Helping You Avoid Life's Financial Mistakes

Zero Percent Credit Cards, The Good, The Bad, And The Ugly

January 4, 2010 By 8 Comments

o_percent_001

Owning any credit card is like owning a double edge sword, there is always a good side and a bad side and even at times an ugly side.  However, in this article I’m going to be discussing the pros and cons of owning zero percent credit cards.

You’ve heard of them, the credit cards zero percent interest for 6 months.  These cards are found almost everywhere from outlet stores to major credit card companies.  If you’ve been considering owning these types of cards you may want to read this post first.

Get a Low Interest Credit Card – Apply HERE

The Good

There are a lot of benefits to owning a zero percent card, some obvious and some not but here are the good things you should  look for in these cards.  Also all the benefits I mention may not be available on one particular card.

  • No interest for 6 months. This is the typical reward for these kinds of cards.  The way it works is you can buy stuff with card and you have six months or whatever time limit they give you to pay off the balance in full before they tack on any interest.
  • No interest on balance transfers. A lot of zero percent credit card offers also allow no interest on any balance you transfer from one credit card to the new card.  The benefit of doing this is that it will give a lower interest rate on you balance you held with a previous card.   There is also a time limit with this as well, usually around 6 to 12 months.
  • Zero percent interest credit cards buy you time. The greatest benefit of owning this card is that it buys you time to pay off the principle amount you owe without getting slapped with some huge interest rate.  This time could prove very valuable for example if you bought $2500 of furniture but couldn’t pay it back in one month but instead purchased it through your card and paid it back over a six month period you wouldn’t pay a dime in interest.  Not Bad.

The Bad

Now that we know some of the great benefits of owning zero percent credit cards, I’m going to cover some of the downfalls of them.

  • Pay off the balance before time is up. Since the zero percent credit card offers come with a time limit of when the interest will be applied it’s a good idea to have it paid off before the time period is up.  I say this because credit card companies a beginning to get a bit fierce with their interest rates.  Since the new credit card laws are coming into effect the companies are looking for new ways make up for the loss.  So how do they fix it, up your interest rate, in fact I’ve heard of one company up their rate to as high as 80%.  Ouch!
  • Don’t transfer unless you plan to pay it off. As in the last point with paying off your balance before the time period is up holds true with zero percent balance transfers as well.  The interest rate here again could skyrocket as a result of not paying it off before the time limit is up.

The Ugly

Now it’s on to the ugly side of zero percent credit cards.  Before I go any further I should say that I’ve seen people go through this situation and it isn’t pretty but, if you play by the rules and do what I’ve said above you’ll be fine.

If you want to avoid this scenario just keep them paid off and you’ll be fine.  The problem comes in when you rack the card full of debt.  In fact you have so much debt that you can’t afford the payments because of the high interest rates on them.

So what do you do, you transfer the balance to another zero percent credit card to cut the rate down.  With the rates lowered you start spending again and then you stack that card full of debt until it becomes a giant circle of revolving debt transferring the balance from one card to another never paying off any of the debt.

I’ve seen people to the point where they had so much debt on their credit cards that even if they made the minimum payments on all of the cards they still wouldn’t be able to come out ahead.

In Closing…

Follow the rules I’ve laid out and you’ll be fine.  Don’t follow them and beware of disaster.  Zero percent credit cards are great cards to have for cutting off the interest off the payments, however if you find yourself getting out of control stop using them before it’s too late.  Abstinence is the best cure form credit card debt.

Get a Low Interest Credit Card – Apply HERE

To check out more articles like this go to  Million Dollar Journey.

Filed Under: Credit Cards Tagged With: , , , ,

The Advantages Of Virtual Credit Cards

December 28, 2009 By 1 Comment

A credit card is an exceptionally convenient alternative for paying cash for the purchases made via the internet but due to an increase in the identity theft and internet fraud many people prefer not to make online purchases using credit cards. However, thanks to the virtual credit card it is now possible for everyone to shop online without getting scammed.

Virtual credit cards, commonly called substitute credit cards have single use numbers that have an imminent expiration date, usually within one to two months. Virtual credit cards give protection to one’s personal information such as original credit card number, social security number, date of birth and address. As the virtual credit card can be used only for single purchase the customer has to get a new random number every time he/she wants to do online shopping.

While using virtual credit cards, the merchant never comes to know the original account number. The number and personal details remain as confidential information between the customer and the bank and even if the card falls into wrong hands it is of no use to the scammers as it expires quickly and the number can only be used for a single purchase.

Most of the financial institutions offer virtual credit cards and like any other card the customer is protected from unauthorized purchases while using this controlled payment method. One can get the substitute credit card number by opting for virtual credit card in his/her online account.

This is probably the safest way to make purchases online as it provides greater control over the payment and protects the personal information. However, one cannot use this number to auto pay the bills or to confirm the airline and hotel reservations as the virtual credit card numbers do not exist outside the internet. To find one that suits you needs you can simply go a quick search on the Internet, but be sure to compare the charges incurred by a few issuers to make sure you get the best deal.

Filed Under: Credit Cards Tagged With: , , ,

Top 10 Credit Cards By Category

November 29, 2009 By 14 Comments

4-cardsIn my last article I covered unsecured credit cards and why I liked them and in this post I’m going to go a bit deeper and discuss the top 10 credit cards to have by category.   The categories will cover everything from the best instant approval credit card to the best low interest credit card.

  1. Low Interest Credit Cards.  The top card in this category is the Capital One No Hassle Miles Rewards Card.  This card has high marks on low interest rates, no annual fees, and a 0% APR on purchases till 2010.  The down side would be the fees on balance transfers and the fact that you would need excellent credit to get the card. Get a Low Interest Credit Card – Apply HERE
  2. Balance Transfer Credit Cards.  The top card in this category is the Discover More Card-American Flag.  This card has no balance transfers fees for the first 12 billing cycles, and also has a 0% interest for the first 6 months  This card also has no annual fee.  The down side would be that you have to have a good credit standing to be approved for it. Click Here for additional Balance Transfer Credit Cards Offers
  3. Gas Rewards Credit Card. The Marathon Platinum MasterCard takes top honors in the category.  It gives 5% cash back on all purchases made at a Marathon Gas Stations and a 1% cash back on all other purchases.  It has no annual fee.  The down side would be interest rates range from 13.24% to 24.99% as the default interest rate.  You also need to have excellent credit to apply.  I should also mention I have this card as well. CreditCards.com Apply for a credit card today
  4. Cash Back Credit Cards.  The Capital One No Hassle Cash Rewards Card takes the cake here.  It gives 2% on all gas and groceries and 1% on all other purchases.  It has not annual fee and a 0% APR on all new purchases till November of 2010.  The down side would be you need excellent credit to apply and there will be a 14.99% interest on balances after November 2010. Click Here for additional Cash Back Credit Card Offers
  5. Airline Credit Cards. The Capital One No Hassles Miles Rewards Card defiantly gets the top pick here.  This card gives you 1 mile per dollar spent below $1000 and 2 miles to every dollar spent over $1000 each month.  On top of that your miles never expire.  It has no pesky blackout dates and allows you to fly on any airline to any destination.  The down side is that you again have to have an excellent credit rating to apply for the card. Click Here for additional Rewards Credit Card Offers
  6. Instant Approval Credit Cards. If it’s instant approval because of bad credit you’re looking for the First Premier Bank Gold Credit Card.  First off you don’t need a great credit rating to apply for this card.  The card company will also report your information on a monthly basis to help improve your credit standing.  The down side is that there will be an annual fee of $48 and a onetime program fee of $95, and a set up fee of $29.  The credit limit will only start out at $250 but as your credit improves so will you credit limit. Click Here for additional Instant Approval Credit Card Offers
  7. Prepaid Debit Cards. What if you don’t like the idea of carrying a credit card?  Then check out the prepaid debit card from Account Now Prepaid Visa Card.  This debit card has a 100% guaranteed credit approval, free bill pay, free direct deposit, no overdraft fee, and a $0 activation fee.  This card also gets reported to the credit bureaus which help to improve your credit standing.   The down side is theirs a $9.95 monthly fee and the cards cash limit is only $10,000 that you can put in at any given time. Prepaid Debit Cards & Prepaid Credit Cards – CreditCards.com
  8. Student Credit Cards.  If you’re a college student then you’ll want the Discover Student Card.  It has a 5% cash back bonus on stuff like travel, gas, restaurants, and much more.  It also has a 0% APR for the first 6 months, no annual fee and the best part is you don’t even need a credit history to apply.  The down side is that after the first 6 month the 0% APR is up your regular rate will be 14.99% and the default rate if you would have to miss payments would be 29.99%. Ouch! Click Here for additional Student Credit Card Offers
  9. Business Credit Cards. If you own a business then you’ll want to take a look at The At&t Universal Business Rewards Card.  This card has  0% on purchases for the first 6 months, no annual fee, and you can even get additional cards for employees with credit limits you can set.  The down side is that the regular rate after the six month 0% Apr is up is a variable 16.99% rate and you must also have an excellent to good credit rating to apply. Additional Business Credit Cards HERE
  10. Points Reward Credit Card. If it’s points you want then the Citi Forward Card is what you want.  This card gives 6,000 bonus points when you spend $250 in the first 3 months of opening the account and 5,000 points when you sign up for paperless statements in the first three month of opening the account.  From there you’ll get five reward points for every dollar you spend on restaurants, books, music, movies, and you’ll get 1 point for every dollar you spend on anything else.  Along with no annual fee this card is very attractive.   Finally, this card reward for good behavior, if you stay below your credit line and pay your bill on time at least 3 months in a row you’ll get a 2% reduction on your annual APR.  The down side is that you have to have excellent to good credit and if you do go over the credit line there will be a $39 fee. Click Here for additional Rewards Credit Card Offers

Are They The Top 10 Best Credit Cards

Now, you might have a different opinion on which is a better credit card based on your experience of use and what you’re comfortable with.  You might know of better top 10 balance transfer credit cards, or better top 10 business credit cards, or a better top 10 rewards credit card.

If you have one that is better that’s great.  The suggestions I’m making are the top 10 credit cards are based on my research and experience.  So if you looking for a credit card look at what I’ve shown you and compare it with what you like.  Also feel free to leave a comment and let me know if you have a better suggestion.

Chris

This article was recently featured on The Carnival Of Personal Finance by Suburban Dollar.

Filed Under: Credit Cards Tagged With: , , , , , ,

What Is An Unsecured Credit Card And How Can It Benefit You

November 27, 2009 By 5 Comments

unsecured_credit_card1

Unsecured credit cards have been around for a long time.  In fact you may even own a couple of these credit cards and not even know it.  In this article I am going to cover what an unsecured credit card is and how it can be a big advantage to you.

Excellent, good, fair or bad credit, you can apply for at credit card here.

What Is An Unsecured Credit Card

An unsecured credit card is a card that is not backed by any kind of asset.  For example a secured credit card would be backed by a deposit account.   Another way to think of it is your home.  If you take out a mortgage and you fail to make the payments the bank will come take the asset which in this case is the house.

With a card that is unsecured it is not backed by any type of asset.   It is only backed by the good will and faith that you will pay back what you borrowed.  Think of it like a line of credit except not back by anything.

I currently have two of these cards and have found them very useful to have.  One is a gas card through MasterCard which gives me 5% back on all of my gas purchases through marathon gas stations.

The card is not backed by any type of asset but as long as I continue make my payments on time I will continue to receive the benefit of paying less for my gas.  Not a bad deal.

Benefits Of An Unsecured Credit Card

Here are several benefits of owning an unsecured card.

  • Line of credit based on credit history. With a home your value is determined by the value of the home.  Therefore it is only worth as much as the home is worth.  With an unsecured card if you credit is great then you’ll get a higher credit line and if your someone who has poor or bad credit then your credit line will be a lot less.
  • Fewer fees being unsecured.  Secured cards tend to have higher fees but if your someone who is looking for an unsecured credit card for  bad credit you will be happy to know that you will find better deals and pay less in fees with them.
  • Build your credit up.  With unsecured cards you will be able to build your credit history up better.  If you keep your card paid off on a regular basis your credit score will go up because you are proving to the credit card companies that you can manage your money.  Better yet you are doing it under the good will that it’s not backed by an asset unlike secured debt.

How To Get An Unsecured Credit Card

First off, I just want to point out that when you apply for unsecured credit card that you’ll want to make sure that you look at all the deals, fees, and interest rates to make a good decision.  I personally like the method CreditCards.com uses to apply for a card.  They have information on hundreds of cards and the basic one stop shop.

  1. Search. Look for the card you want.  This site has hundreds of different cards to look at everything from the instant unsecured credit card to the best unsecured credit card.
  2. Compare. In this step you will be able to compare cards side by side and look at everything from fees to rewards they offer.  This makes the whole process a lot easier.
  3. Apply. After comparing you can even apply right online through a secure connection without wasting any time at all.

Using this method is a lot easier than sifting though several credit card applications in the mail and allows you to get all the offers out on the table.   With the right unsecured credit card you can build your credit and be on your way to achieving  fiscal fitness.

Chris

This article was recently featured on the Carnival of Personal Finance by A Gai Shan Life.

Filed Under: Credit Cards Tagged With: , , , , , , ,

How To Cancel Your Credit Cards

June 12, 2009 By 4 Comments

istock_000006875534xsmall

Every now and then, while we are in the process of getting out of debt, we do things that we think are right but end up costing us in the long run.  One such incident is canceling your credit cards.

For some reason or another we believe that canceling the cards will stop us from spending more money and get us out of debt faster because we won’t have that option to use them.

While that may hold true, there are a couple of things you must consider before you cancel those credit cards.

Consider This…

First, if you cancel your card with a balance on it, the credit bureaus will see this as more debt and less credit hence cutting down your credit score.  What happens is you are in essence increasing your debt-to-credit ratio.  If you don’t know what this is, just know it is just one of the factors considered in your credit report.  

Second, if you close out of too many accounts at once this can also have a huge effect on your score as well.  When closing your credit card accounts there is a specific way to handle this, and if you get it wrong you may end up paying for it down the road.  Follow the steps below and you shouldn’t have any problems.

How To Cancel Your Credit Cards

  1. Pay Off The Balance First.  Before you close any card make sure your balance on the card has been paid in full.  This will ensure that you won’t affect your credit score.  If you’re not sure, give your credit card company a call and they will assist you in finding what your balance is.
  2. Cancel Your Newest Card First.  Once the balance has been paid in full you want to start with your newest card first.  Why that card?  Because cards with a shorter history have less effect on your credit score.  A credit card you may have had for several years will have a more significant effect on your score. 
  3. Cancel Your Next Card 6 Months To A Year Later.  Once you’ve canceled your first card I want you to wait at least 6 months to cancel your next card.  Again, the next card you should cancel is the newest one.  So why wait 6 months to a year?  Because cancelling too much credit at one time will have a negative affect your score. 
  4. Keep Some Credit.  I also recommend not canceling all of your cards as well.  It’s always good to have some active credit which will help you boost up your credit score.  Keep at least one card open and use it every now and then.  A good card to use would be a gas card.  For example I have a Marathon Master Card which I use to get gas with.  This way I get great rebates on my gas and also build up my credit score at the same time.

Share Your Tips

Do you have any tips you would like to share on canceling credit cards?  If so leave a comment here and let us know.

Chris

Canceling

Filed Under: Credit Cards Tagged With: ,

New Changes On The Credit Card Rules

January 28, 2009 By Leave a Comment

Getting Out Of Debt May Get Easier

Recently I had done a post on tips beginners should know about credit cards.  In that post I had explained how certain tactics that the credit card companies were using to keep people in debt in order to keep a profit. 

In this quick post I want to share a few changes that the federal goverment is making to limit the abuse from these companies.  Money Magazine recently reported the changes so I felt I would try and keep you updated.

  • First off credit card companies have been know to change interest rates at about any time they want to.  With the knew rules to be set in stone in 2010 these companies will only be able to raise rates if you’ve been late for 30 days.
  • Second terms are usually so hard to make out that even a lawyer can’t even figure them out.  In 2010 statements must include the full terms, fees, and all interest paid.
  • Third, terms can change with in a 15 day notice.  In 2010 credit card companies must give you a 45 day notice before they can change your interest rate and terms.
  • Last, getting ripped off by double cycle billing.  If you don’t want to pay interest twice in one month this may be the best tip of all.  In 2010 interest will only be calculated on what you owe.  However this tip only pertains to certain credit cards.  It’s nice to know these kind of money traps are getting changed.

I hope these tips help,

Chris

Filed Under: Credit Cards Tagged With: , , , , , ,

10 Things Beginners Should Know About Credit Cards

January 8, 2009 By 2 Comments

With all the information out there on credit cards these days and getting out of debt why is it that the average family in the U.S. has around $3,000 of credit card debt.  Is it because they are buying bigger things or is because they weren’t properly informed of all the extra things credit cards may come with.

Like most families we didn’t intend to pile up a lot of credit card debt it just happened over time gradually building payment by payment.  So in this post I decide to go over a few things beginners should know about credit cards especially beginners.

Before I start I should mention that knowing these tips could essentially save you thousands in interest payments alone so read on and leave a comment below.

  1. Universal Default Clause.  knowing just this one tip could save you a ton.  Universal default is a clause that basically states that if you miss a payment the credit card company has the right to up your interest rate to the maximum if they want.  Not only can they do that but if you have a late payment on any other bill such as a utility bill, your car loan,  or any other type of regular bill or debt you have they can increase your interest rate.
  2. Stay Away From Late Payments.  Making a late payment can ding you credit score very quickly.  It’s the quickest way for you to lose trust with other financial institutions.  But here’s the catch credit card companies have been very sneaky about sending you your statements at the last minute and in some cases a few days before they are due just so you will be late.  However the payment isn’t good from the date of your postmark.  It’s only on time once they receive the payment.  What gets me the most about this is it’s O.K. to postmark for your taxes but not for your credit card payments.
  3. Remember The 33% Rule.  If you haven’t heard of this before it basically means that as long as you stay below 33% of your credit limit your credit will stay clean.  For example if you have a $3000 credit limit and you have a $1000 balance on the card at all times you’ll be safe.  However, if you continually have a balance greater than that month after month you will start to see a few issues show up on your credit score.
  4. Stay Away From The Minimum payment Trap.  By paying the minimum payment on your cards you are in a sense prolonging the fact it will only take you more money to get debt free.  Though I do have one exception for this.  If you are running your own debt plan as I have shown in previous post then it is fine because you are doing what is called snowballing.  If you would like to learn more about this click here.
  5. Watch Out For 0% Transfers While Charging Normal Rates On Everything You Buy.  This one doesn’t apply to every card but their are the select few you may see this on.  Typically what happens here is you may get a new credit card with a 0% transfer rate so you can cut your rate down for say 6 months so you don’t get hammered with the interest.  However, if you buy anything with that card you are going to sacked with interest payments and worst of all they may then add the interest to you current balance.
  6. Be Careful About What You Buy.  This one also is just exclusive to just a few cards.  Some credit card companies are now getting picky about what you buy.  For example if you tend use your credit card at bars, nightclubs, massage parlors and a few other places some credit card companies may be reporting this against your credit.  However no credit card company has ever come forward and admitted this it has been known to happen.
  7. Be Careful Of Double Cycle Billing.  How would you like to pay interest twice on your monthly credit card bills.  Again this is only subject to certain companies but can be a big cost to you.  Double cycle billing works like this, if you have a thousand dollar balance on your card and you pay off $500 of the bill you not only pay interest on the remaining $500 but you also will pay interest on the original $1000 on your bill but here’s the catch they are charging you interest on $1500 not just $1000. 
  8. Beware Of The Overdraft Fees.  Today the average overdraft fee is around $35 not including the interest.  If you have the issue of using over the limit or think you may go over the limit beware.  This little pot hole in the road can cost you some series bucks not to mention a few dings in your credit history.
  9. Accepting Credit Without Income.  This is a big one for the younger crowd especially college students.  The average college student these days has on average $6000 on credit cards before they graduate.  But the worse part is they have now way to pay off the debt other than making the minimum payment.  This would be like going to the bank to get a loan with out showing any proof of income.  Instead look to alternatives like debit cards so you can’t over spend your limit.
  10. Be Careful Of High Credit Limits.  This can be a big trap from the beginning.  Unless you actually need the high credit for say running a business or have something that would be easier to buy with a credit card this would be fine, but if your an impulsive spender and can’t control your wallet you may want to call the credit card company and to have the credit limit lowered to something more suitable like $500. 

What’s Your Position?

Have you ever been caught in any of these situations or do you know of any other tips to pass along?  Leave a comment below and share your tips and stories.

Filed Under: Credit Cards Tagged With: , , , , , ,

Financial Money Traps: How Your Credit Cards Can Get The Best Of You And How To Fix It

December 19, 2008 By 3 Comments

Earlier in the week we started an article series called financial money traps and in the first article we talked about timeshares and different ways they can trap you. Then next week we will finish the series with the final post on Monday.

Today post is about helping you get past some of the credit card traps out there and also to give you some tips to help you save more money and avoid getting ripped off.

My First Credit Card Nightmare

I’m sure almost all of use can speak from experience about how credit cards can bring us happiness and joy but also bring us to are knees at a moments notice.  My worst experience with credit cards came true several months back as I opened the statement and proceed to read down the list of transactions.

Everything looked good until I got to the bottom of the statement.  Their was a payment for $90 to an internet marketing company.  I looked at the name of the company and reliezed who it was.  It was an internet marketing company I had bought a book and a few DVDs from and somehow they were charging me $90 for some sort of membership site fee.

What I failed to realize was that I had been paying for this membership site for several months without even knowing it.  What a nightmare.

After calming down I dug through the fine print and realized they had given me a free month subscription to there membership site and after the first month they were going to bill me $90 every month after that.

The only good news out of this story was that after I had called the company and explained my story to them they at least refunded me the last months $90.

Why Credit Cards Take Money From You?

From that point on I learned my lesson and paid very close attention to every payment being made on my credit cards.

Or did I?

The second story is similar to the last one.  I bought an ebook on the internet about affiliate marketing.  However I clearly read the fine print this time.  This particular website had an ecourse which again gave me a free months access to.

So I decide to take them up on the 1 month subscription and take there ecourse.  However at the end of the month I went to cancel myself out of the program and realized it was next to impossible to get out of the program.

After nearly 2 months after being in there program I finally was able to get out of the program.  However to cancel I had to dig through their forum to find their phone number and then call them to cancel the subscription.  This took more time than I realized.

So why do credit cards take money from you?  Because they don’t know any better.  I could blame the credit card company or the subscription program I got involved with but it in the end it was nobodies fault but my own because I signed up for the program and it was my responsibility to cancel it.

Credit Cards May Even Try To Steal From You.

This last story happened to me not to long ago.  Again I was skimming though my credit card statements and seen a payment for $30 for a payment protector program.  I had no idea what this was for and at the least did not remember signing up for this program.

So I called the company and canceled the program but in the entire conversation with the company no one could tell me how I got into their program.  Again this shows why it is so important to read you statements.

In the end though following a few simple tips can save you some big money when it comes to your credit cards and as in my case it saved me $150 a month or $1800 a year.

  1. Review all of your credit card statement thoroughly. I can’t say this one enough.  Know who is getting your money and stop those who you don’t want to pay.
  2. Read the fine print. This is a big deal with credit card companies but also make sure you check the fine print other things you buy like internet subscription programs and membership websites.  You may sign up for something that’s not easy to get out of.
  3. Be careful who you give access to. Giving access to the wrong people can cost you big and if you do give access to a company to bill you monthly make sure you monitor them and that they debit your card for the correct amount.

Have you ever been though a credit card nightmare?  Do you have some tips to help those from falling victim to credit card abuse?  Leave a comment below and let everyone know.

This post was featured in The Carnival Of Money Stories Edition #90: The Holiday Edition

Filed Under: Credit Cards Tagged With: , , ,
Newer Posts »