National Debt Relief - BBB Accredited Business - Get Relief From Credit Card Debt, Medical Bills And Unsecured Loans

What You Should And Shouldn’t Put On Your Credit Cards

man holding multiple credit cardsThe answer to what you shouldn’t put on your credit cards is fairly simple. You shouldn’t put anything on them that you can’t pay off at the end of the month or, worst case, the following month. When you start carrying balances forward you fall victim to what some people have termed the most powerful force on earth – compounding interest. You could end up paying interest on interest, which can be a slippery slope towards very serious problems.

Your best friends or worst enemies

Credit cards have gotten a bad rap for good reasons. If you use them sensibly they can be good friends. But if you don’t they can become your enemy and you could end up drowning in debt. According to one recent study the average American has more than $6000 in credit card debt and the average for indebted households is $15,863. If you were to owe that $6.000 at 15% and made only the minimum payment ($125) each month it would take you 284 months to clear the debt. Just think. You’d be paying on that $6,000 debt for more than 23 years!

The benefits of credit cards

There’s no doubt about the fact that there are benefits to using credit cards. You can use them to earn rewards points, free miles, cash back or all three. Plus, when you use a credit card it lets you defer payment for a few weeks or even more than a month. Just keep in mind that you will only enjoy these benefits if you pay off your balance in full at the end of the month. Otherwise the interest you’ll pay could actually offset any rewards you earned.

The best things to put on credit cards

What are the best things to put on credit cards? The first is travel. When it comes to booking flights, rental cars, hotels and other vacation costs credit cards can help you accumulate lots of points or airline miles that you could then use towards upgrades, flights or hotel stays. Some even offer benefits beyond this including concierge services, rental car insurance, travel insurance, lost luggage insurance and access to nicer airport lounges. In the event your credit card is stolen or lost while you’re vacationing you can alert the card issuer to dispute and void any fraudulent charges. When you travel internationally there are cards that will give you more favorable exchange rates. On the other hand, you need to make sure that your credit card is not one that tacks on a fee of 3% for foreign transactions.

Electronics and appliances

Credit cards often offer extended warranties, price protection and return protection. This means it’s good to put big-ticket items like laptops, computers, refrigerators, washers and dryers on your credit cards. Make sure you check to see which services are offered by your particular card. Some MasterCard, Discover and Citibank cards come with a “price rewind” service so if the thing you purchased goes on sale the card issuer will reimburse you the difference.

Online purchasesadd to basket

Credit cards generally offer better protection against fraud than debit cards and checks. This could be the reason why 50% of consumers recently surveyed said they liked to pay for their online purchases with a credit card. In fact, most credit cards limit your liability to $50 in the event of fraud or identity theft and some will even waive the $50. If you do use your card to make online purchases don’t do it when using public Wi-Fi or a public computer. Wait until you are in a secure site.

Fragile items

If you buy a new laptop, cell phone or some other fragile item it’s good to put the cost on a credit card as it probably offers extended warranties for purchases and even replacement services. Some cards will double the manufacturer’ s warranty on your purchase for up to a year, which would eliminate the need to buy an extended warranty from the store.

Special categories

Many of today’s credit cards offer multiplier rewards in special categories such as gas, groceries and dining out. These special rewards can be for a month or a quarter. For example, if you were to dine out in May this could double or triple your points in a rewards program or the amount of cash you get back. You’ll be alerted to these promotions several weeks in advance so be sure to activate them.

Automatic payments

When you put automatic payments on a credit card and there’s any kind of a dispute you would have proof of payment. If you need to hold those automatic payments for any reason or for some period of time all you would need to do is call your credit card company to take care of this. As noted above it will also likely credit your account right away for any erroneous charges or fraudulent activity.

It’s a good time for credit cards

Now’s a really good time for credit cards if you have good credit. Credit cards have become very competitive and banks are getting more creative about getting and keeping their customers. For example, rewards programs have gotten more flexible. This is in response to customers’ complaints about the rigid rules regarding blackout dates or specific retail partners. As a result, the latest rewards programs generally allow you to earn and redeem rewards in a more flexible way.

Cash back programs are getting more generous. While the industry standard for cash back is still 1%, savvy card users can earn 2% or more. For example the Citi Double Cash Card allows customers to earn 1% on purchases and another 1% for paying them off.

Shop around

If you’re not happy with your credit cards and their rewards or if you simply want to see what else is available now’s a great time to shop around as introductory offers have also gotten better. As an example of this, cash bonuses for first timers increased 7.45% over last year and offers based on miles increased more than 10%. So if you’ve been using the same card or cards for the past several years go to a site such as where you can check out cards based on criteria such as low interest, cash back, no annual fee and points. You may find deals that are much, much better than what you’re getting with your current cards.

Tips For Using Your Credit Cards When Traveling Abroad

Tourist couple walking in city with suitecasePlanning a trip abroad this summer or fall? Good for you. Visiting foreign countries, whether in Europe, Central America or the Far East, can be both fun and educational. And let’s not forget out neighbors to the north and south – Canada and Mexico. They’re both great places to visit and Canada comes with an added plus. We all speak the same language.

A big reason to visit Europe

Now is a great time to visit Europe as the euro has lost nearly 25% of its value versus the U.S. dollar. As an example of this let’s take a hotel room in Paris that costs 300 euros. It would have cost you around $415 to stay in that room 12 months ago, when euros cost $1.385. But now that euros cost $1.06 that same room could be yours for just $318.

Regardless of where you intend to vacation there’s always the issue of how do you access your funds. There are several ways to do this and one of the most popular and simplest is to use your credit cards. They’re both a convenient and effective way to pay for things as you travel. Unfortunately, there are some downsides to using credit cards when abroad. It’s important that you know how to use a credit card when outside the US to make sure that you will have both a safe and enjoyable trip. You definitely want to keep your credit card(s) safe and here are some strategies that could help you do just that.

Inform your credit card issuer

First, it’s wise to let your credit card issuer know if you will be traveling outside the U.S. The card companies have security software to avoid fraud. The result of this is that your card could be declined if you use it someplace unusual. This makes it a good idea to let your card company know you will be traveling, where you’ll be going and when you’ll return.

Avoid high service fees

If you use your credit card within the euro zone your purchase transactions will be free. However, if you make an ATM cash withdrawal within the euro zone you may be charged a high service fee. Be sure to check with your credit card issuer on this before you begin traveling. Make sure you remember the different interest rates on your different cards and their fees for converting currencies, if any. And if possible try to use the card the most that has the lowest interest rate.

Check your perks

You may not be aware of this but there are credit cards that come with perks when you’re traveling but the benefits provided by different cards are not the same. These benefits could include concierge services, medical travel insurance benefits, rental car discounts and free breakfasts at hotels. There are also cards that offer rewards or points when you use them to pay for a flight, a hotel stay and more. If you carry more than one credit card try to choose the one that will get you the best rewards. If you find that none of your cards offer these types of rewards you might think about getting a new one just for your trip.

Be safe, not sorry

If you carry multiple credit cards when traveling abroad don’t keep them all in one place. Do this and you run the risk of having them stolen or lost. When you leave your hotel room to go out for sightseeing or dinner, you might leave one of your cards in your hotel room and then take the others with you. Also be sure to watch out for skimming devices when you use your cards at unusual locations. Try to check out your credit report from time to time to make sure you have not fallen victim to ID theft.

Get a prepaid card?

Depending on where you will be traveling you might consider getting a prepaid card. The functionality of these cards is quite similar to those of a debit card but the money is not deducted from your checking account. That way if you run into any kind of problem, your checking account won’t be affected. Instead, you’ll have to deal only with what’s on the card. You should be able to get a prepaid card very easily at your bank.

Magnetic stripe or “Chip and PIN”?

Don’t make the mistake of thinking that your credit card will be accepted wherever you go. In addition to talking with your credit card company you might want to talk with your travel agent or your destination hotel. Restaurants, hotels and gift shops generally accept credit cards with magnetic stripes. However, you may find there are places such as small retail stores and automated kiosks that accept only what are called “chip and PIN” credit cards. If you think this could be the case, and you don’t have one of these cards, you may need to contact your bank to get one before leaving

Why to carry multiple cards

You might use just the one credit card at home but it can be a good idea to carry multiple cards when traveling abroad – preferably ones from different issuers. The reason for this is simple. Not every credit card is accepted globally, meaning that a second credit card could come in very handy. If you were to run into a situation where your main credit card isn’t accepted, you’ll have a backup that might work.

Have a budget and stick to it

When you plan that dream vacation abroad be sure to calculate how much you can afford to spend. While credit cards can be helpful and convenient they can also be way too easy to use. Don’t let yourself get carried away and spend $200 for that jacket that you hadn’t budgeted for or $400 for that really cool camera. Carry your itemized budget with you on your smart phone or pad and check it periodically to make sure you’re staying on track. That way when you get home you’ll have a credit card bill(s) you can live with and not one that will cause you to faint away from shock.

What You Need To Know About The New Credit Cards Coming Out

credit card chipDid you know that avoiding debt is not the only problem that you need to worry about when using credit cards? Another threat that you need to consider is identity theft.

Thanks to the digital age, all our information is accessible online. Hackers are able to steal our information and use it to steal from us. Once they have our information, they can use it to apply for credit and acquire stuff using it. We end up paying for all the credit purchases made by these thieves because we cannot prove that these were unauthorized transactions.

According to the press release published on, identity theft is the leading complaint that they got from consumers in 2014. It is 13% of the overall complaint that they got. The question is, how does identity theft happen? How exactly can thieves get our information?

One way is for hackers to copy your details through the magnetic strip of your credit card. If you notice, the current credit cards that you own have a magnetic strip on it. This contains vital information about you and allows you to purchase on credit. When thieves get this information, they can buy on credit using your data. That means all their purchases will be credited to your account and you will be left to pay for all of them.

For the past few years, the government had been looking for ways to counter these identity thieves. One of their resolutions is to protect the information taken from credit cards. There is a widespread action among financial institutions and credit card companies to replace the magnetic strip credit card and distribute cards with computer chips in them.

Features of the new credit card

An article published on explained a lot of things about these new credit cards. Apparently, banks in the US are already tired of paying consumers whenever it is proven that they have become victims of identity fraud. After all, it is their loss when consumers do not pay for their debts when it is proven that the transaction was unauthorized.

The solution to the problem, or at least they believe will help lower the cases of identity theft, is to change all magnetic strip cards into those with computer chips. According to the article, the magnetic strip cards are outdated anyway. A lot of countries are already using this computer chip cards and it has proven to be more effective in keeping the data of the consumers safe whenever they use their credit cards.

Here are important facts about the computer chip credit cards as taken from the USA Today article.

  • The switch to the new credit card started last year and will continue to happen within the year. This switch will not just include credit cards but also debit cards. This is a massive switch because a lot of merchants all over the country will have to switch their equipment to be able to read these new cards.
  • The computer chip equipped credit card has a metal chip embedded in front – this placement is necessary to make the information stored in it safer. The new cards also have a magnetic strip in case a merchant does not have the new equipment that will enable them to read the chip.
  • A deadline has been set on October 1, 2015 for merchants to update their equipment to allow reading of computer chips. After that, there will be a liability shift that will happen wherein the merchants will be responsible in case the consumer becomes a victim of identity theft because of the magnetic strip cards.
  • The computer chip assigns a code that is unique to every transaction that you will make. This code, even if stolen cannot be reused – which makes it pretty much useless to thieves intercepting your data during transactions.
  • Computer chips can be duplicated but it is harder to do – at least if compared to magnetic strips. The chip is actually used to prevent the duplication of credit cards.
  • When making a purchase, the new credit card will be inserted into a machine – similar to those found on ATMs. This is how the information is read.
  • At the moment, the chip will be accompanied by a signature from the consumer for added security. In the future, it is expected that the chip will accompanied by a PIN instead. It is believed that signatures are not really checked anyway so PINs should be more authentic.

Once you have this new credit card, you may able to have less fear in making purchases with it. This new card can help you enjoy a better future – at least, this is true if you can avoid too much credit card debt.

Tips to protect your credit card from identity theft

Obviously, credit cards are a staple in our wallets. The convenience that it brings cannot be replaced by cash. However, you need to make sure that you can further protect it from identity theft.

According to an article published on, almost 1 billion records were leaked in 2014. This is not primarily caused by credit cards. Some of the data were taken from the records of merchants, retail companies, and even the government archives. You are in danger of identity theft from all of these portals. While being pessimistic will not solve your problems, you are encouraged to be very vigilant when it comes to your personal data. Be very careful whenever you divulge your information – especially when it is being done online.

Fortunately, there are several things that you can do in order to keep your data from being taken by malicious individuals. Here are some tips that you may want to follow in order to protect yourself.

  • Do not just give your credit card to anyone. When you are in a store or restaurant, be conscious of the people asking for your credit card. As much as possible, keep your eyes on your card even as it is brought to the cashier. Not only that, you need to ensure that the person asking for your card is an employee of the establishment.
  • Be careful of the data you post online. The rise of identity theft incidents happened because of the growth of the digital age. People post just about anything online. Be very careful when you do this. Some thieves can use seemingly innocent posts against you. Do not make it easy for them to figure out your regular schedule. Once they know your activities, it will be very easy for them to steal from you. Do not give them that window of opportunity. Make your profiles and posts private and be wary of friend invites from people you do not know.
  • Monitor your credit report. One of the effective ways to be vigilant when it comes to identity theft is to keep a close eye on your credit report. You need to check it every now and then to see if there are entries there about transactions that you did not authorize. When you find these unauthorized transactions, you need to dispute them immediately so they can be investigated and removed if proven to be a result of identity theft.

What you need to know about identity theft is that you can prevent it if you practice vigilance and credit management. When you are careful about your own information and transactions, you can protect yourself from becoming a victim of any form of theft.

Although the new credit cards will help protect you from identity theft, it will not protect you from debt. This is a different problem that you need to deal with. To help you avoid credit card debt, here is a video that shows the common causes of this type of debt.

The 8 Very Worst Mistakes You Can Make With Credit Cards

Video thumbnail for youtube video 6 Tips For Simplifying Your Financial LifeYou could love or hate your credit cards but, of course, they’re just little pieces of plastic with your name and a number on the front and a magnetic strip on the back. Whether you love or hate your credit cards you know it really isn’t the cards. It’s you and how you use them. Credit cards can be real friends when you use them correctly. For example, they offer instant gratification – for better or for worse. There you are browsing through one of your favorite stores and you spot a smart TV for just $499. Unfortunately there’s only $30 in your wallet. But, hey, you don’t have to save money for three months to buy that TV. Just whip out that little piece of plastic and you’ll walk out of the store with it under your arm.

Convenience and security

Credit cards also offer both convenience and security. It’s just much more convenient to carry one or two credit cards than a big wad of cash. If your card is stolen or if you suffer identity theft most credit card issuers limit your liability to just $50 and many cases will even waive that. And of course there are those juicy rewards programs offered by many credit cards. Depending on the card you could earn cash back, points redeemable for travel and other goods and services every time you buy something. If you use your cards regularly and pay your balances in full every month, you can actually come out ahead. Use those cards correctly and you could be flying home free for a weekend with friends.

 On the downside

Unfortunately, those little pieces of plastic can turn into little devils if not used correctly. There are some very bad mistakes that can be made with credit cards and here are eight of the worst.

1. Having too many credit cards

There is a simple equation at work here. The more credit cards you have the more likely you are to use them, which means the more likely it is that you will get into debt. In addition, when you have many credit cards this can negatively impact your credit score, which will reduce your ability to borrow money. Ideally, you should probably have only one credit card because this makes it easier to track your spending and to make your payments on time. There is a case to be made that having three to five credit cards won’t be a problem but if you find your balances are increasing, it’s a danger sign and you need to definitely not get another card

2. Misunderstanding the introductory rate

One smart thing to do if you have high interest credit cards is to transfer their balances to one of the 0% interest balance transfer cards. But when you do this don’t mistake the introductory interest rate for the permanent rate. Those cards make a big thing about the number of months where you won’t be required to pay any interest at all but they tend to put their permanent interest rates in very small type. If you don’t pay off your balance before your introductory period expires you could end up paying 19% to 20% on it.

 3. Failing to read the fine print

If you do make a balance transfer it’s important to read the fine print. It could include two-tier balance transfer fees as well as some limitations. In most cases, your introductory rate will apply only to balance transfer amounts or to purchases for a certain period of time. There could even be a security interest clause that would allow the card issuer to repossess items you bought with its credit card if you fall behind on your payments.

 4. Not shopping for the best interest rate

One of the biggest mistakes people make is to not do what’s called rate shopping. Before you sign up for a new card look for the best possible APR or interest rate. When you get unsolicited credit card offers make sure you note the rate. This is because if you’re having financial problems you probably won’t get the best rates or terms. Always comparison shop for a credit card

 5. Making only the minimum payments

If you make only the minimum payments on a credit card where you have a high balance, you could be repaying the money over several lifetimes. Here’s an example of what this can mean. Let’s suppose you owe $5,000 at 15% and make just the minimum payment of $100. In this case it would take you 79 months to pay off the debt or about 6 1/2 years. Just imagine how long it would take to pay off $10,000 or more.

6. Paying no attention to your monthly statement

When you pay attention to your monthly statements you will know your due dates. This will also allow you to make sure that all of the charges are legitimate. You’ve probably heard of the big data breaches that have occurred recently. These are bound to turn into identity theft and you could be a victim. If you ignore your monthly statements there is no way for you to know that your identity has been stolen. In addition, one of the worst things you can do is be late in making a payment as this can have a very bad effect on your credit score. If you won’t be able to make a payment on time, call the credit card issuer explain what happened and ask it to waive the late fee. Most credit card issuers will be happy to work with you if you just ask for help.

 7. Exceeding the credit limit

When you review your credit card statements every month you’ll also keep from exceeding your credit limit. While the CARD Act stopped the policy of automatically enrolling customers in over-limit programs with high fees, it can still be very embarrassing to stand at checkout and find that your card has been rejected. If you review a statement and find that you’re getting close to your credit limit try hard to pay down your balance before using the card again. And when you go over the limit, you will be charged an over-the-limit fee.

8. Using credit cards to buy things you don’t needwoman looking at a lot of bills

Probably the worst mistake you can make with credit cards is using them to buy things you don’t need. One good exercise is to sit down at the end of the month, go over your credit card statements and look for things you purchased that you don’t really need. There’s a simple fact that we all spend more using credit cards than cash. When you review your statements you might be really surprised at the number of items you bought you could have done without. We all fall victim to making purchases that at the time we think are needs but are just really impulse buys. If you are about to make a really significant purchase like a smart TV or a new refrigerator, wait 48 hours. If you still think you want the item wait another 48 hours. If after that you still believe you need the item then go buy it.


Charge Cards And Credit Cards

woman thinkingYou might think that credit cards are the only way to make purchases using plastic. but you’d be wrong. When it comes to those little pieces of plastic, there are credit cards and charge cards. Both offer certain features but if your goal is to increase your credit score without adding on more debt, a charge card might be your best option.

The similarities

There are a number of similarities between charge cards and credit cards. They both represent a line of unsecured credit provived to you by the company that issued the card. Both mean that you’re essentially being given a short-term loan whenever you use the card and it’s expected that by the end of the month you will repay this loan.

Both charge cards and credit cards are fairly comparable when it comes to offering rewards. You could be getting cash back, points or miles every time you spend a dollar. Which one of these you’d get earn will depend on the card you choose.

Both credit cards and charge cards have very similar fees. This could be an annual fee, a late fee or a fee for a foreign transaction – again depending on the card you choose.

The differences

While charge cards and credit cards can be very similar, they are also very different in some respects. As an example of this, credit cards typically have a limit on how much you can spend. The amount will depend on which type of card you choose and your personal finances. It’s possible that your credit line could be increased over time but other than that it will remain the same as long as you have the card.

In contrast, there is no predetermined credit limit on charge card. The company that issued the card might set some limits on as to how you use it but this is this not set at the time of approval. If you charge a lot this could be a good thing as it means extra flexibility.

Here comes the most important difference. With a credit card you can pay just the minimm and roll the rest of your balance over to the next month. With a charge card you are required to your full balance every month or be charged a fee. The good news is that this means you’ll never have have a balance on which you’ll be charged interest. A credit card provides more flexibility because you’re only required to pay the minimum to avoid problems with the credit card issuer. This means if you have a month where your a little short on money you could pay the minimum payment required and then pay off your remaining balance the next month – of course with interest.

Your credit score and a charge card

Using a charge card will have a different effect on your credit score then when you use a credit card. The reason for this is that 30% of your score is based on your debt-to-credit ratio. This is the total amount you’ve charged on your cards as compared with your overall credit limit. For example, if you have an overall limit of $5000 and have charged $1000, your debt-to-credit ratio would be 20%. Your credit score could take a hit if this ratio creeps above 30% and especially above 40%.
If you don’t know a lot about credit scores, watch this brief video courtey of National Debt Relief.

Not nearly as much of an impact

As you have read charge cards don’t have a conventional credit limit. As a result FICO, the company whose credit scores are most widely used by lenders, looks at them differently. In fact, in terms of the debt-to-credit ratio, charge cards are totally excluded from your credit utilization. This means the amount you put on a charge card won’t have nearly as severe impact on your FIC) score as the same amount put on a credit card. If you were the type of person that runs up a high balance every month, this would be very convenient. You wouldn’t have to worry constantly that a high balance would damage your credit.

You would build a good credit history

Your FICO score will be affected in other ways by a charge card. A full 35% of your credit score is based on your payment history and length of credit. If you were to get a charge card as soon as you can and then make your payments on time every month, this will help you build a solid credit history and a higher credit score. Of course, if you pay off all your credit cards every month this will have the same beneficial effect. But you would still have to watch your debt-to-credit ratio.

Using those credit cards sensibly

If the idea of having to pay off your balance every month doesn’t appeal to you then a credit card would be a better choice. However, if you want to keep from getting in trouble with a credit card you need to use it sensibly. This means making your payments on time.
Every time you’re late making a payment or miss a payment you will not only accrue late fees and additional finance charges but these will show up on your credit report and can significantly reduce your credit score.

Don’t pay just the minimum

Using a credit card sensibly means paying more than the minimum. When you pay just the minimum each month your balance will grow even if you don’t put any new charges on the card and you will end up much more interest. For instance, if you have a credit card with a balance of $5000 at 19% and a $130 minimum payment it would take you until 2020 to pay off the debt and would cost you a total of $7771 including interest. But if you were to pay $200 a month you would have the debt paid off in two years and nine months at a total of $6415.

Read your agreement carefully

To use a credit card sensibly also means carefully reading your agreement and any other materials the credit card issuer sends you. The agreement you sign will spell out things such as your interest rate, when your payments are due and what will happen if you’re late or miss a payment. Your credit card issuers will also send you “changes in terms” notices around 45 days before they actually make changes to your fees, interest rate or other important things about the card. If you read your agreement and those notices very carefully it help you determine whether or not you want to change your spending habits.

Review your monthly statements.

Mistakes can happen and your identity could be stolen. It is important to carefully review your monthly statement as soon as they arrive. Call your credit card company right away if you spot an error. One of the best things about credit cards is that if your identity is stolen they generally cap your liability of $50. And in some cases they won’t even require you to pay that.

Don’t exceed your credit limit

Remember how we said that credit cards have credit limits. If you did read your agreement carefully you will know what your credit limit is and it’s wise to stay below it. If your balance grows to 70% to 75% of your credit limit, this will be a daner sign on your credit report and could damage your score. If you believe there is some reason why you would need to exceed your credit limit, opt in for overdraft protection. If you don’t do this and a charge would take you over your limit, it could be turned down. Plus, you may be hit with one fee per billing cycle.

Store Credit Cards – Great Money Savers Or A Really Bad Idea?

Attractive woman holding small goldern scalesTis the season to be jolly and the season to be pressured by clerks to sign up for store credit cards. There you are at check out ready to pay for your purchase and the bright-eyed clerk asks, “Wouldn’t you like to sign up for our store credit card and earn this wonderful discount? After all, you’re buying the stuff anyway why not save some money?” We’ve seen discounts as deep as 25%, which could be a substantial savings if you’re buying $200 worth of kids’ toys. Or even better if you’re buying a $500 tablet.

Before you sign on the dotted line

As tempting as that discount might be here’s something to consider. One recent survey found that nearly half – 49% – of those that had signed up for a store credit card ended up wishing they hadn’t. Given this statistic it’s clear that you should think the matter through very carefully before you sign on the dotted line. And you should never feel unduly pressured to get that store credit card. If you see that one of your favorite stores is offering a great discount when you sign up for its card then think this through carefully while you’re outside the store and not when you’re at checkout. Don’t get us wrong. Signing up for a store credit card can actually be a very good decision. Or it can be a terrible one. What’s the difference? It will depend on how you pay your bills and your current financial situation.

Understand what you’re signing up for

If you sign up too hastily without understanding the card’s terms and conditions you could end up doing yourself a world of hurt. Store credit cards have seriously high interest rates or almost as high as the interest rates paid by subprime borrowers. Another survey done recently found that America’s largest retailers had an average APR of 23%. And this is about eight percentage points higher than the national average for all credit cards. What this means is that if you fail to pay off that purchase in a couple of months you’ll have basically given back the discount your earned by signing up for the card in the first place. As an example of this let’s suppose you put $1000 on that brand-new store card. If you pay just the minimum balance it would end up costing you $840 in interest and take you more than six years to pay off the balance. In fact, the retailer can actually make more money off the interest than in selling you the merchandise. Know this and you will understand why they are so eager to give you that discount when you sign up for their store card.

More stuff to consider

Do you pay off your credit card balances in full every month? If so and you’re not about to buy a car or take out a mortgage soon and you could save a lot of money by signing up for that store card, then maybe you should do it. In addition, getting a store card and using it to establish credit can be a good thing because our retailers are often more lenient about whom they let have their store cards than if you were to try for a Visa, MasterCard or Discover card. In fact, if you have a low credit score you have a much better chance of landing a store credit than one of those “universal” cards. If you keep your balance low and pay off your bill at the end of every month you’ll be well on your way to a better credit history.

Don’t get a bunch

No matter how much money you could save by signing up for a bunch of credit cards just in time for your Christmas shopping it’s like the old, “Just say no.” Why is this? Because it could seriously damage your credit score. And keep in mind that if you want to get a store card that’s co-branded with American Express, Visa, Discover or MasterCard, you’ll still need to have very good credit.

What if you don’t have good credit?

If you don’t have good credit than, as noted above, a store credit card could be a good choice but only if you use it sensibly and pay off either the entire or most of the balance at the end of every month. Beyond this, you should get to work improving your credit worthiness. Unfortunately, there’s very little that can be done about this short-term. A full 35% of your credit score is based on your credit history and there is nothing you can do about this. It is what it was. But 30% of your credit score is your credit usage and this is an area where you could do some good. Credit usage is quite simply how much credit you’ve used versus how much you have available. This is usually expressed as your debt-to-credit ratio. Let’s say you have $10,000 in total credit available and have used $5000 of it. Your debt-to-credit ratio would be 50%, which could have a negative impact on your score. If you could pay down some of that debt or get your credit limits increased so your ratio drops down to less than 30% this could cause a nice uptick in your credit score.

The other three components

The three other components of your credit score are length of credit history, new credit and types of credit used. Once again there’s not much you can do about your length of credit history but you could influence the types of credit used by getting a new auto loan, a personal loan or even a home mortgage. What new credit really means is the number of times you’ve applied for new credit. This gets back to the point made earlier about not applying for too many credit cards during this holiday season.

woman with laptop and credit cardBeyond this you will just need to make sure that you pay off each credit card at the end of the month if it all possible. One trick that’s helped many people is setting up alarms on their computers or smart phones to remind them when their payments are due. Other people have had success by taking all of their bills when they come in at the first of the month and then sorting them into two categories – those that need to be paid at the first of the month and those that need to be paid in the middle of the month. They then organize them in such a way that they pay about the same amount at the first of the month and at the 15th. If you have bills with due dates that don’t fit this scheme then contact your creditors’ customer service departments and you should be able to negotiate a change in due dates. Be sure to mark the bill paying days on your computer or smart phone – the first and the 15th. When the time rolls around reserve an hour or so to review your bills and get them paid. Finally, whenever possible, sign up for online bill pay as this will not only save you a stamp it could end up saving your credit score.

Finally, here are some more good tips for bill paying courtesy of National Debt Relief …

Why Are Millennials Using Credit Cards For Small Purchases?

paying through a card in a pubWe have read a lot of news reports that tell us how young adults are being eaten alive by student loans. It is a scary situation because these young people are the future of the country. If they are so burdened with debt, how can they hope to improve our still fragile economy?

Not only are they in trouble with their student loans, they are also having a lot of problems with their credit card debt. While it is not as great as their elders, the combination of their debts from their college education and credit cards add up to be a formidable financial problem.

To add to this debt situation, this generation seems to lack in terms of financial literacy. A study done by revealed that Millennials, compared to other generations, are also displaying low levels of financial literacy. The study conducted by FINRA Investor Education Foundation also revealed that this generation engage in financial behaviors that are sure to lead them to problems later on. The study involved answering a series of questions and in the age bracket of 18 to 26, a mere 18% was able to answer 4 to 5 questions correctly (from a questionnaire of 5).

According to the observations from the study, Millennials stepped into adulthood amidst a bad economic condition. Student loans are high, jobs are scarce and businesses and households are all suffering from the Great Recession.

Currently, states are working on the financial literacy problem through the inclusion of economics and personal finance in the K-12 curriculum. But we have to think about how to address the bad financial behavior of this generation. It seems that one of the behaviors that we need to be looking into is the use of credit cards.

Study shows Millennials like to use cards for minimal purchases

According to a study done by, Millennials have this knack of using credit cards for small purchases. Things like coffee, newspaper, and even chewing gum – Millennials love to use their card. Some of them use debit cards but a lot of them use credit as their mode of payment. This seemingly casual way of making purchases on credit is scary because it is easy to forget just how destructive it can be. It will also make us too reliant on these cards when making any kind of purchase.

The survey was done on 983 adults – all of which are credit card holders. The results gave us the following insights:

  • ⅓ of respondents use their cards to make purchases that are less than $5.
  • Of the respondents that are aged 18-29 years old, majority of them prefer using plastic to cash. The percentage goes down as those who are older are more inclined to use cash over credit cards. In fact, of those who are retired (65 and above), 82% of them prefer to use cash.
  • Those who graduated or attended college are revealed to be more comfortable in using cards. 18% of those who got a college degree use their credit cards for small purchases compared to 6% of those who did not attend college. It can be assumed that those with college degrees are more confident about their ability to pay back their charges.
  • The higher the income bracket, the higher percentage of cardholders will use plastic when making small purchases. When the consumer is employed full time, it also affects how they use their cards – which is more likely than those who have a part time job or are unemployed.

In truth, most of the people who expressed preference for using credit cards are those who have the ability to pay it back. Things like a college degree, higher income and employment stability affect the frequency of credit card use.

It had long been a debate as to paying in cash or credit is the smarter way to spend you money. In truth, both of them have their own pros and cons. But when Millennials are asked why they prefer to use credit cards, they gave a lot of answers.

  • Buying with cards is just as easy as buying with cash – thanks to the advancements in technology.
  • Credit card purchases can be done in almost all merchant stores.
  • Rewards are more prominent and attractive. It motivates consumers to make purchases through credit cards.
  • Trips to the bank to withdraw cash is no longer necessary.
  • Making small expenses makes the debt more manageable.
  • Allows Millennials to build up their credit history.

When is it okay to use your credit card account

While the convenience of using credit cards may be there, it is very important that Millennials be very careful about not over charging. It can actually go both ways. The small purchases can allow consumers to pay off their debts immediately. But at the same time, it can also keep them relaxed about payments – since it is small anyway.

It really depends on what you know about proper credit management. If you need a reason to use credit cards, here are 4 good reasons to use them even for small purchases.

When you need to boost your credit score

The thing about Millennials is they still have a short credit history. This makes it difficult for them to make the right investments that involve personal or secured loans. According to an article from Millennials are struggling to build credit because before you can get a loan, you need to good credit score. But how can you get a good score if no one will trust you with a loan? Well this is where credit cards can be helpful. You can get a secured card, use it for small purchases, pay it off immediately and it should be enough to help put data into your thin credit history.

When you can pay it off immediately

It is also alright to use your credit card even for small purchases if you have the discipline to pay it all off immediately. Some people use their cards even though they have the cash in their bank accounts. They take note of the amount they spent on their cards and makes sure that the cash equivalent is secure in their bank accounts. That way, when the bill comes in, they have the funds to pay everything back at once. If this is done before the grace period expires, then the interest rate or finance charges will not be included in the payment.

When the rewards are worth it

Lastly, if you think that the rewards are worth it, then go ahead and keep on using the card. There are certain rewards card that can save you more money – as long as you understand how to use and maximize it. For instance, if the rewards are something that you need around the house, then this is beneficial to you. As long as your purchases to get that rewards are also necessary, then using your credit cards to get the reward should be sensible.

There is nothing wrong about using your credit card for any kind of purchase. If you decide to use it for small or expensive purchases alone, that is all up to you. However, it is vital for you to understand that credit management is the key to keep yourself from incurring problems with your credit card debt. As long as you are responsible, then using your credit cards should not bring any danger into your finances.

3 Very Big Questions (And Answers) About Personal Finances

young woman looking at credit cardPersonal finances are a bit like your health. You need to keep an eye on them just as you need to watch what happens to you physically. If you’re smart you’ll have a physical exam once a year just as you should give your personal finances the occasional checkup. And you probably have questions about your finances just as you have questions about your health. Recent college graduates were surveyed regarding their questions about personal finances and here are the three that came up most often.

Why not have just a debit card?

Since credit cards can be very dangerous why have one? Why not just use a debit card instead? Yes, credit cards can be troublesome. However, they do come with some benefits. If you have a credit card and use it responsibly, this will help your credit score. Second, merchants sometimes require a credit card rather than a debit card. If your identity is stolen, undoing the damage from a stolen credit card can be easier than with a debit card. If you run into a dispute with a merchant, it’s often better to have used a credit card as your credit card issuer will help you settle the dispute. Plus, almost every credit card now comes with rewards that can be beneficial – assuming you don’t go into debt or end up having to pay high interest.

The cons of debit cards

The money comes out of your account immediately when you use a debit card. In comparison, with a credit card you get a short-term free loan and your money stays in the bank earning a return. In fact, with most credit cards you would get at least a 27-day free loan every month. Given today’s historically low interest rates this may not amount to much but interest rates will go up eventually.

Is it better to have no credit or bad credit?

The problem with bad credit is that it’s very hard to fix. If you have bad credit the first thing you must stop running up more debt. You will need to create an emergency account and a budget that will require you to do and buy only what your income will cover. In addition, you will need to pay all your bills on time and in full, and pay down your debt. This includes everything even any accounts you have that were charged off. As you can imagine, this will require a lot of discipline and commitment – no matter why it was that you developed bad credit in the first place. If you have no credit it’s fairly easy to establish good credit. The reason why you want to do this is so that you will have it when you need it to get a home, a new car or for some other major purchase. You need to responsibly handle your savings and checking account and should get a debit card with no over-limit protection and maybe a secured credit card. If you have a secured credit card and use it responsibly then after six months you should be able to get an unsecured car with a low credit limit and no over limit protection. Of course, while you’re doing this you will have to pay all of your bills on time.

Girl looking worriedWhat’s the best way to pay off credit card debts?

The first thing you need to do is create an emergency savings account to make sure that if something happens you don’t fall into more debt. You also need an honest and realistic budget so you can see what you spend your money on and whether it is a wish, a want, a luxury or a convenience that you could do without. Once you have done these things the next step is to get to work and pay off those credit card debts as quickly as you can. There are several schools of thought as to the best way to do this. The financial guru, Dave Ramsey, recommends what he calls the snowball method of paying off credit card debts. What this amounts to putting your debts in order from the one with the lowest balance down to the one with the largest. You then focus all of your efforts on paying off the one with the lowest balance while continuing to make the minimum monthly payments on your other credit card debts. When you get that first debt paid off you will have extra money you can use to pay off the credit card with the next lowest balance and so on. Dave calls this the snowball method because like a snowball rolling downhill you will pick up more and more momentum as you pay off each debt. However there are other financial experts that believe it’s best to put your credit card debts in order from the one with the highest interest rate down to the one with the lowest. You then concentrate on paying off the one with the highest interest rate first as this will save you the most money. Which of these two methods would be best for you? It really boils down to a matter of personal choice. The important thing is to pick one and then stick to it.

How it used to be

Until very recently it was easy to understand how to handle credit cards to keep from having them negatively affect your credit score. All you had to do was… • Make every one of your payments – at least the minimums due – on time every month • Be sure to keep your balances below 30% of your credit cards’ credit limits. Of course, it’s better to have an even lower percentage but the difference that 10% or 20% make to your score is really very minimal when compared to 30%. • Make sure that you apply for a new credit card only when you need it. Your credit score can be negatively affected if you have a lot of recently opened accounts.

A new factor in credit scoring

But now there’s a new factor in credit scoring as the three credit bureaus are now using the amount by which you pay down your cards each month in calculating your score. It’s likely that other bureaus and scoring companies will soon follow suit. What’s the purpose of this? It’s to differentiate between people who pay down their balances in full each month (“transacters”) and people called “revolvers,” who carry forward their balances from one month to the next. The theory behind this is that people who pay off their balances each month are likely to be more credit worthy and so deserve higher scores. A spokesperson for FICO, the company that invented credit scoring, has said that it is still studying the data and hasn’t yet changed its systems. In addition to having invented credit scoring, FICO is the company whose credit scores are used in more than 90% of all lending decisions made in the US.

How this could affect you

If companies in the credit-reference industry and FICO begin to differentiate between “revolvers” and “transacters,” the “revolvers” could see their scores being downgraded even if they always make the minimum or higher payments on their credit cards on time every month. And this could lead to a significant change in how people view their credit cards and there could soon be fewer “revolvers.”

Bad news for the credit card issuers

In turn, this could be bad news for the credit card companies. Would you use your cards to borrow if you knew that this would probably make your home, auto and other loans more expensive? For that matter, the interest that credit card companies garner from those that roll forward their balances every month is an important revenue stream. One of the best-kept secrets of the credit card business is that people that always pay their balances on time are referred to as “deadbeats,” because they generate little or no profit for the credit card companies.

10 Credit Management Questions Your Teen Should Know How To Answer

young woman looking at credit cardAs a parent, you need to understand that it is your responsibility to teach your children the right financial lessons. From saving to budgeting to spending, these are concepts that you need to make sure they understand.

When your kid gets older and starts to understand more about life, you need to introduce them to more financial concepts. For instance, there are credit card rules to discuss to your college kid. You should also begin discussing student loans with your high school student. While it may seem too early to teach them about credit management, it is a reality that they will face once they enter their college life.

An article published on discussed a study done by EverFi and Higher One. These two organizations are strong advocates of financial literacy. They conducted a study that involved 65,000 college students to prove that being taught financial concepts in high school can affect their money management behavior in college. The study revealed that those who took financial literacy classes in high school displayed signs of being more financially responsible. They were found to make better decisions about debt, paid their dues on time and did not go beyond the limit of their credit cards.

This proves that starting them young with financial lessons like credit management pays off in the end. With the rising financial problems of young adults because of student loans, you should understand that they need to be educated immediately. That will help them make better decisions about their debts.

10 questions that your teen should be able to answer about credit

You may be asking, why are we concentrating on teens? Well, they are at a mental stage that allows them to understand debt and the reason why people use it. Not only that, this is the perfect time to prepare them for the financial responsibilities that they will face once they are in college. If student loans are imminent in their future, then you have to make sure they understand credit management.

As part of the lesson to manage debt, your teen needs to learn about credit card debt and credit scores. To help guide you, here are the important questions that your teen should be able to answer on their own.

  1. What is a credit card? It is a purchasing tool that consumers can use in lieu of cash. Instead of using your money, you are using the money of the creditor. That means, this amount has to be paid back in full.

  2. How can you use credit cards without ending up in too much debt? The best credit management tip to stay away from credit card debt is to avoid carrying over a balance to the next billing cycle. That will keep you from paying finance charges that is just a waste of you money. Make sure to pay the bills in full within the grace period to avoid added payments.

  3. What are interest rates and finance charges? The interest rate is also known as an APR (Annual Percentage Rate) that is used to calculate the finance charge that will be added to the debt carried over to the next month. That is considered as profit for the credit card company. If you do not carry a balance, then you do not have to worry about this.

  4. What is the ideal amount of credit cards to own? 2 should be enough for you. One is a card that you can use on groceries or in a retail shop that you regularly buy items from. The other is a low interest card that you can use for emergencies. Anything beyond this is excessive.

  5. How should a credit card be used? Since this credit management lesson is for a teen, let them know that the credit card should only be used for emergencies. If they plan to use it on unnecessary expenses, they have to make sure that it will be paid off immediately to avoid incurring additional fees. That is a waste of money. A good rule is, if they cannot afford to pay a non-emergency expense in cash, then they should not use credit on it.

  6. When a credit card debt is paid off, should it be closed? It makes sense to close a credit line you’ve paid off but understand that it will affect your credit score. It will make it lower so if you do not have to, just keep your cards and practice credit management to keep it from accumulating debt.

  7. What is a credit score? This is a number that is calculated to measure your creditworthiness. It speaks of your credit management behavior. If you have a bad record of payments, then that will give you a low credit score. This is computed based on 5 factors: your payment history, debt amount, credit history, type of debts and new accounts.

  8. How can I view my credit score? You need to get your credit report from any of the three major credit bureaus: Equifax, TransUnion and Experian. You can get a free copy from the Annual Credit Report website. Once you have downloaded the most current copy, you can use the free credit score calculators found online. This is the cost free way to go about it. Of course, you can order your credit score from the three major credit bureaus for a fee.

  9. Why is a credit score important? A credit score can influence the interest rate that will be imposed on the future loans that a consumer will have. A good credit score will allow them a low interest on a home or car loan. It can even help them get a good job, rent an apartment in a respectable neighborhood and even low premiums on insurances. Know what this score is all about because what you don’t know about your credit score can hurt you.

  10. What is a good credit score? This will depend on the company that is computing it. FICO scores have a range of 300 to 850 so a score of 750 and above is a good score. A VantageScore has a range of 501 to 990 so anything about 900 is a good score. Make sure you know where the credit score is being computed to know what the good credit score is.

Here is a video from National Debt Relief that discusses why credit scores are important. This can help you with the concepts that you need to point out to your teenager.

How to prepare your incoming college student from debt situations

Given the scary debt that young adults are burdened with right now, you have to make sure that your kid is protected from a financial future that is filled with debt. The best way to do that is by educating them – especially about credit management.

An article published on discussed how most students are really unaware of what they are signing up for – especially when it comes to student loans. In most cases, the councilor in school will not provide them with the whole debt situation.

This is an important role that parents need to complete because financial difficulties can affect even the studies of college students. According the same study featured by USA Today, which is originally published on, research shows that financial troubles cause students to go through mental stress, academic failure and the eventual withdrawal from school.

Because of that fact, you need to equip them with the right knowledge that will help them make better decisions about their finances. It also helps to set a good example by practicing the right credit management skills yourself.

For problems with student loans, National Debt Relief recently launched a program that helps borrowers deal with this type of debt. It is a consultation service that will help consumers get into the right program that is based on the details of their student loan debt and their financial situation. The company charges a one time flat fee that is placed in a secure escrow account. The service includes assistance in the paperwork that will help consumers enter into a student loan repayment program. If the consumer is satisfied with the paperworks, that is the only time that the company will receive their payments. Take note that they will never charge an upfront or maintenance fee for this service.

How To Know If You Really Need A Credit Card

Video thumbnail for youtube video How To Be A Smart Credit Card UserSo you think you need a credit card? You’ve seen those great offers such as “Get our card and enjoy 2x cash back” or “Apply for our card today and earn 1,000 bonus points.” These offers sound oh, so appealing. Plus, having a credit card means a new freedom. You see something you would like such as a new tablet computer or an HDTV and you could buy it instantly instead of having to spend months saving for it. But before you fill out that application, there are some things that you need to think about.

How good are you about self-discipline?

Millions of Americans have gotten seriously into credit card debt because they lacked the self-discipline necessary to use their cards wisely and sensibly. No matter how much fun having a credit card might seem, it’s important to understand that the credit card companies are not your friends. They’re there for one purpose and one purpose only and that’s to make money. And there’s no way they can make money off you unless you go into debt. If you charge a few things on a credit card and then pay off your balance at the end of every month, the credit card company earns nothing. What it wants you to do is carry a balance forward so that it can charge you interest and then compound the interest. If you’re not familiar with compounding it’s where you end up paying interest on interest.

An example of how compounding works

Just as credit card companies are not your friends either is compounding. Suppose you owe $5000 and make just the required minimum payment each month. If that card has an interest rate of 19% it would take you 41 years to pay off that $5000 and cost you $16,198 in interest charges alone.

Perks are a lame excuse

If you decide to sign up for a credit card because of all those mouthwatering perks such as cash back or airline miles, you’re just making up excuses. You should sign up for a credit card only because you need it. Credit cards can be great for emergencies or to buy something on a sort of installment plan basis but as noted above if you’re not careful your debt could get totally out of control.

Will it fit your lifestyle?

If you decide you do need a credit card, it’s important to make sure that it fits your lifestyle. When you take that card to a mall will you have the self-discipline necessary to buy only the things you need or would you be buying stuff to fit a lifestyle you think is necessary or to impress your friends. If the answer is the latter and you don’t have much self-discipline, this will have a huge impact on your psychological and financial well being.

Are you ready to handle a debt?

Are you fully aware of what will happen if you don’t pay off your balance at the end of that first month? When you carry a balance forward – as illustrated in the example given above – you can fall into the trap of compounding interest. The smaller amount you charge, the smaller amount you will have to repay and the easier it will be for you to pay off your balance at the end of that month. However, if you fall into the trap of paying just the required minimum payment each month it will take you much longer to pay everything off and you will be charged that nasty 19% or 20% interest fee.

Do you have a stable income?

It’s just not a good idea to get a credit card unless you have a stable income. You need to be a full-time employee and not a contractor or a part-time worker. You need to know you will have money at the end of your billing cycle to pay off your balance without fail. If you work on a contract, it could be ended with little or no warning and there you’d be stuck for a credit card payment and without enough money to make even the minimum payment. If you’re a part time worker you could see your hours cut back with little or no warning and find yourself in the same fix.

Have you budgeted for that new expense?handwritten family budget

If you haven’t gone through the exercise of developing a budget, you need to do so. It’s not all that complicated. Just add up all of your fixed monthly expenses, then your variable expenses such as food and clothing and subtract this total amount from your monthly income. If you want to have a credit card you need to have enough money left over after all your expenses to pay your credit card bill and not just the minimum monthly payment.

How do you plan on using a credit card?

Is it your intention to buy new appliances on an installment basis? Is your goal to accumulate points for an airline flight or for your shopping? Or maybe you want a credit card to help you establish a good credit history? What you need to do is compare the cards available and then sign up for the one that best fits your needs. That way you would be able to maximize your benefits.

Consider a debit card instead

If you’re at all concerned about your ability to handle credit and debt you might consider getting a debit card instead. Debit cards give you all the same benefits as a credit card. However, they’re linked to your checking or savings account so that you can’t spend any more money than you have in that account. And a debit card does offer several benefits:

  • Debit cards have no interest charges. You’re using your own money and so long as you use the card sensibly it won’t cost you anything.
  • Carrying a debit card is easier and better than carrying cash. Cash can be lost or stolen and if so, there’s no way to replace it. On the other hand, if you lose your debit card all you have to do is notify your financial institution. It will cancel the card and send you a new one. And if there are illegal charges made on the card, you should be able to get your money back — though it may take as long as 60 days.
  • When you use a debit card, you have the option of getting cash back. I use my debit card at the grocery store and almost always get $20 or $40 cash back. That’s easier than going to my bank and, unlike ATM machines this costs nothing.
  • Debit cards are more secure than credit cards. When you use a credit card all you’re required to do is sign a receipt. But when you use a debit card you must type in your four-digit pin number to validate the purchase. Many stores prefer this because it reduces their risk. Plus, it’s much easier for a thief to use a credit card than a debit card because he or she has no way of knowing your pin number.

Keep all your receipts

Whether you get a credit or debit card, make sure you keep all of your receipts. This is an easy way to track your spending so that you will know where your money’s going. You would be able to sit down at the end of a month, take out all of those receipts and see exactly where your money went. When you add this to your fixed expenses, you’ll know if you’re spending exceeded your income or not. If so, you will need to make some adjustments in your spending.

Mobile Menu