Wednesday, October 18, 2006
The Advantages of Different Types of Mortgage Lenders
What kind of lender is "best?"
If you talk to a loan officer, he (or she) will probably say the lender they work for is "the best" and give you a list of reasons why. If you meet the same loan officer years later and he works for a different kind of lender, he will give you a list of reasons why that type of lender is better.
Realtors have differing opinions and, as a group, their opinions have changed over time. In the past, most would often recommend portfolio lenders - because they almost always closed the deal. As time passed, mortgage bankers and mortgage brokers became more important, and agents switched along with the changing times.
Most often a Realtor will direct you to a specific loan officer who has demonstrated a track record of service and reliability -- or a loan officer who works for a lender affiliated with their real estate office.
It is often more important to choose a good loan officer, not the institution. Loan officers have two jobs. One is to be your advocate in getting the loan approved. The other is to deliver quality loans. You want someone who has proven dependable and ethical in the past -- someone you can trust.
As for lending institutions, each type of lender has strengths and weaknesses. Quality within each branch or office can vary, depending on the loan officer, the support staff, and a variety of other factors
If you talk to a loan officer, he (or she) will probably say the lender they work for is "the best" and give you a list of reasons why. If you meet the same loan officer years later and he works for a different kind of lender, he will give you a list of reasons why that type of lender is better.
Realtors have differing opinions and, as a group, their opinions have changed over time. In the past, most would often recommend portfolio lenders - because they almost always closed the deal. As time passed, mortgage bankers and mortgage brokers became more important, and agents switched along with the changing times.
Most often a Realtor will direct you to a specific loan officer who has demonstrated a track record of service and reliability -- or a loan officer who works for a lender affiliated with their real estate office.
It is often more important to choose a good loan officer, not the institution. Loan officers have two jobs. One is to be your advocate in getting the loan approved. The other is to deliver quality loans. You want someone who has proven dependable and ethical in the past -- someone you can trust.
As for lending institutions, each type of lender has strengths and weaknesses. Quality within each branch or office can vary, depending on the loan officer, the support staff, and a variety of other factors
Credit Cards tips
1 - Avoid cash advances
2 - Choose a card that matches your needs
3 - Do you qualify for a 'relationship discount'?
4 - Do you qualify for annual fee waivers?
5 - Don't be distracted by sweeteners
6 - Don’t let ancillary card fees creep up on you
7 - Interest-free periods don't apply unless you pay off in full
8 - Look beyond the banks
9 - Loyalty can cost you
10 - Maintain card security as fraud grows
11 - Make low-interest-rate cards work for you
12 - Pay off more than the minimum each month
13 - Think hard about the rewards you want
14 - Twelve tips to ensure internet security
15 - Use a debit card instead
16 - Use two cards to beat the banks
17 - Use your credit card to save bank fees
1. Avoid cash advances
Interest-free periods offered on credit card accounts do NOT apply to cash advances. In most cases, you will pay interest on that cash right from the time you withdraw it. ANZ and Westpac cardholders pay a bigger penalty - a fee of 1.5 per cent of the withdrawal. That's $15 straight off on a $1000 credit card cash advance.
2. Choose a card that matches your needs
Make sure that the credit card you use is the most suitable for your spending patterns. If using a card for extended credit and don't pay off the balance in full each month, choose a card with a lower rate. It may not offer any interest-free period, but the lower interest rate should save you more in the long run. If you use your card for the convenience of paying for everyday purchases such as petrol or groceries, try a credit or charge card with maximum interest-free days, then make sure you pay it off in full each month. This way you get the benefit of up to 62 interest-free days on purchases, as well as rewards, discounts and frequent flyer points. But watch the annual fees on rewards cards.
3. Do you qualify for a 'relationship discount'?
Relationship discounts are available from banks and credit unions for those borrowers who consolidate a range of banking business with the one institution. Home and personal loan interest rate discounts, term deposit bonuses, savings account fee waivers and credit card annual fee waivers are commonly offered.
4. Do you qualify for annual fee waivers?
Some institutions offer to waive the annual fee if you spend enough on your card each year, or if you have a home loan or lots of savings with the bank. If your card spend is more than $5000-$10,000 a year you may be able to choose a card with all the benefits you want and avoid the annual fee. But make sure you only use your card to make purchases you were going to make anyway. Spending money for the sake of reducing fees or earning rewards points is false economy.
5. Don't be distracted by sweeteners
Many lenders offer credit cards that include introductory discounted interest rates, rewards programs and insurance. Make sure you look at the overall ongoing cost of credit of any card option you consider - the standard interest rate, interest-free period, annual fees - and weigh these up against the real value (if any) of the added extras.
6. Don’t let ancillary card fees creep up on you
Watch out for the increasing range of ancillary fees and penalties charged for using your credit card. It's not just the annual fee and interest charges you have to worry about these days but fees for late payment of your monthly statement, exceeding your credit limit, having a periodical payment refused, issuing secondary cards on the same account, replacing a lost card, duplicate statements, taking cash advances and making overseas ATM withdrawals. These all come at a cost ranging between $4 and $90.
7. Interest-free periods don't apply unless you pay off in full
To avoid paying interest on your credit purchases you must pay the full outstanding balance on your statement (not just the minimum payment required) by the due date. If you don't, you will be charged interest right back to the date of purchase on each item – thus forfeiting the interest-free period on those PAST purchases. What's worse, you must pay the balance off in full before you will get any interest-free period on CURRENT and FUTURE purchases.
8. Look beyond the banks
Get a feel for what's on offer across the wide range of financial providers around these days. Credit unions, building societies, mortgage originators, community banks and boutique online or telephone banks may offer better interest rates or lower fees than the big banks because they are anxious to win new business or they are non-profit organisations.
9. Loyalty can cost you
Store cards such as David Jones and Myer may offer benefits of convenience, discounts, added warranties and extended credit, but aren't cheap. Advertisement
AdvertisementAlthough these cards don't charge annual fees, the interest rate can be up to seven percentage points higher than alternative cards. Shoppers should therefore use them for specials and loyalty benefits, but pay them in full by the due date to avoid being whacked with high interest charges.
10. Maintain card security as fraud grows
The instances of ATM and credit card fraud are on the rise, as latest disturbing news reports reveal.
InfoChoice has compiled the following tips to help avoid becoming a victim:
don’t let anyone swipe your card twice without giving you a ‘transaction cancelled’ receipt for the first swipe – card ‘skimming’ is growing where fraudsters swipe cards through a second machine to record details.
Be on your guard when withdrawing money from ATMs - if anything seems out of place with the machine or people around you, don't transact.
Hang onto ATM receipts as proof of your transactions.
When buying over the Internet, deal only with reputable online merchants whose sites offer full security (check the padlock sign at the bottom of your web browser)
don't send card details by e-mail, your details are not secure (if you must, send half your card number through in one email, the rest in a second message)
Avoid paying by credit card over the phone or by mail order. If you must, only give card details to established companies with a verified physical address.
keep your card in sight at all times to ensure no-one copies your card details.
don’t store copies of your password or security number with the card
beware letterbox thieves – arrange to pick up new or replacement cards from your branch rather than have it sent through the mail
check statements closely each month and report any unauthorised transactions to your bank immediately
read correspondence from your bank before discarding it – it may contain important card account information and not just marketing material
11. Make low-interest-rate cards work for you
If you're a "revolver", a card user who doesn't pay off your card in full each month and has debt revolving from one month to the next, increasing competition is working in your favour. A host of new low-rate cards are on the market which have interest rates up to 9 percentage points lower than the high interest rate cards charging 16 to 18 per cent. There are also many balance transfer offers around that give you even lower rates of 5 per cent for the first six months or so on balances you transfer from another card. You could save $200 in interest in the first year alone on a $2000 revolving card balance by taking advantage lower interest rates.
12. Pay off more than the minimum each month
Don't be content just to pay the minimum payment amount. For those who can't pay off the whole balance on their cards, it's important to try and pay as much as possible each month. Paying just the small minimum required each month will consign you to long-term revolving debt incurring enormous total interest charges over time. Card providers have lowered the minimum payments from 3 or 4 per cent of the outstanding balance to as low as 1.5 per cent in some cases in recent years.
If you can't pay more than the minimum, it's probably time to transfer the debt off the card to a personal loan at a lower interest rate.
13. Think hard about the rewards you want
Annual fees for cards are on the increase – and the highest fees are usually on the cards with a rewards program attached. At the same time, the points earning rate is going down. Reserve Bank reforms forced on credit card providers mean they are no longer willing to offer frequent flyer points without charging card holders for the privilege. Either by a higher annual fee or introducing a dedicated rewards fee. It now pays to make sure you aren't paying for a reward program that you don't want. If you're chasing frequent flyer points make sure the benefits outweigh the costs, that is, the value of the points you earn each year in flights is more than the annual fee. This is becoming more difficult to achieve as many reward programs now offer less than one Qantas point per dollar spent.
14. Twelve tips to ensure internet security
Online banking fraud is on the rise and there are a number of ways you can protect your credit card and bank accounts if you transact over the internet:
keep your computer secure and the access to it;
don't send credit card or account details by e-mail;
reject any email that asks you to follow a link to website and input account details for verification - even if the website looks authentic, its probably a fake replica
make sure you log out of your online account when finished - especially at work, libraries and net cafes
deal only with established and reputable merchants;
only make payments to secure websites - look for the padlock symbol in the bottom-right of your browser and click for details
if using a new site, do business first in a small way;
check your accounts and report discrepancies immediately;
ignore the "remember my password option" on banking and shopping sites
change your password regularly;
cancel any card that has been used fraudulently;
read a company's privacy policy before buying online
15. Use a debit card instead
The safest form of card is not a credit card at all, but a debit card which offers all the convenience of paying with plastic. A debit card links to your savings account and debits it to cover the costs of purchases. Some cards can act as both a debit and a credit card.
16. Use two cards to beat the banks
Disciplined users can use two cards to maximise the benefits of both interest-free periods and lower interest rates. Typically cards offer one and not the other. However, if you have one of each type of card you can:
make all your credit purchases on the card with interest-free days.
if you don't have the ready cash to pay the account in full by the due date, use a cash advance instead from the low-interest card to pay it off.
This means you have made use of the interest-free period but have the outstanding debt attracting a lower interest rate.
Of course, it is better to pay any outstanding balance by the due date and be done with it, rather than rolling your credit over from month to month like this.
17. Use your credit card to save bank fees
Instead of withdrawing cash to make purchases, use a credit card with interest-free days to make as many purchases as possible. At the end of each month, pay off your credit card in full by the due date using just one of your free transactions.
2 - Choose a card that matches your needs
3 - Do you qualify for a 'relationship discount'?
4 - Do you qualify for annual fee waivers?
5 - Don't be distracted by sweeteners
6 - Don’t let ancillary card fees creep up on you
7 - Interest-free periods don't apply unless you pay off in full
8 - Look beyond the banks
9 - Loyalty can cost you
10 - Maintain card security as fraud grows
11 - Make low-interest-rate cards work for you
12 - Pay off more than the minimum each month
13 - Think hard about the rewards you want
14 - Twelve tips to ensure internet security
15 - Use a debit card instead
16 - Use two cards to beat the banks
17 - Use your credit card to save bank fees
1. Avoid cash advances
Interest-free periods offered on credit card accounts do NOT apply to cash advances. In most cases, you will pay interest on that cash right from the time you withdraw it. ANZ and Westpac cardholders pay a bigger penalty - a fee of 1.5 per cent of the withdrawal. That's $15 straight off on a $1000 credit card cash advance.
2. Choose a card that matches your needs
Make sure that the credit card you use is the most suitable for your spending patterns. If using a card for extended credit and don't pay off the balance in full each month, choose a card with a lower rate. It may not offer any interest-free period, but the lower interest rate should save you more in the long run. If you use your card for the convenience of paying for everyday purchases such as petrol or groceries, try a credit or charge card with maximum interest-free days, then make sure you pay it off in full each month. This way you get the benefit of up to 62 interest-free days on purchases, as well as rewards, discounts and frequent flyer points. But watch the annual fees on rewards cards.
3. Do you qualify for a 'relationship discount'?
Relationship discounts are available from banks and credit unions for those borrowers who consolidate a range of banking business with the one institution. Home and personal loan interest rate discounts, term deposit bonuses, savings account fee waivers and credit card annual fee waivers are commonly offered.
4. Do you qualify for annual fee waivers?
Some institutions offer to waive the annual fee if you spend enough on your card each year, or if you have a home loan or lots of savings with the bank. If your card spend is more than $5000-$10,000 a year you may be able to choose a card with all the benefits you want and avoid the annual fee. But make sure you only use your card to make purchases you were going to make anyway. Spending money for the sake of reducing fees or earning rewards points is false economy.
5. Don't be distracted by sweeteners
Many lenders offer credit cards that include introductory discounted interest rates, rewards programs and insurance. Make sure you look at the overall ongoing cost of credit of any card option you consider - the standard interest rate, interest-free period, annual fees - and weigh these up against the real value (if any) of the added extras.
6. Don’t let ancillary card fees creep up on you
Watch out for the increasing range of ancillary fees and penalties charged for using your credit card. It's not just the annual fee and interest charges you have to worry about these days but fees for late payment of your monthly statement, exceeding your credit limit, having a periodical payment refused, issuing secondary cards on the same account, replacing a lost card, duplicate statements, taking cash advances and making overseas ATM withdrawals. These all come at a cost ranging between $4 and $90.
7. Interest-free periods don't apply unless you pay off in full
To avoid paying interest on your credit purchases you must pay the full outstanding balance on your statement (not just the minimum payment required) by the due date. If you don't, you will be charged interest right back to the date of purchase on each item – thus forfeiting the interest-free period on those PAST purchases. What's worse, you must pay the balance off in full before you will get any interest-free period on CURRENT and FUTURE purchases.
8. Look beyond the banks
Get a feel for what's on offer across the wide range of financial providers around these days. Credit unions, building societies, mortgage originators, community banks and boutique online or telephone banks may offer better interest rates or lower fees than the big banks because they are anxious to win new business or they are non-profit organisations.
9. Loyalty can cost you
Store cards such as David Jones and Myer may offer benefits of convenience, discounts, added warranties and extended credit, but aren't cheap. Advertisement
AdvertisementAlthough these cards don't charge annual fees, the interest rate can be up to seven percentage points higher than alternative cards. Shoppers should therefore use them for specials and loyalty benefits, but pay them in full by the due date to avoid being whacked with high interest charges.
10. Maintain card security as fraud grows
The instances of ATM and credit card fraud are on the rise, as latest disturbing news reports reveal.
InfoChoice has compiled the following tips to help avoid becoming a victim:
don’t let anyone swipe your card twice without giving you a ‘transaction cancelled’ receipt for the first swipe – card ‘skimming’ is growing where fraudsters swipe cards through a second machine to record details.
Be on your guard when withdrawing money from ATMs - if anything seems out of place with the machine or people around you, don't transact.
Hang onto ATM receipts as proof of your transactions.
When buying over the Internet, deal only with reputable online merchants whose sites offer full security (check the padlock sign at the bottom of your web browser)
don't send card details by e-mail, your details are not secure (if you must, send half your card number through in one email, the rest in a second message)
Avoid paying by credit card over the phone or by mail order. If you must, only give card details to established companies with a verified physical address.
keep your card in sight at all times to ensure no-one copies your card details.
don’t store copies of your password or security number with the card
beware letterbox thieves – arrange to pick up new or replacement cards from your branch rather than have it sent through the mail
check statements closely each month and report any unauthorised transactions to your bank immediately
read correspondence from your bank before discarding it – it may contain important card account information and not just marketing material
11. Make low-interest-rate cards work for you
If you're a "revolver", a card user who doesn't pay off your card in full each month and has debt revolving from one month to the next, increasing competition is working in your favour. A host of new low-rate cards are on the market which have interest rates up to 9 percentage points lower than the high interest rate cards charging 16 to 18 per cent. There are also many balance transfer offers around that give you even lower rates of 5 per cent for the first six months or so on balances you transfer from another card. You could save $200 in interest in the first year alone on a $2000 revolving card balance by taking advantage lower interest rates.
12. Pay off more than the minimum each month
Don't be content just to pay the minimum payment amount. For those who can't pay off the whole balance on their cards, it's important to try and pay as much as possible each month. Paying just the small minimum required each month will consign you to long-term revolving debt incurring enormous total interest charges over time. Card providers have lowered the minimum payments from 3 or 4 per cent of the outstanding balance to as low as 1.5 per cent in some cases in recent years.
If you can't pay more than the minimum, it's probably time to transfer the debt off the card to a personal loan at a lower interest rate.
13. Think hard about the rewards you want
Annual fees for cards are on the increase – and the highest fees are usually on the cards with a rewards program attached. At the same time, the points earning rate is going down. Reserve Bank reforms forced on credit card providers mean they are no longer willing to offer frequent flyer points without charging card holders for the privilege. Either by a higher annual fee or introducing a dedicated rewards fee. It now pays to make sure you aren't paying for a reward program that you don't want. If you're chasing frequent flyer points make sure the benefits outweigh the costs, that is, the value of the points you earn each year in flights is more than the annual fee. This is becoming more difficult to achieve as many reward programs now offer less than one Qantas point per dollar spent.
14. Twelve tips to ensure internet security
Online banking fraud is on the rise and there are a number of ways you can protect your credit card and bank accounts if you transact over the internet:
keep your computer secure and the access to it;
don't send credit card or account details by e-mail;
reject any email that asks you to follow a link to website and input account details for verification - even if the website looks authentic, its probably a fake replica
make sure you log out of your online account when finished - especially at work, libraries and net cafes
deal only with established and reputable merchants;
only make payments to secure websites - look for the padlock symbol in the bottom-right of your browser and click for details
if using a new site, do business first in a small way;
check your accounts and report discrepancies immediately;
ignore the "remember my password option" on banking and shopping sites
change your password regularly;
cancel any card that has been used fraudulently;
read a company's privacy policy before buying online
15. Use a debit card instead
The safest form of card is not a credit card at all, but a debit card which offers all the convenience of paying with plastic. A debit card links to your savings account and debits it to cover the costs of purchases. Some cards can act as both a debit and a credit card.
16. Use two cards to beat the banks
Disciplined users can use two cards to maximise the benefits of both interest-free periods and lower interest rates. Typically cards offer one and not the other. However, if you have one of each type of card you can:
make all your credit purchases on the card with interest-free days.
if you don't have the ready cash to pay the account in full by the due date, use a cash advance instead from the low-interest card to pay it off.
This means you have made use of the interest-free period but have the outstanding debt attracting a lower interest rate.
Of course, it is better to pay any outstanding balance by the due date and be done with it, rather than rolling your credit over from month to month like this.
17. Use your credit card to save bank fees
Instead of withdrawing cash to make purchases, use a credit card with interest-free days to make as many purchases as possible. At the end of each month, pay off your credit card in full by the due date using just one of your free transactions.
Monday, October 16, 2006
How Online Degrees Work
Earning a degree if you're working (or simply busy) isn't as hard as it used to be. The time, distance and financial constraints of higher education have all but disappeared with the arrival of distance learning via telecommunications and online technology. If you're already in the workforce but would like to earn a degree, then the opportunity is there. It may require some technological know-how, current computer equipment, and a lot of self-discipline, but it is definitely easier and more effective than it used to be.
Today, you can earn a degree from a major university without ever having sat in one of their classrooms. Many colleges and universities are jumping on the distance learning bandwagon and offering online courses and degree programs. There are even consortiums of universities, such as Canadian Virtual University (CVU). CVU offers no courses or degrees itself, but simply acts as a portal for courses from 13 universities across Canada. There is also the Global University Alliance that is a consortium of nine schools from the United States, Britain, New Zealand, Australia and the Netherlands. There are even schools that are complete, stand-alone virtual universities with no campuses, no football teams, and no fraternity row.
In this article we'll look at how online degrees work, what you should look for if you are pursuing a degree via the online option, and what employers think of online degrees.
Today, you can earn a degree from a major university without ever having sat in one of their classrooms. Many colleges and universities are jumping on the distance learning bandwagon and offering online courses and degree programs. There are even consortiums of universities, such as Canadian Virtual University (CVU). CVU offers no courses or degrees itself, but simply acts as a portal for courses from 13 universities across Canada. There is also the Global University Alliance that is a consortium of nine schools from the United States, Britain, New Zealand, Australia and the Netherlands. There are even schools that are complete, stand-alone virtual universities with no campuses, no football teams, and no fraternity row.
In this article we'll look at how online degrees work, what you should look for if you are pursuing a degree via the online option, and what employers think of online degrees.
Thursday, October 12, 2006
How to find a Good Mortgage
It is always a good idea to compare rates from several different companies. But there are several factors to keep in mind. The lowest rate isn't always the best deal.
Other factors to consider are "points" and "closing costs".
Points are simply additional finance charges tacked on to the beginning of a loan. They can be paid up front or spread out over the life of the loan. Although adding them into the loan makes your up front costs lower, it greatly increases your total cost since in effect you are paying interest on interest.
Closing Costs are additional fees and expenses necessary in order to transfer ownership of a property. Some examples of typical closing costs are title insurance, title searches, court filing fees, and survey charges. Sometimes closing costs are called settlement costs. These fees are not the same with every lender so be sure to include them in your comparison.
Another factor in the rate that you will be offered is your credit rating. Someone with a good credit rating provides a much lower risk to the lender so they will be able to offer you a lower rate. Some lenders specialize in one type of borrower over another. In other words some lenders prefer higher risk with higher returns while some prefer lower risk borrowers. So if you ask the wrong type of lender either they will turn you down (in the case of a high risk borrower approaching a low risk lender) or their lowest rate will be higher than you could get elsewhere, (in the case of a low risk borrower approaching a high risk lender). Of course some lenders are willing to loan to either type of borrower and just offer them different rates.
The following is a list of lenders that you can shop from. We have listed them with their preference for borrowers as best we can tell and have included their choice of "tag line" wording. Obviously they all claim to have the lowest rates you need to judge for yourself to see if they really do. Best to check out several.
Other factors to consider are "points" and "closing costs".
Points are simply additional finance charges tacked on to the beginning of a loan. They can be paid up front or spread out over the life of the loan. Although adding them into the loan makes your up front costs lower, it greatly increases your total cost since in effect you are paying interest on interest.
Closing Costs are additional fees and expenses necessary in order to transfer ownership of a property. Some examples of typical closing costs are title insurance, title searches, court filing fees, and survey charges. Sometimes closing costs are called settlement costs. These fees are not the same with every lender so be sure to include them in your comparison.
Another factor in the rate that you will be offered is your credit rating. Someone with a good credit rating provides a much lower risk to the lender so they will be able to offer you a lower rate. Some lenders specialize in one type of borrower over another. In other words some lenders prefer higher risk with higher returns while some prefer lower risk borrowers. So if you ask the wrong type of lender either they will turn you down (in the case of a high risk borrower approaching a low risk lender) or their lowest rate will be higher than you could get elsewhere, (in the case of a low risk borrower approaching a high risk lender). Of course some lenders are willing to loan to either type of borrower and just offer them different rates.
The following is a list of lenders that you can shop from. We have listed them with their preference for borrowers as best we can tell and have included their choice of "tag line" wording. Obviously they all claim to have the lowest rates you need to judge for yourself to see if they really do. Best to check out several.
Avoiding Credit Card Debt
Learn how to use credit cards wisely so that you don't get buried in credit card debt.
Credit cards can be a great thing -- they're convenient, can help build good credit if used properly, and are useful in emergencies. But they can be dangerous, too. Because you can charge more than you can afford and make very low monthly payments, the temptation to overspend is tremendous. That, combined with credit cards' extremely high interest rates, cause many people to spiral into debt. To avoid becoming one of the millions of Americans struggling under a huge amount of credit card debt, learn to use credit cards wisely. Here's how.
Don't Use Your Credit Card as a Loan
A credit card can be two things, depending on how you use it. If you carry a balance, it is a very high interest loan. If you make only the minimum payment (usually 2-3% of the balance) each month, you'll be paying off the debt for years and years to come and will pay a huge amount of interest. On the other hand, if you pay off the balance each month, a credit card becomes a very convenient way to purchase items and services without carrying around a lot of cash. Use your credit card as a cash substitute, not as a high-interest loan.
Charge Only What You Can Afford
Don't use a credit card to finance an unaffordable lifestyle. If you can't pay off the entire balance every (or almost every) month, then you are overspending. Use these guidelines to determine what you should and shouldn't charge:
You have cash in the bank to cover the purchase. If you have sufficient cash in the bank to make a purchase, go ahead and charge it. Then pay off the balance in full when you get the statement.
Credit cards can be a great thing -- they're convenient, can help build good credit if used properly, and are useful in emergencies. But they can be dangerous, too. Because you can charge more than you can afford and make very low monthly payments, the temptation to overspend is tremendous. That, combined with credit cards' extremely high interest rates, cause many people to spiral into debt. To avoid becoming one of the millions of Americans struggling under a huge amount of credit card debt, learn to use credit cards wisely. Here's how.
Don't Use Your Credit Card as a Loan
A credit card can be two things, depending on how you use it. If you carry a balance, it is a very high interest loan. If you make only the minimum payment (usually 2-3% of the balance) each month, you'll be paying off the debt for years and years to come and will pay a huge amount of interest. On the other hand, if you pay off the balance each month, a credit card becomes a very convenient way to purchase items and services without carrying around a lot of cash. Use your credit card as a cash substitute, not as a high-interest loan.
Charge Only What You Can Afford
Don't use a credit card to finance an unaffordable lifestyle. If you can't pay off the entire balance every (or almost every) month, then you are overspending. Use these guidelines to determine what you should and shouldn't charge:
You have cash in the bank to cover the purchase. If you have sufficient cash in the bank to make a purchase, go ahead and charge it. Then pay off the balance in full when you get the statement.
Credit Card Is A Powerful Tool, Use It Wisely
How To Use Your Credit Cards Wisely
by: Noel Hynes
Are you one of the thousands pulling your hair out trying to figure out how you're going to pay your credit card bills? Using your credit cards sensibly will help you avoid a number of monetary problems and help you to create a good credit rating for yourself
So here is some information to help you get your credit card problems under control.
Buying with a Credit Card
Credit cards are convenient for buying things now and paying later. Credit card companies are in business to make money. Don't forget that every time you use your credit card you are borrowing money. You will pay a finance charge if you don't pay off your balance each month.
Millions of people use credit cards to avoid carrying large amounts of cash, for emergencies, to track spending, etc. However, charging more than your income allows can be worrisome and potentially devastating to your finances and your credit rating. The pitfalls of credit card use are the accumulation of large amounts of debt and the inability to make more than the minimum monthly payment.
Credit Card Repayments
It's important to carefully check the credit card repayment requirements. Some credit card companies have lowered minimum monthly payments to less than two percent of the balance. It could take 30 years or more to pay off your credit cards if you pay only the minimum payment. Debit cards should not be confused with credit cards. There is no credit extended with a debit card. The money is deducted directly from your savings or checking account. The bottom line is don't spend more than you can afford to pay on a monthly basis.
Credit Card Applications
Limit the number of credit card applications you fill out. There will be an inquiry into your credit report for each application you submit. Your credit report contains a record of every company or institution that has evaluated your credit. It reflects negatively on your credit score if you have an inquiry that does not lead to the issuance of a credit card. Obtaining too many credit cards can affect your ability to finance other purchases as well, such as homes or automobiles. Too much available credit can cause suspicion in the eyes of a lender as to your ability to repay your potential debt.
Features of a Credit Card
Consider what you are looking for in a credit card such as the interest rate, annual fee, grace period, and credit line. Be wary of companies offering cards with a low introductory interest rate that often lasts for only a brief period of time, after which they become considerably higher. The average interest rate for credit cards is over fifteen percent. Choose a credit card with no annual fee. Credit card issuers are paid a percentage from the vendor each time you make a purchase. Many companies have waived the annual fee to attract customers. Avoid cards offering a high credit limit. There is great potential to overspend. Instead, pay down your balance before using your card to make additional purchases. Send in your payment well ahead of the due date. Issuers may charge late fees, and late payments could result in a considerably higher interest rate than the advertised rate.
So the bottom line is by using your credit cards wisely you can reduce adverse effects of credit cards and maximize the benefits by spending wisely, using self-discipline, and paying off your balance as quickly as possible to avoid unnecessary fees.
by: Noel Hynes
Are you one of the thousands pulling your hair out trying to figure out how you're going to pay your credit card bills? Using your credit cards sensibly will help you avoid a number of monetary problems and help you to create a good credit rating for yourself
So here is some information to help you get your credit card problems under control.
Buying with a Credit Card
Credit cards are convenient for buying things now and paying later. Credit card companies are in business to make money. Don't forget that every time you use your credit card you are borrowing money. You will pay a finance charge if you don't pay off your balance each month.
Millions of people use credit cards to avoid carrying large amounts of cash, for emergencies, to track spending, etc. However, charging more than your income allows can be worrisome and potentially devastating to your finances and your credit rating. The pitfalls of credit card use are the accumulation of large amounts of debt and the inability to make more than the minimum monthly payment.
Credit Card Repayments
It's important to carefully check the credit card repayment requirements. Some credit card companies have lowered minimum monthly payments to less than two percent of the balance. It could take 30 years or more to pay off your credit cards if you pay only the minimum payment. Debit cards should not be confused with credit cards. There is no credit extended with a debit card. The money is deducted directly from your savings or checking account. The bottom line is don't spend more than you can afford to pay on a monthly basis.
Credit Card Applications
Limit the number of credit card applications you fill out. There will be an inquiry into your credit report for each application you submit. Your credit report contains a record of every company or institution that has evaluated your credit. It reflects negatively on your credit score if you have an inquiry that does not lead to the issuance of a credit card. Obtaining too many credit cards can affect your ability to finance other purchases as well, such as homes or automobiles. Too much available credit can cause suspicion in the eyes of a lender as to your ability to repay your potential debt.
Features of a Credit Card
Consider what you are looking for in a credit card such as the interest rate, annual fee, grace period, and credit line. Be wary of companies offering cards with a low introductory interest rate that often lasts for only a brief period of time, after which they become considerably higher. The average interest rate for credit cards is over fifteen percent. Choose a credit card with no annual fee. Credit card issuers are paid a percentage from the vendor each time you make a purchase. Many companies have waived the annual fee to attract customers. Avoid cards offering a high credit limit. There is great potential to overspend. Instead, pay down your balance before using your card to make additional purchases. Send in your payment well ahead of the due date. Issuers may charge late fees, and late payments could result in a considerably higher interest rate than the advertised rate.
So the bottom line is by using your credit cards wisely you can reduce adverse effects of credit cards and maximize the benefits by spending wisely, using self-discipline, and paying off your balance as quickly as possible to avoid unnecessary fees.
