July, 2010

Although acquiring a credit card is much easier than adhering to a budget, planning your credit card expenses is esential to help prevent dire consequences from credit card utilization. This may stem from the fact that a credit card is by no means a mobile automated teller machine. It is however a means to get you out of an emergency situation such as a car breakdown, or for travel convenience. The following budgeting tips will provide you with great insights on wise credit card usage.

Spend within your capability

With or without a credit card, one should always spend only what they can afford. In fact, you should spend like you dont have a credit card because at the end of the day, you will have to pay back what you charged. It is true that you should never use your credit card to settle your grocery bills or to quelch your shopping needs. With all the discounts and bargains clamoring for your attention, it can be annoying to know that you will be paying more for it because of credit card interest rates.

Have a good concept of the Credit Limit

Rather than viewing the credit limit as the amount of money you can use every month, think of it as a loan that you must repay within 30 days. Then, tabulate the amount of interest that you have to pay if you decide to settle your repayment over a period of six months. This way, the 7500 will look less tempting and when calls with offers of higher credit limit plans come in, you will have the good sense to put the phone down.

Do not let your credit accumulate

You need to be responsible to own a credit card but as luck would have it, there are emergencies that are unavoidable. In this case, you should settle your credit card bills as soon as possible. You have to be self-disciplined on this because credit accumulates and credit cards work on compound interests. The longer you delay your repayment, the more you have to pay.

How To Avoid High Interest Charge on Your Credit Card

There is a credit term call grace period its a period within which you may pay your bill without being charged interest. Its usually a period of 25-30days before interest kicks in. Recently, most issuing companies are eliminating this grace period and instead offering a low fixed interest rate. The question now is which one is better between grace period and low fixed interest rate?

It will be a bit difficult to have one answer that will favour everybody. Some prefer paying their bills in full within the normal grace period. To this group of people the grace period will be better. It will be advisable for them to shop for grace period cards and avoid no-grace-period cards.

Some banks do charge interest from the day they process your charge slip when you use your card to get cash. If you normally pay your bill in full you still need to shop for card that offers very low interest rate plus grace period, if you are to avoid interest charges on your account. However, for those that usually carry a balance each month, the low interest rate will be good for them. If you are in this group you can even shop for institutions that periodically offer cards with no fee for the first year.

Most issuing company often offers premium credit cards such as goldcards and Premier VISA. They are fancy cards that come with travel insurance benefit and extra protection when your card is lost or stolen. These institutions will rarely use the highly annual service fees which you will be subjected to as their marketing point. So its advisable to beware of these cards. There is no reason for paying such high service fees. As a matter of fact it did not really worth it if you can have a lower interest or grace period card.

Seeing people buying food or shopping clothes using credit cards has been commonplace these days. The phrase “Charge it!” has become a favorite expression of card users, and has been commonly heard in shops, dining places, and elsewhere.

After all, who does not want to use these credit cards? Easy to use, these sleekly-designed cards can be used to buy practically everything in commercial establishments regardless of how much (or less) money does one carry money in his wallet. Short of cash and hungry? No grocery supplies? Going to a party but no money to buy that dress you’ve been drooling for? No problem! Your good ol’ credit can care of that for you. No worries.

Credit Cards: Not Free Money

But wait. A credit card spree may be fun, but that doesn’t free you from responsibilities in paying the expenses you incurred from using your credit card. Credit cards, after all, are interest loans in disguise. Typical credit cards ask for a number of charges, including:

” A finance charge, which is an interest charge for the unpaid portion of your monthly bill;

” An annual membership fee;

” Or if you’re paying after the deadline, there is also a late payment fee which could have a higher interest rate.

In fact, many credit-card holders face credit-related problems. Poor purchasing decisions, lack of information on credit card fees, and disregard for upcoming credit payments are among the reasons why many credit-card users are often hard-pressed in paying their debts. Some are not even able to pay for the actual purchases they made, just barely managing to pay credit card company charges.

Before you get drowned in a sea of debt, here are some tips to help you manage your credit-related expenses:

” Be credit smart. Applying for a credit card application means you are ready to assume the responsibility for paying your credit. You and only you – not your parents, spouse, or whoever – is responsible for that.

” Use your credit cards wisely and sparingly. Remember: Paying goods and services using credit cards are more expensive than using cash or checks. Credit payments include interest and other fees. Use credit cards as sparingly as possible. If you really need to use credit cards, carry only the cards that you will actually use.

” Use credit only if you are sure you can repay it. Paying your debt on a credit card using another does not count.

” Avoid impulse shopping on your credit card.

” Use credit for money emergency only.

” Seek credit counseling as soon you see financial problems on the horizon.

It is a sad fact of life that credit card companies are very willing and fast to slap a penalty charge on your account for every mistake, delay and slip up you cause, immediately and without a second thought. These penalty charges can amount to millions of pounds taken from consumers each month. They are a necessary part of all credit card operations and are fair in the sense that it means that customers who do everything correctly and on time are not penalised for the extra work and expense that other customers cause, but what you will want to do is make sure you are not one of the unlucky customers that is paying for these extra expenses.

The best way to avoid these penalties is to look at the entire situation from the point of view of the credit card company. Really, all they want from you is to keep your card safe, to stay within your credit limit, and to make at least your minimum payment, on time every month. If you manage to do these simple tasks you will avoid ever incurring a penalty on your account.

The problem is that it is very easy to slip up on these things. Its not easy at all to keep track of your outstanding balance, especially as we use credit cards for more and more things and companies begin placing holds and other such transactions on customers accounts without them necessarily knowing or understanding about them. Then there is the fact that it is very easy to forget or become late on a payment. Every one has busy periods in their life and sometimes we simply have other more important things on our minds than paying our credit card bill on time. Some people are less organised than others and for them it can be very difficult making sure all their credit cards are paid out in full and on time.

If your card is lost or stolen without any fault on your part, and you call your credit card company as soon as you find out, you will only be liable for a maximum of 50 pounds. And if you manage to let the credit card company know before any thing has been spend on your stolen card you will not be liable for any thing. This is also the rule that applies for identity theft and fraud so you can feel safe using your credit card online. Taking a few simple steps can mean you are virtually never subjected to credit card penalties.

I have a friend whos a frequent traveler whos most of the time always out of the United States. While hes always traveling, his purchases done in other countries are done over his credit cards. He prefers using his frequent traveler credit card in buying his plane tickets as these that allow him to accumulate travel air miles. Whenever he buys plane tickets, can always redeem his accumulated travel miles to avail of discounts on his plane ticket or if he has accumulated a lot of air miles already, he can use them in buying his plane tickets alone. He does have other credit cards that were offered to him from US merchant stores. The only problem he has is as hes always out in other countries, while hes able to use these credit cards, he may not be able to always to use his accumulated points from those merchant sponsored credit cards because he seldom goes to those stores anymore. In availing of credit card points other than air miles, are there other ways of redeeming them assuming that an individual may not be around all the time to shop back in the locally based stores that co-sponsored those credit cards?

The answer is yes. While an individual may be out of the country on business or leisure, the advantage provided by the internet has allowed consumers all around the world with much flexibility and benefits. Accumulated rewards points from credit cards offered by major US based merchant stores can also be redeemed online whenever he may make purchases over the internet. A person making a book purchase online using his credit card sold to him also by the same online book retailer hes buying the book purchase right now for example may redeem his rewards points in the form of redeemable gift checks that he can later use to buy other books and have them sent over to his house in the US or send as a gift to friends or loved ones.

In order determine the number of points a person has accumulated from his purchases from his credit cards that he can later on redeem for new gift items, appliances or even equivalent travel air miles, these can also be tracked and checked from the credit card companies websites. Credit card companies have their own hotline numbers for inquiries on redeemable rewards also. Its important to know the equivalent number of points that will be needed to redeem the equivalent items so that the credit card user may maximize the benefits and rewards that his credit can offer him on a longer-term basis.