Tag: Credit Card


How to Make Your Credit Card Work for You, Not Against You!

25
August

Credit Cards

Planning to get a credit card? Before you do, here are a few tips on credit card do’s – measures that will help you enjoy the benefits of credit cards to the max if you follow them to the letter!

Know Why You Want One

First, you have to be sure why you need a card. What is your purpose?

Many people get credit cards so that they can establish a good credit record. Their primary purpose is long term; maybe they are planning to buy a home in the future, or maybe they plan to get a car loan, or apply for a home renovation. Whatever the purpose is, having a credit card and managing it well can greatly help establish good credit history.

Some people get credit cards because they want to enjoy the ease and convenience when shopping online or via the phone. Some get credit cards because it’s easier to use when shopping in Malls and specialty stores.

There are also people who get credit cards for the rewards offered every time the credit card is used. Of all the rewards offered by credit card companies, the most sought after are travel rewards, frequent flyer rewards, and flights.

Be Sure to Get the Right Credit Card

If getting a credit card is really a necessity for you, be sure to get the right card. What will make a credit card the right card for you?

One consideration you need to look into is the card’s interest rate. Ask yourself if you can afford it. It’s also very important that you know the fees and charges that comes with it. Evaluate your finances and determine if you have the capacity to pay off your loan or debt with the interest charges.

What are the features that come with the credit card? Some features come with a higher fee, so be sure to get only the features that you will actually use. There are plenty of credit cards that offer numerous features which may not be very useful for you; so avoid them because they will add up to                                                                                                  your costs.

Use the Credit Card Wisely

The most fundamental principle in credit card use is to “use it only when necessary!”

Do not use your credit card “just because” … this can be very costly. If you have cash, use cash instead of the credit card when paying for things or services.

Pay On Time!

Another word of advice: pay your credit card bills on time!

“On time” means at least two days before the due date. Why two days in advance? The two days will give you an allowance for your payment to reach the company especially if you are paying through the mail.

Next, pay off everything! If you do this, you will be able to avoid interest. This is the best way to make the most out of your credit card; you are using the lenders money to pay for your purchases free of charge.

If, for some reason, you can not pay everything in full, pay more than the minimum. This will lower the amount you owe tremendously, and it will make payment on the next due date easier.

Most important of all, should you encounter financial challenges that will make payment of your credit card debt difficult, refrain from using your credit card for a while. Never be tempted to use your credit card in this situation – it will cause you more trouble later on.  Slow down with your credit card use. Get back on your feet first, that is, financially. Remember that if and when you fail to pay your debts, it will have a negative effect on your credit record.

These tips are like guideposts; when followed, they will keep you safe from financial troubles in the future.

 

Enhanced by Zemanta

Comment » | Money Matters

Weighed Down By Debts?

24
August

Burdened with too much debt?

Have you ever carried a load that’s too much for your strength? If you had, you would agree with me when I say that with too much load on your back or over your head, your knees will wobble, and as you take one step forward, every step becomes an unsure step, never knowing until when your knees with hold you up, or how long you can remain standing up.

Carrying the burden of debt from personal loan is the same. Every day that passes by means additional interest, which means that your debt is growing and growing … consistently.

When you find yourself in this situation, know that there is still hope; that something can still be worked out to improve the situation you are in. All you need is a good strategy and the will to do!

Some of you might wonder what strategy means. Strategy is defined as “the art and science of planning and marshaling resources for their most efficient and effective use.”

In layman’s term, it means planning how to pay off all your debts from your personal loans; making an inventory of all your available resources; and using all these wisely to pay off all your debts the soonest possible time.

One strategy that is very simple is to pay off everything by prioritizing payments through the process of elimination. This means you have to pay off first the ones that carry with it the highest interest.

So here’s the three-step strategy for debt management:

 

Step 1

Make a record of all your personal debts. Remember to write them down.  In your list identify the nature of debt, the commercial lender, how much the interest is, and the total amount you owe. Recall all your debts; never leave one unrecorded.

Include in your list the following: your personal loans and mortgages, your credit card debts, money you borrowed from your friends and relatives, and your old student loans from when you were in College. Again, always remember to include everything.

One very popular adage says: “what you can not measure, you can not manage”. Hence the necessity of writing all your debts down in an inventory.

 

Step 2

Identify and classify your debts into two categories: good debts and bad debts.

Good debts are those debts that are necessities, and there’s no other way to pay for them except through loans. Examples of good debts are mortgages, student loans, and car loans.

Bad debts are “revolving” debts. Examples are credit card debts and store debts.

 

Step 3

Make a final list of all your debts, arranged according to priorities; the topmost or number one (1) being the first debt to be paid off, and then so on and so forth.

Debt Management

This does not mean that the debts on the lower ranks do not get paid. It means that if it can be helped, focus most of your resources in paying off first the debt that carry with it the highest interest. Then move downward, slowly and surely, until you are able to pay off everything in time.

One advice at this point is for you to stop saving money first. Saving money in the bank will earn you very little interest, so little it’s incomparable to the amount you are paying for the interest and charges of your outstanding debt. Pay off all your debts first, and then when you’re finally free from debt, you can start saving again.

 

Look into your spending habits. If you have habits that caused all your financial troubles, such as impulsive buying, begin controlling them. Stop using your credit cards. Keep them somewhere where you will not be tempted to use them again. Leave them at home. Do not put them in your purse or wallet. Destroy them by cutting them in half, if necessary. Learn from your past mistakes. Do not commit the same mistakes again.

Lastly, this is the best advice of all;  live within your means.

 

 

 

Enhanced by Zemanta

Comment » | Money Matters

Do You Know How to Get the Most Out of Your Credit Card?

17
August

Credit Card

 

If you are an observant shopper, you probably have noticed that a majority of the people shopping in big stores and malls now use credit cards to pay for their purchases. This is also true in restaurants, in spa’s and salons, in gasoline stations, in airline ticketing offices, actually – practically everywhere.

 

Truly, the number of people using credit cards has tremendously increased. This increase is very apparent if you look and count the cashier or teller lines in shopping malls and groceries exclusively dedicated for those who are paying through credit cards than those who are paying using cash.

Is this a good thing or not? Well, like everything else in life, it depends on how it is used. This also applies to credit cards. In and of themselves, credits cards are not bad per se; it is the manner with which it is used that makes it bad or good.

Benefits of Credit Cards

The use of credit card is designed so that it will be mutually beneficial for all the parties involved. In a normal credit card transaction, there are at least three (3) parties involved: the credit card issuer, the credit card user; and the business.

Credit card lenders offer them to borrowers for a profit. The profit credit card lenders make comes in the form of fees, charges, and interest.

For the business, they make an income when credit card owners purchase their goods/products/merchandise, or when credit card owners patronize their service establishment and pays for the services received. The business’s income then comes from the sales of good and/or services and the corresponding profit from the transaction that took place.

For the credit card user, the benefits are numerous.

One benefit is the ability to purchase things immediately. The credit card affords the holder the convenience of buying something without delay. This can be very helpful during times when huge “sales discounts” are offered unannounced by malls and stores. There are stores that come up occasionally with marketing and sales strategies which offers huge discounts for a limited period; the credit card allows the holder to take advantage of these discounts.

Credit card also allows the user to shop online or purchase things using the telephone. These transactions simply can not be done using cash; hence the necessity for a credit card or a debit card.

Using the credit card to purchase things or pay for services also allows the credit card user to use the bank’s money (or the lenders money) free of charge during the interest-free period; as long as the credit card holder pay’s the total amount before the due date.

The credit card can also be very helpful in paying utility bills before the due date. Failure to pay utility bills on time can be very costly because of the penalty or surcharge that will be added to the amount payable.

Credit cards can also be used to withdraw money from an ATM. This is also called Cash Advance, which comes with a much higher interest compared to the normal use of the credit card (paying for things or services). Again, the cost may be high, but the convenience it affords the user is very invaluable especially in emergency situations.

Credit Card Rewards

Many credit cards also have rewards system, which allows the user to earn rewards every time they use their credit cards. This means that the more often the credit card is used, the more rewards earned. The rewards are also very appealing to almost everyone. Rewards come as free travel miles, free airline tickets, discounted products, or cash back.

In a nutshell, credit cards can be very helpful, but only if you know how to use them to your advantage.  To maximize the benefits of credit cards, always pay 2 days before the due date; avoid carry-over balances; and spend only on things that you can afford. Never abuse your credit card.

Enhanced by Zemanta

1 comment » | Money Matters

« Previous Entries     

↑ Back to top