Even if it is only 15, you are saving time and money.

2. Make a phone call.

Take the time to call your credit card companies and request a lower interest rate. It isn’t hard to do. You simply request a better interest rate. If you are a good customer who makes his or her payments on time, you will probably be successful. Tell them that you want the lowest rate possible. You can even say that you have received an offer to transfer your balance to another card at a better interest rate. You want to give them a chance to compete. If they won’t lower your rate, consider switching to a card with a lower rate.

3. Say goodbye.

Send your cards on a little vacation. If you have debt and you can’t pay it completely off, you need to stop using your credit card for now. Put it somewhere that you won’t be able to easily access. This removes the temptation to simply charge this one thing. I suggest a safe deposit box at the bank. This usually always works. If you have a true emergency, you can get it. But it often isn’t worth the hassle to get it to just buy a new sweater.

4. Look for money.

Now is the time to start paying that debt off with what you already have. If you have an 18% credit card and money in the bank earning 5%, you are losing 13% each month. Take your savings and pay off your credit card. This will save you interest and a lot of worry. Then work on building back up your savings by having the amount you paid in credit card debt automatically deposited into your savings each month.

5. Vow to change.

Now that you have seen the stress and problems that credit cards bring, you can make a committment to change. Credit cards aren’t the problem, they just contribute. The problem is the way you spend. You need to realize that you cannot continue to shop the way you do. You have to change your spending habits so that you aren’t tempted to use your card. It is hard. People slip back into it easily. But you need to find a way to remind yourself that it isn’t worth it. Regain control of your credit and turn it around.

Finding The Right Credit Card

I remember the lecture my mother gave me a few weeks before my first day of college. She sat me down and said, “I have something important to tell you.” Right about then is when I rolled my eyes and braced for the, “Young men are the devil’s spawn and should not be trusted,” and the, “You are going to a place where there will be great temptations,” speech. What I got was not really a lecture, but a talk about how it was time to start building my credit.

I really never gave that topic much thought. I always thought that getting a credit card was for grown ups, and Lord knows I didn’t quite feel like a grown up at the time. She told me I should start thinking about applying for a credit card. She also warned me if I did so, she would NOT bail me out if I started charging up the world. That alone scared me. I had a full time job, but what if I couldn’t handle the payments? What if I went temporarily insane, and decided to charge everything I could. It was too much for me, and I told her, I didn’t want to hear any more nonsense about me getting a credit card.

She of course persisted for the next two weeks, and I finally told her that I would look into it. I then asked the million pound question, “How do I find the one that is best for me?” She blank stared me. Then she blink. Then she shrugged her shoulders and said, “I don’t know, that’s your problem.” Cue the crickets.

So there I was, eighteen in 1992, trying to get a credit card, but not knowing where to start. Luckily on the fist day of classes, I was in the school book store and found an ad for a student credit card. Without giving it much thought, I applied and to this day I still have a card from that company. Was that the best way of going about it? Probably not. I suppose if I did the research I could have found a card with a better interest rate, or a better limit.

Now days, the internet has changed the way people research topics. I’ve found the best way to find a good product is to find a site that helps you compare similar products side by side. Are you interested in credit cards that offer airline rewards? How about credit cards that offer hotel and travel rewards? Maybe you are just looking for the credit card that would be right for your business, or one with low interest rates. There are even credit cards for poor credit.

Some people feel loyal to certain credit card companies, it’s only natural when you’ve had them for so long, but why not see if they can offer you a better card? Your time is precious and getting the best credit card for you is important to your lifestyle.