How to stamp out bad credit card offers

How to stamp out bad credit card offers
If you're like me, your mailbox is usually stuffed with
things like bills...postcards selling some turbo-charged
Internet service...maybe a few magazines...and, of course,
credit card offers.

It's the credit card offers that get you. They're pretty
tempting, aren't they? Whether it's being pre-approved for
$10,000, or the promise of earning free airline tickets,
there's always something that lures us in.

While you might get a few good offers every now and then,
most should be sent right to the shredder. The trick is,
knowing which ones should stay—and which ones should
go.

Be choosy

Keep one thing in mind: if you have a couple of credit
cards you're happy with, try not to apply for more cards.
Each time you apply, it shows up on your credit report. And
that can make you look credit hungry. It may also lower
your credit score.

When you do decide you need a new credit card—or you
are applying for your first one—ask yourself: what
kind of card do you want? You can get one with reward
points. Or miles. Or even a card that helps you save. With
so many cards out there, you don't have to jump at the
first offer you get in the mail. Shop around.

Learn the lingo

You've probably noticed that credit card offers come with
what looks like a lot of legal mumbo jumbo. But these are
the terms and conditions of the credit card, and they
explain what fees and finance charges you could pay when
you use the card. Every card has different terms and
conditions. To shop for the best deal, you need to know
what the main terms mean. Here are some to look out for:

Annual Percentage Rate (APR)—This is the yearly
percentage rate charged when a balance is held on a credit
card. This rate is applied each month that you carry a
balance (the lower APR, the better).

Annual Fee—Yearly fee associated with having the
credit card. Unless you are getting rewards or miles, or
something extra, you may want to look for a card without an
annual fee.

Grace Period—A period of time during which you are
allowed to pay your credit card bill without being charged
a finance and/or late fee. This period is usually 10-28
days.

Introductory Rate (or Intro APR)—A temporary, lower
annual percentage rate that is raised later. Make sure you
know what the rate will go up to after the intro period is
over.

Other fees—Also check for the amount of the late
payment and cash advance fees.

Why wait? Activate

Once you receive your new card in the mail, activate it
right away. Then put it in your wallet or in a safe place.
Otherwise, you may set the card down, forget about it, and
it could end up in the wrong hands.

As you use your card, keep an eye on your bill and the
charges listed. Also, you should get your credit report on
a regular basis to make sure no one else is using your
account. That way, you stay in charge of your credit card.

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Credit Card Cash Advances

Credit Card Cash Advances
There may be times when you feel the need for some hard
currency and all you have in your pocket is loose change
and your credit card. No problem, you can always use your
credit card to obtain a cash advance. At other times, card
issuers may even send you a subtle invitation to make a
cash advance. The invitation comes as a convenience or
credit card check, and if you do use the check, the amount
you write is treated as a cash advance. This could be
useful if, for example, the shopkeeper refuses to accept
credit card.

Should you be concerned about that?

There is no doubt that credit card cash advances provide a
real service. Any traveler who finds himself or herself
wanting for cash in a foreign country will really
appreciate the relief it gives. Your credit card allows you
to get a cash advance anywhere around the world, from
locations as convenient as the ubiquitous ATM machine.

But, yes, there are things you should know about credit
card cash advances. Generally, a cash advance will cost you
more than the purchases you charge on your credit card.
Consider the following:

Finance charge: There may be some exceptions, but cash
advance usually attracts a higher interest rate than the
rate applied on your purchases. This is a common feature
and can be found even among low interest credit cards. In
Australia, for example, one issuer set the cash advance
interest rate on its low interest credit card is set at
18.75 percent (as at March 12, 2008), while the purchase
rate is 12.99 percent. The point is the interest rate
difference can be quite significant.

There is a reason for this. The credit card issuer earns
some income from your purchases because merchants pay fees
to process and receive payments for the transactions. A
merchant is not involved in a cash advance transaction, so
the credit card issuer does not earn fees.

Grace period: Credit card issuers normally grant a grace
period on purchases, and charge interest on these only if
you don't pay off the amount when it falls due. A cash
advance does not get such grace period, and interest is
charged from day one. A $500 credit card purchase could
cost nothing in interest if you paid the bill in full on
its due date; a $500 cash advance at 18 percent APR paid in
full after one month would require you to pay $7.50
interest.

Special fee: Banks normally impose a transaction fee on
cash advances, expressed as a certain percentage of the
cash advance amount. Usually, the fee ranges from 2 to 3
percent, but with a minimum fee (e.g. $10). In the example
above, you would pay $10-$15 (2-3 percent) as transaction
fee on the $500 cash advance.

In the examples above, the $500 credit purchase would not
cost anything in interest or fees, but the $500 cash
advance would cost a total of $17.50-$22.50.

That is the bottom line: credit card cash advances are more
expensive than credit purchases. The message is that cash
advances should be used judiciously and only in emergency
situations.

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Richard Greenwood is Director of
http://www.click4credit.com.au where users can compare
credit card offers and apply online.

Keep out of Debt with a Good Credit Rating

Keep out of Debt with a Good Credit Rating
Financial debt is now a major concern to many millions of
people in the West; clearing debts takes time and you will
have to start somewhere. A debt relief solution might save
your home, possessions and a great deal of stress. In this
consumer driven world in which we live it is actually hard
work to stay in credit but if you are in debt you need to
start managing it now.

The most important thing to remember is not to panic and
stay focused as this way your decisions will be clearer and
more positive. The order of the day is to continue paying
your debts of regularly unless you want your credit rating
to plummet.

Create a budget for yourself by adding up all your income,
payments and expenses which will help you check where your
money is being spent plus your budget will highlight all
the small, unnecessary expenses that can be eliminated. One
hard action you will face is to slow down or stop the use
of your credit card then start using cash again and you
will find yourself being more careful.

One sure way to help with your debt relief is to save all
spare cash and place it in a fund to pay off smaller
amounts that are owed but drain resources. If you are
someone who enjoys going out for a meal of other
entertainment on a regular basis then you need to cut back
and you will be surprised how much money you can save each
month.

No-one really wants to increase their mortgage repayments
but many homeowners see their only option is to refinance
their home which can work but just increases the amount you
pay in the long term. However, prior to adopting this
option, think about whether your choice of debt repayment
is instrumental in giving you money and if the answer is
yes, then will this method be ideal but there are other
ways too.

It is not uncommon to find people withdrawing cash from
their credit card to make a payment, which works but just
increases the amount owed. If re-financing your home does
not work then you must consider filing for bankruptcy but
this step should not be taken before you take specialist
advice from a bankruptcy attorney.

There are occasions to avoid bankruptcy, individuals use
the money that has been accumulating in their individual
retirement accounts but it has serious consequences for
your future financial security. Should you decide to use
your IRA then be aware of how it will affect your long term
financial future and you may just reconsider this as a
method of debt relief.

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It is very difficult, but not impossible to achieve
significant credit score repair. This is a bit of effort,
but it is far better to do this than to have negative data
appearing in your credit history file. Want more
information on this ever increasing problem, then visit:
http://www.improveyourcreditscoring.com