A $2,000 balance on your credit card – how did that happen? (Oh yes, dinner at Chez Fifi, new tires, school clothes for the kids…) Thankfully the minimum payment is only $38. You can afford that!
Choosing the right credit card is crucial to building your credit. Don’t leave this important decision to chance. Learn the ins and outs of all those offers to find the card that best fits your unique needs.
There is no magic wand to poof away debt. But you can save money and pay what you owe faster by thoughtfully managing your credit card balances. Start with a close look at your finances, and follow our tips to power down your balances.
So, you’ve done your homework and determined a balance transfer is right for you. You still need a plan to choose the best way to consolidate your debt.
If your employer issues credit cards for business-related purposes, count yourself lucky. Depending on company policy, this provides workers like you with the flexibility to make essential purchases, such as airline tickets and company-related travel. It also relieves employees of the burden of using their own credit cards for such purchases, and it eliminates the wait time on company reimbursements. The downside? Be careful how you use the company card, because your job could be on the line.
Buying with plastic can cost you little or plenty, depending on how you use it. Knowing the true price of credit before you charge can save countless dollars and hours of anxiety.
Be aware of your grace period. Typically between 21 to 30 days, this is the time you have before interest is assessed. Some creditors only charge interest on carried-over balances. Generally, there is no grace period for cash advances. Interest accumulates immediately, and in most cases you will also be charged a service fee, making this a very costly form of credit.
If used carefully, credit can be a helpful financial tool. For example, using credit to purchase a home now, rather than trying to save up the whole purchase price, makes financial sense. The home provides a place to live that will perhaps increase in value and the mortgage interest offers a tax deduction. Credit may also help you deal promptly with costly emergencies.
Do you remember being a teen, when your folks insisted on knowing where you were going, who you’d be with, and when you’d be back? It was annoying then, but as an adult you probably understand they just wanted you to be safe.
Well, we don’t care so much about the company you keep, but giving us the “where and when” of your travel plans can help prevent problems when you use your card, especially if you are going overseas.
“Why would you borrow money for something you could buy outright?”
I heard this question a lot when I was a young ensign in the Navy. I had set up a credit building loan with the credit union. The very nice loan officer had taken the time to explain that if I built my credit now – when I didn’t need it, I would be able to get financing and the best possible loan rate when I was ready to buy a house or make any type of major purchase.
The advice I got that day has paid off in spades. Thirty years later, after having bought two houses, refinanced multiple times, and made too many major purchases to count, the money I’ve saved in interest dwarfs the small amount of interest I paid to establish my credit. Nowadays, you can build your credit without spending a dime in interest by setting up a secured credit card. But secured credit cards are not all the same.
“Many third party institutions offer secured cards with fees or other pitfalls,” says Scott Post, SVP of Strategy and Delivery at Hanscom FCU. “A good financial institution will make it as easy as possible to get you on the road to good financial health.”
Topics: Credit Card
If you are familiar with the way credit scoring works, you probably know that avoiding being “maxed out” on your credit cards and other revolving accounts generally impacts your score in a positive way. You might also be aware that the FICO score — the most popular model in a credit score review — dedicates 30% of its score calculation to how much of your available credit you are using. The lower percentage of available credit you are using, the better your FICO score will be. It would seem then that logic dictates that a no-limit credit card would be the best possible solution for this part of your FICO score calculation, since you theoretically have an infinite amount of available credit. But this is one place where logic fails.