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Thursday, 14 January 2010

5 Basic Credit Card Safety Tips

Ultimately keeping you credit card safe is you responsibility. Indeed, in a worst case scenario, if it can be proven you may have been negligent in keeping your credit card safe, you may find yourself liable for the cost of all transactions made fraudulent on your account should you lose the card. To help you avoid this, here are 5 basic credit card safety tips:

1. Never have more cards than you need

While it is always advisable that you have more than 1 credit card, in case it gets lost, you should never have more credit cards than you actually need to use. The principal reason why this is the case is because it becomes harder to keep a track of which cards you have and where you have kept them with the more cards you have.

2. Always keep a photocopy of your cards

How many times have you been asked what you card number is only to find yourself looking for your card to get the number? Now, what happens if you have a card stolen and no credit card statement to-hand? You have a problem! For this reason, it is always best practice to take photocopies of you credit cards to so that always know where to find the number should anything unfortunate happen to your card.

3. Always keep your receipts separate

Among the most important of the basic credit card safety tips you’ll receive is never to keep your credit cards and credit card purchase receipts in the same place – because likely as not if you have lost your card, or if it is stolen, then you’ll have lost or stolen the receipts as well. Now there is no way for you to vouch which transactions were yours and which where not – or, there is no way to tell which was the last genuine transaction you made.

Moreover, never keep a record of your PIN with your card, this is only asking for trouble!

4. Never give your account number to someone you don’t know

If you are ever asked to give your credit card details to someone you don’t know, or who as initiated a discussion with you (rather than the other way round) over the phone or via email, you should always refuse. Worst come to the worst, phone the card issuer and ask them if it is okay for you to divulge the information or phone the enquirer back. If the enquirer seems reluctant to accept this, you have to ask yourself why!

5. Never leave your account details open to public viewing

It may sound rather basic to say you should never let ‘Joe public’ see your credit card account details, but ask yourself this question: “How often have you received a publication subscription form in postcard format?” Now, suppose you complete this with your credit card details filled in. Suddenly half the world has access your credit card number, expiry date and signature!

Although the above may sound like 5 basic credit card safety tips you already know, you would be surprised to see how many people fail to follow one or all of them!


Thursday, 22 October 2009

10 Benefits of Using Credit Card

1. Build credit history: Charging small amounts and paying them off is a great way to establish credit history. Without credit history, it can be more difficult to get loans (including good loans such as student loans or a mortgage), secure insurance, or even land a job. If you are able to secure a loan without any credit history, your loan rate may be higher as a result.

2. Emergency source of funds: I mean for a real emergency. Not everyone has $1000 cash to buy emergency airline tickets, make car repairs, deal with a natural disaster, etc. And in my opinion, paying 15% interest is much better than taking out a payday loan in an emergency. Some payday loans have interest rates near 1000% if left for an entire year.

3. Fraud / Theft Protection: If your card is lost or stolen, you are only responsible for the first $50 in unauthorized charges. Fraud protection for debit is similar, but only if you notify your financial institution within 2 days. If you wait longer than 2 days, you can be liable for up to $500 on your debit account. Fraud and theft protection is non-existent for cash.

4. Disputed charges: When you dispute a charge on your credit card, most credit card companies remove the charge until the dispute is resolved. With a debit card, the money will not be returned unless you can prove the dispute in your favor. With cash, the money is usually gone.

5. Rewards: Many credit cards offer rewards including cash back, airline miles, discounts, rebates, gift cards and many others. Most of these rewards are designed to get people hooked into using the cards or spending more than they would otherwise, but used properly, rewards points can earn you a lot of money. Here are some credit cards that offer a sign up bonus.

6. Convenience: I don’t like to carry large amounts of cash with me. If you lose it, it’s gone. If it’s stolen, it’s gone. Credit cards are small, convenient, and carry better protection. They are also convenient to use to buy things on-line, or to buy large dollar items. Another, convenience is travel. I will be going on a cruise next week and if I use my credit cards I won’t need to exchange as much currency. Some credit cards don’t even charge a foreign transaction fee.

7. Car rentals: Some car rental agencies will not allow you to rent a car if you do not have a credit card. Some may allow you to rent a car with a debit card, but may lock up a substantial amount of money in your account until you return the car. You won’t be able to use those funds during that time. Many credit cards also provide additional liability insurance when you rent a car. Debit cards? Not so much.

8. Extended warranties: Many credit card companies provide extended warranties on items you purchase with their card. In some cases, the manufacturer’s warranties are doubled. That’s not a bad feature!

9. Short term loan: Credit cards usually have a grace period, after which your payment is due. This can be several weeks, which allows you to earn interest on purchases you have already made. While this may not be a big deal for a hundred dollars, if you charge a thousand dollars every month and add it up over the course of a year, you can actually earn some decent money with this. With cash or debit cards, the money is immediately removed from your account and you do not earn any interest on it.

10. Budgeting tools: Most credit card companies provide detailed transaction logs which are easily downloaded into Quicken or MS Money. This makes budgeting much easier to track and plan. Yes, it can be done with cash, but it is much more labor intensive. And time, as they say, is money.


Wednesday, 7 October 2009

How to Choose Credit Card?

Choosing a credit card can be a difficult decision, after all, there are thousands of credit cards available from various financial institutions offer different rewards programs. The credit card should be chosen on the merits that benefit the consumer and fit in with their lifestyle and spending habits. Here are some things to keep in mind when choosing a credit card – whether it is your first or your fifth credit card:

What is the Interest Rate?

The interest rate of the credit card can directly affect the expense of the credit card on a monthly basis. The interest rate should be as low as possible – or as low as your credit rating will allow. Consumers with high credit ratings are offered lower interest rates than those consumers that have a lower credit score.
The interest rate will be multiplied by the balance to come up with the minimum payment amount. Keep this in mind if you intend to carry a balance on the credit card that you are choosing. Credit card companies have three tiers of interest rates; premium interest rates, elite interest rates and standard interest rates.
Maintain a high credit rating to get the lowest interest rate.

Are Rewards Programs Available with the Credit Card?

If the credit card comes with the choice to collect rewards, there are three options for these rewards; cash back rewards, rewards points which are often given for each dollar purchased with the credit card and travel rewards that can help you to collect points with your favorite airline or travel rewards system.

There are many rewards cards available, the choice is up to you – many programs offer flexible redemption programs to change which types of rewards are redeemed through the program. Look for a rewards card that has no monthly or annual limits on the amount of rewards that can be redeemed or earned as well as a rewards credit card that comes without a separate enrollment fee – aside from that of the credit card.

What Types of Fees Are Associated with the Credit Card?

For most credit cards, there is more than just an annual fee associated with the credit card. The annual fee is the usage fee for the credit card and is often put into place when cards are associated with rewards programs.
There are many other fees which should be priced before using the credit card to ensure it is used wisely; over-limit fees, late fees for payments that have not been received on time and balance transfer fees. Knowing these fees and the amounts that they could cost the card holder has a sobering effect and could help to avoid bad credit card behavior.

The Basics of Smart Credit Card Use

Using a credit card is not rocket science, but unfortunately, especially for first time card holders the card does not come with an instruction manual. Confused card holders that are unaware of policies are often the card holders that end up in debt with high interest rates, balances that have been carried from month to month and the fees associated with late payments and the card holder allowing the balance to exceed the credit limit that has been granted. Simple credit card “rules” could prevent these credit mistakes that could leave you in debt and cost you the good credit rating that the card holder has worked so hard for.

Don’t Carry a Balance

Carrying a balance can cost the card holder money each month in convenience fees referred to as interest. The monthly payment will often increase if there has been a balance on the card and are accounted as the cost of using money that isn’t yours! Many consumers are unaware that repaying the credit card up to twenty days later means that the purchases were repaid within the grace period of the credit card and therefore are not subject to interest fees. However, the card must be balance free from to month to save money this way.

Pay at Least the Minimum Payment… Pay More if You Can

Missing the minimum payment on the credit card can cost you more than high levels monthly payment and fees for missing the payment. It can cost you the good interest rate that you have been granted. Once a payment is missed on the credit card the credit card company can raise your interest rate, as you have begun to show risky payment behavior! If you are carrying a balance, your monthly payment can increase as much as ten percent.
Paying the minimum monthly payment to a credit card that is at its limit could take up to ten times longer to repay than paying double, or even triple the monthly payment. These minimum payments are designed to repay interest, with a tiny portion of the balance. Paying only the minimum payment is a great way to get into debt, and stay there.

Watch out For Fees

When using a credit card, it is important to remember that they are often one of the highest costing financial services that are available to consumers. There are many fees associated with the card including over limit fees, late payment fees, foreign transfer exchange fees, balance transfer fees and even annual fees that allow for use of the credit card. Watch these fees and you can save hundreds of dollars per month throughout the lifetime use of the credit card.
Using these tips, you should be able to use the credit card wisely and reduce the chances that you could be facing credit card debt in the future. Be sure to use the card wisely and purchase only what you can afford to repay – any other behavior is ultimately going to lead to debt.

Another Credit Card Tips

Read the fine print. If you receive an offer for a pre-approved credit card or if someone says they'll help you get a credit card, find out the details first. You need to know what interest rate you will be paying and for how long. Some credit cards offer low rates as "teasers" that are raised after a certain period of time or only apply to balances transferred from other cards. You also need to know about any annual fees, late charges or other fees, and whether there are grace periods for payment before interest is applied. If the terms of the offer aren't provided or aren't clear, look for a credit card from someone else.

Shop around. Interest rates and other terms vary widely. There are also different types of cards, such as secured cards that require a deposit to cover any charges that are made, cards that can also be used as telephone calling cards, cards that allow you to either charge something and pay later or deduct the charge from your bank account immediately, and cards that can only be used to charge merchandise from a catalog. Make sure you know what kind of card you're being offered and what type of card meets your needs best.
Don't pay fees up front to get a credit card. Legitimate credit card issuers don't ask for money up front, unless you're applying for a secured card. If you are applying for a secured card, make sure you understand how your deposit will be used. Don't pay someone to help you get a credit card; if you have good enough credit, you can get one yourself, and if you have bad credit, no legitimate lender is likely to give you one.
Use your credit wisely. Many Americans are in debt because they have taken on more credit than they can handle or have not used credit responsibly. Don't apply for more cards than you absolutely need, and don't charge more than you can afford. To maintain a good credit rating, pay bills promptly. Avoid interest charges by choosing a card that offers a grace period and paying the entire balance due each monthly. If you can't pay the full balance, choose a card with the lowest interest rate.
Get help if you feel you're in over your head. Consumer Credit Counseling Service, a nonprofit organization, provides low or no cost services to consumers who need a plan to repay debts and improve their credit.