APR http://www.wisebread.com/taxonomy/term/1060/all en-US 6 Ways to Travel When You Have Student Loans http://www.wisebread.com/6-ways-to-travel-when-you-have-student-loans <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-to-travel-when-you-have-student-loans" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_backpack_travel_87628739.jpg" alt="Woman finding ways to travel while paying student loans" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Student loans are a reality for millions of recent graduates and even some of us who have been out of school for a while. Americans alone have <a href="https://commonbond.co/blog/average-student-loan-debt-and-student-loan-refinancing/">1.36 trillion dollars</a> of student loan debt. That's second only to U.S. mortgage debt.</p> <p>Don't worry! There are plenty of ways to manage your student debt and continue doing what you love. With these tips, you can get out and spend your time traveling while making all of your payments on time!</p> <h2>1. Take a Look at Your Loans Before You Go</h2> <p>Getting ready for a big trip is actually a very good time to re-evaluate your student loans (and the rest of your finances), especially because it has the potential to save you a lot of money. By <a href="http://www.wisebread.com/should-you-refinance-your-student-loan">refinancing your student loans</a> you could save thousands. That's because you may be able to get a better APR, and you can also change the terms of your loan so that your monthly payment feels more manageable.</p> <p>Even a small difference in the interest rate can make a big difference over the time that you're paying off your loan. With <a href="http://www.wisebread.com/3-private-lenders-that-can-really-save-you-money-on-your-student-loans">online lenders like CommonBond</a>, you can get an APR starting as low as 2.14%. It only takes minutes to fill out the application, and you're under no obligation to change your loan once you get your free quote.</p> <p>That cash you're saving can easily go into your travel fund!</p> <h2>2. Consider Consolidating Your Loans</h2> <p>This second tip is closely linked to the first, since in the process of refinancing your loans, you may also want to <a href="http://www.wisebread.com/what-s-the-difference-between-student-loan-refinancing-and-consolidation">consolidate your loans</a>. This means that if you have multiple student loans, instead of paying, let's say, three separate bills every month, you can combine all of your existing loans into one.</p> <p>Consolidating your loans will help to simplify the payment process for you and reduce the time you spend every month administering and worrying about your loan payments.</p> <p>This is an especially important point for people planning to travel, since you're already going to have a lot of logistics to keep straight. The simpler you can keep your loan payments, the better.</p> <h2>3. Put Things in Perspective &mdash; And Into Your Budget!</h2> <p>It can be paralyzing to think about the total amount of money that you owe, especially if you know you're going to be spending the next 20 years of your life paying it off.</p> <p>It's more helpful to put things in perspective, so once you've refinanced your loans and you have a manageable monthly payment, treat that like you would any other monthly bill that you have to pay.</p> <p>Take it on a month-to-month basis and you won't feel as limited by the amount of money that you owe. When you're making your travel budget, simply factor in the monthly payment that you'll be making into your overall budget for the time you'll be traveling, and set aside that money before you go. That way, you won't feel like you have to scramble for funds at the last minute.</p> <h2>4. Start a Travel Fund</h2> <p>Figure out how much money you can commit to setting aside for travel every month. Then you can set up an automatic transfer into a special bank account that is dedicated just to travel expenses. Even if you're only putting in a few hundred dollars a month, you'll be surprised at how fast these funds can add up over time.</p> <p>See also: <a href="http://www.wisebread.com/the-5-best-credit-cards-for-college-students?utm_source=wisebread&amp;utm_medium=seealso2&amp;utm_campaign=travel">Best Credit Cards for College Students</a></p> <h2>5. Create a Realistic Budget</h2> <p>You should think about how you like to travel and be honest with yourself. Frugal travel is not for everyone, so you should consider what your priorities are; maybe you will be just as satisfied going on a shorter trip and putting more emphasis on higher-end accommodations and fancy restaurant meals.</p> <p>If these types of comforts or luxuries don't matter to you, you can probably get by with a smaller budget, but on a longer trip. (See also: <a href="http://www.wisebread.com/savor-your-trip-and-save-big-with-these-5-slow-travel-tips">Save Big With These Slow Travel Tips</a>)</p> <p>Budgeting is all about striking a balance that works best for you while being realistic about how much you can afford to spend on your trip. By weighing these decisions before you leave, you'll eliminate a lot of money-related stress so that you can just enjoy your trip, knowing that you've already budgeted in the funds to cover your student loans.</p> <h2>6. Earn Extra Money for Travel</h2> <p>You're probably already getting excited to go, so if you want to speed up the process you can always consider earning a little extra money to cover your travel expenses.</p> <p>It's up to you what skills you have and what kind of work you enjoy, but maybe you want to consider getting a second part-time job and putting the money you earn right into your travel account!</p> <p>Depending on your professional skill set, you can also consider taking on some <a href="http://www.wisebread.com/22-websites-that-will-pay-you-to-write-for-them">freelance gigs</a>, since they can be very flexible and add a little something extra to your normal paycheck. While you'll have less free time, this also means less time to be out spending money which can be a big help when you're trying to save money. There are also ways to <a href="http://www.wisebread.com/15-ways-to-make-money-while-you-travel">make money while you&rsquo;re traveling</a>.</p> <h2>Don't Let Debt Stop You</h2> <p>There's no reason to let student debt paralyze you, and there are simple steps you can take if you're passionate about traveling. It will take a bit of good strategy, combined with some hard work and a proper execution of your plan, but if you're willing to put in the time you can really reap the rewards on your next trip (and even at home).</p> <p><a href="http://www.inklingafar.com/"><em>Amanda Gokee</em></a><em>, a writer at </em><a href="http://www.goatsontheroad.com/"><em>Goats On The Road</em></a><em> contributed to this article and helped with some student loan specific information.</em></p> <h2 style="text-align: center;">Like this post? Pin it!</h2> <p>&nbsp;</p> <p style="text-align: center;"><a href="//www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-ways-to-travel-when-you-have-student-loans&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%20Ways%20to%20Travel%20When%20You%20Have%20Student%20Loans.jpg&amp;description=6%20Ways%20to%20Travel%20When%20You%20Have%20Student%20Loans" data-pin-do="buttonPin" data-pin-config="above" data-pin-color="red" data-pin-height="28"><img src="//assets.pinterest.com/images/pidgets/pinit_fg_en_rect_red_28.png" alt="" /></a> </p> <!-- Please call pinit.js only once per page --><!-- Please call pinit.js only once per page --><script type="text/javascript" async defer src="//assets.pinterest.com/js/pinit.js"></script></p> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Ways%20to%20Travel%20When%20You%20Have%20Student%20Loans.jpg" width="250" height="374" alt="" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nick-wharton">Nick Wharton</a> of <a href="http://www.wisebread.com/6-ways-to-travel-when-you-have-student-loans">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-ignore-these-4-things-before-refinancing-your-student-loans">Don&#039;t Ignore These 4 Things Before Refinancing Your Student Loans</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-private-lenders-that-can-really-save-you-money-on-your-student-loans">3 Private Lenders That Can Really Save You Money on Your Student Loans</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-s-the-difference-between-student-loan-refinancing-and-consolidation">What’s the Difference Between Student Loan Refinancing and Consolidation?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-times-student-loan-refinancing-can-save-you-big">4 Times Student Loan Refinancing Can Save You Big</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-get-trapped-by-these-higher-education-scams">Don&#039;t Get Trapped by These Higher Education Scams</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Education & Training Travel APR budgeting consolidation debt refinancing strategy student loans travel funds trips Mon, 22 Aug 2016 10:00:13 +0000 Nick Wharton 1775891 at http://www.wisebread.com Why Rent-to-Own Is a Bad Idea http://www.wisebread.com/why-rent-to-own-is-a-bad-idea <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-rent-to-own-is-a-bad-idea" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_shopping_computers_84494997.jpg" alt="Woman learning why rent-to-own is a bad idea" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Rent-to-own plans may seem like a good idea at first. But once you look into the total cost, it is apparent that these plans are just too good to be true. In fact, according to Dave Ramsey, it is &quot;one of the worst moves you can make with your money.&quot;</p> <h2>How the Plan Works</h2> <p>With a rent-to-own plan, you can enjoy the freedom of making a large purchase with smaller weekly or monthly payments, over a prolonged period of time. The payments include the interest charged and a portion of the principal. Repaying this obligation is similar to repaying a credit card obligation.</p> <h2>It'll Cost You in the End</h2> <p>The problem with these programs is the finance charge. Even using a credit card with a 20% APR would save you money compared to a rent-to-own program, which you will need to pay off over a significant amount of time (on a weekly, semimonthly, or monthly basis). The longer your contract is, the more you will pay in finance charges.</p> <p>Rent-to-own plans are significantly more expensive than outright purchases. By paying the purchase cost and effective interest rate over time, you can expect to spend significantly more than the retail price. In fact, according to Consumer Affairs, &quot;Even in the best-case scenario, you'll pay at least <a href="https://www.consumeraffairs.com/news/rent-to-own-is-an-expensive-way-to-do-either-110613.html">twice the standard retail price</a>.&quot; (See also: <a href="http://www.wisebread.com/this-is-how-much-a-rent-to-own-tv-really-costs?ref=seealso">This Is How Much a &quot;Rent-to-Own&quot; TV Really Costs</a>)</p> <h2>Rent-to-Own Programs Are Unregulated</h2> <p>Rent-to-own programs do not require credit and are not a form of credit, so they are <a href="https://www.ftc.gov/reports/survey-rent-own-customers">excluded from regulation</a> by federal law. While some states do effectively regulate the purchase agreements, there are other states that have no regulations at all, which means that the buyer is taking on all the risk.</p> <h2>What About Missed Payments?</h2> <p>Some rental centers are lenient about missed payments and might just charge a late payment fee, but will allow you to keep the item. However, there are some rental centers that will repossess the item should you miss a payment. In this case, you will experience the worst of both worlds. You will lose the money that you invested toward the purchase of the item, and the item will be repossessed.</p> <h2>Unexpected Additional Fees</h2> <p>If you will only be using the item for a short amount of time, such as for a prolonged business trip, make sure the rental center you choose offers free repairs, delivery, pick up, and set up. This should be standard because the last thing you want is to be paying additional fees on top of the already exorbitant prices. These unexpected additional fees can really add up, so make sure to inquire about them before signing any agreements.</p> <h2>Is It Ever a Good Idea?</h2> <p>The only time rent-to-own may be a good idea (for the short-term) is in the following situations:</p> <ul> <li>You are traveling for business and need furniture and appliances for a short period of time. The benefit of rent-to-own programs is you only pay for the item as long as you need it, and you can stop making payments once you are ready to return the item.<br /> &nbsp;</li> <li>You need appliances or furniture right away and you can't wait until you have the money to purchase them.<br /> &nbsp;</li> <li>You frequently get bored with your appliances and like to upgrade often. Some rental centers will allow you to upgrade to newer products and technologies at no extra cost, as often as you want. In this case, you can think of it almost like leasing a car.</li> </ul> <h2>Bad Credit or No Credit?</h2> <p>Rent-to-own will allow you to buy items without credit, so if you have bad credit or no credit, it will be much easier to sign up for a rent-to-own program rather than trying to get your new TV financed. With a rental center, they will not check your credit or base their decision on mistakes you've made in the past. This also means that it won't show up on your credit, so the plan won't hurt or help your current situation.</p> <p>Certain rental centers, like Rent-A-Center, will allow you to purchase the item within 90 days or less with no interest charges. This means you can purchase an item with 0% APR over three months. If you can pay off the item within three months, then this may be a good idea for you.</p> <h2>What About Large Purchases?</h2> <p>If you can't qualify for a mortgage loan, a rent-to-own agreement will allow you to live in your dream home today, with the option to purchase it down the road. However, this can be a pitfall for renters and may end up costing you more in the end. (See also: <a href="http://www.wisebread.com/5-things-you-need-to-know-when-renting-to-own-a-home?ref=seealso">5 Things You Need to Know When Renting-to-Own a Home</a>)</p> <p>Rent-to-own can apply to vehicles as well. The agreement is similar to a leasing agreement, except the money you pay every week or month will go toward the eventual purchase price of the vehicle. Whereas with a leasing agreement, your payment does not go toward the purchase price and you need to return the vehicle at the end of the term.</p> <h2>Consider Layaway Plans Instead</h2> <p>Instead of signing on to a rent-to-own agreement, consider a layaway plan. With a layaway plan, you can split the cost up into payments that meet your budget until it is paid off. Generally, you will need to make a down payment (usually 10%&ndash;20% of the purchase price) and can then arrange payments on a weekly, biweekly, or monthly basis.</p> <p>A layaway plan is almost identical to a rent-to-own plan, except you won't have to worry about the high finance charges, and with layaway, your item will stay in the store until you have paid it off. There is generally a small service fee involved, but it is nothing compared to the finance charges you would face with rent-to-own.</p> <p><em>Do you have any positive or negative experiences with rent-to-own programs? Please share your thoughts in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/why-rent-to-own-is-a-bad-idea">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-9-everyday-products-with-the-biggest-markups">The 9 Everyday Products With the Biggest Markups</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-a-balance-transfer-offer-a-good-deal">Is a Balance Transfer Offer a Good Deal?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-questions-to-ask-before-accepting-a-credit-card-offer">10 Questions to Ask Before Accepting a Credit Card Offer</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-how-much-a-rent-to-own-tv-really-costs">This Is How Much a &quot;Rent-to-Own&quot; TV Really Costs</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-important-things-you-should-know-about-balance-transfer-cards">7 Important Things You Should Know About Balance Transfer Cards</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Shopping APR bad credit fees monthly payments rent a center rent to own rip-offs waste of money Mon, 08 Aug 2016 09:30:33 +0000 Andrea Cannon 1767116 at http://www.wisebread.com All the Ways Minimum Payments Are Evil http://www.wisebread.com/all-the-ways-minimum-payments-are-evil <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/all-the-ways-minimum-payments-are-evil" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_laptop_credit_card_88164697.jpg" alt="Man learning ways minimum payments are evil" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Anyone who has a credit card is familiar with minimum payments. Most credit cards don't require cardholders to pay off their balances in full every month, but they <em>do</em> require cardholders to pay some minimum amount. This can be as low as 2% to 3% of the outstanding balance, or a minimum of $25 or $35 &mdash; whichever is higher.</p> <p>While paying the minimum technically keeps your account in good standing, there are negative consequences to this decision. Here are five reasons why minimum payments are evil and should be avoided.</p> <h2>They Keep You in Debt</h2> <p>Minimum payments may keep your credit card bills affordable, but you have to consider the big picture. In the end, minimum payments don't benefit your bottom line &mdash; they benefit your credit card company.</p> <p>The truth is, minimum payments are a sneaky trick designed to keep you a slave to credit card debt. The longer you keep a balance on your cards, the more money your creditors earns off you. If you only pay your minimums every month, you'll carry your balances for years to come. For example, if you have a credit card with a $2,000 balance and 17% interest rate, and you only make minimum payments each month (2% of your balance), it will take you <em>over 21 years</em> to pay it off. You'd have paid over $3500 in interest alone &mdash; and that's if you don't put additional purchases on the card.</p> <p>That may seem like a shock, but that's exactly why the minimum payment schedule was designed. Because they're taking a <em>percentage</em> of your balance, every month, the minimum payment required goes down. That does two things &mdash; encourages you to pay <em>less</em> so that you keep the balance longer, and it also tricks you into thinking that you're actually making progress paying off your debt. If you see that your payments are getting lower, you feel like your debt is getting smaller too. But you're actually hardly chipping away at the debt at all.</p> <p>If on the other hand, you pay $50 per month, it will take you five years to pay it off, with about $970 in interest. That's a huge difference compared to 21 years and $3500 in interest. Every little bit of extra you can put into your credit card debt will significantly cut down on your repayment time.</p> <p>If you can make reasonable plan and keep to your budget, a <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">balance transfer will put a pause on interest payments</a> and help you <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">pay off debt faster</a>.</p> <h2>Purchases Become More Expensive</h2> <p>Credit cards might be convenient, but they're also costly &mdash; and unfortunately, if you carry a balance from month-to-month and only make the minimum payment, you end up spending much more for every purchase made with the card. And once you leave a balance on your card, the grace period disappears and you immediately start accruing interest the moment you make your purchase. Grace periods are only active if there is no outstanding balance. (See also: <a href="http://www.wisebread.com/everything-you-didn-t-understand-about-credit-card-interest-grace-periods-and-penalty-aprs?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=cc_article">Everything You Didn't Know About Credit Card Interest and Grace Periods</a>)</p> <p>If you have to make a large purchase, you can get a card with a <a href="http://www.wisebread.com/5-best-credit-cards-with-0-apr-for-purchases?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">0% introductory APR on purchases</a>. For a certain period, no interest is charged on your outstanding balance. This gives you time to pay off the purchase without interest. However, once the intro period is over, the regular APR will kick in. It's important to only use that opportunity if you know you can pay off the balance during the introductory APR time period.</p> <h2>Your Credit Score Can Suffer</h2> <p>In my younger days, I thought as long as I paid my minimum payments on time, my credit score was protected. I was young and dumb and didn't realize how other factors impact credit scoring.</p> <p>Paying only the minimum may not have a direct negative impact on your score, but it doesn't exactly help it, either. A high credit card balance can result in a higher <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">credit utilization ratio</a>, which is the percentage of outstanding debt in comparison to your available credit line. Credit utilization is the second biggest factor making up your credit score, and if your credit card balances exceed 30% of your available credit, your score will take a hit.</p> <p>You can lower your credit utilization ratio &mdash; and subsequently improve your credit score &mdash; by paying more than your minimums every month. Minimum payments are just that &mdash; minimums. Even if you only double or triple your minimum, this will chip away at what you owe and reduce how much you pay in interest significantly.</p> <h2>It Affects Other Areas of Your Financial Life</h2> <p>Paying only the minimum might not seem like a big deal, until you realize how this decision can impact other areas of your financial life. If you're only making your minimum and carrying a high balance on a credit card &mdash; resulting in a lower credit score &mdash; this affects the ability to get other types of financing. If you apply for a mortgage or an auto loan, lenders will take one look at your high balances and low score and consider you a risky applicant. There's a chance you won't qualify for some loans, or the bank might not offer favorable terms.</p> <h2>Minimum Payments Can Increase</h2> <p>Another problem with minimum payments is that they aren't carved in stone. Credit cards are a revolving type of credit account. As your balance goes up, so does the amount you owe. Your minimum payments might be manageable today. But if you continue to charge to your account and don't make any efforts to significantly decrease the balance, your minimum payments can increase. If you're already struggling with your budget just to meet the minimum payments, the most important thing is to sit down and make a <a href="http://www.wisebread.com/5-day-debt-reduction-plan-stop-waiting-for-tomorrow?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">debt repayment plan</a>. Otherwise, you'll be stuck in this cycle of debt for generations.</p> <p><em>Do you pay the minimums on your credit cards?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/all-the-ways-minimum-payments-are-evil">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-dirty-secrets-of-credit-cards">The Dirty Secrets of Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/avoid-these-5-common-mistakes-while-rebuilding-your-credit">Avoid These 5 Common Mistakes While Rebuilding Your Credit</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-a-balance-transfer-offer-a-good-deal">Is a Balance Transfer Offer a Good Deal?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/best-of-personal-finance-credit-where-credit-is-due-edition">Best of Personal Finance: Credit Where Credit Is Due Edition</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-being-debt-free-can-cost-you">7 Ways Being Debt Free Can Cost You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management APR credit score credit utilization ratio interest rates minimum payments Fri, 22 Jul 2016 09:00:05 +0000 Mikey Rox 1756968 at http://www.wisebread.com Everything You Didn’t Understand About Credit Card Interest, Grace Periods, and Penalty APRs http://www.wisebread.com/everything-you-didn-t-understand-about-credit-card-interest-grace-periods-and-penalty-aprs <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/everything-you-didn-t-understand-about-credit-card-interest-grace-periods-and-penalty-aprs" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000044839186.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>One of the most important elements to consider when choosing a credit card is the interest rate or Annual Percentage Rate (APR). However, figuring out all the ins and outs of how credit cards charge interest can be confusing. In order to get the most out of your credit card, especially if you like to keep track of rewards programs and cash back opportunities, it&rsquo;s important to look at how your actions can affect the amount of interest you pay. When <a href="http://www.wisebread.com/ask-these-7-questions-to-help-choose-the-perfect-credit-card?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">selecting a credit card</a>, it&rsquo;s more than just choosing the <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=5x">lowest APR</a> or best rewards. Being aware of the aspects of credit card interest can mean more money in your pocket and less in interest payments.</p> <h2>Deferred Financing vs. Waived Interest</h2> <p>At first glance, it might seem you can&rsquo;t go wrong with a card with a <a href="http://www.wisebread.com/5-best-credit-cards-with-0-apr-for-purchases?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=5x">promotional 0% APR</a>. However, knowing the difference between deferred financing and waived interest could end up being worth hundreds of dollars.</p> <ul> <li><strong>Deferred interest</strong> is most likely the offer you come across directly from a store. For instance, you can currently take advantage of 0% deferred interest financing on Apple purchases for 6 months on purchases costing under $498. The interest accrues during the promo period, but you don&rsquo;t pay the interest unless you haven&rsquo;t paid off the balance by the end of the promotional period. Further, if any of your payments are late, you could also be billed all of the interest that accrued since you made the purchase. With deferred interest offers, you will be assessed <em>all of the accrued interest</em> if you don&rsquo;t pay your balance in full by the end of the offer.</li> </ul> <ul> <li><strong>Waived interest</strong>, on the other hand, is commonly offered by standard credit cards. If your credit card offers 0% interest that is waived, you are typically able to take advantage of the promotional period <em>without accruing interest</em>. If for some reason, you don&rsquo;t pay your balance in full when the promotional period ends, you just start to pay interest <em>on your balance</em> according to the card&rsquo;s APR at the moment.</li> </ul> <p>When interest is <em>deferred</em>, interest is still accruing. If you don&rsquo;t pay your balance in full, even if you just have $10 left on your balance, you get charged for <em>all the interest</em> during the period. But if the interest is <em>waived</em>, no interest gets calculated until the promotional period is over. Then interest will start being added <em>based on the balance you have left</em>.</p> <p>In either event, it&rsquo;s best to pay your balance off completely within the promotional period , but if there&rsquo;s any chance at all that you won&rsquo;t be able to pay your balance down during the designated period, it&rsquo;s best to make sure your interest is waived rather than deferred. Check your credit card conditions and especially take note of terms such as &ldquo;financing&rdquo; and &ldquo;deferred interest&rdquo; if you aren&rsquo;t sure.</p> <h2>Grace Period</h2> <p>The credit card&rsquo;s <strong>grace period</strong> is typically the amount of time between the end of a billing cycle and your payment due date. According to the <a href="http://www.consumerfinance.gov/askcfpb/47/what-is-a-grace-period-how-does-it-work.html">Consumer Financial Protection Bureau</a> (CFPB) credit card issuers must ensure that your statements are mailed or delivered at least 21 days before their due date. In order to take advantage of the grace period, you need to pay the entire balance in full before the due date.</p> <p>The grace period though, is surprisingly tricky to understand. The important detail to remember is that interest is charged <em>retroactively</em> if a purchase is not paid within its grace period. For example, you charge $1,000 on June 1. The statement closes on June 15, leaving you a 21 day grace period to pay that off. You make a payment on June 30 for $900. A reasonable person would assume that the bank would start charging interest on the $100 balance, starting at the new billing period. That is not the case.</p> <p>You will get hit with interest on the entire $1,000 for the duration of that billing cycle (from June 1 to June 15). That interest will be immediately posted to your account. Then, interest is continued to be calculated at $1,000 until the date the payment was posted to your account (probably around 5/2). At 5/2, your balance dropped to $100, and interest will then be calculated on the new balance, until the statement closes.</p> <p>Now, by leaving a balance on your account, you no longer get the grace period for new purchases. Because you have $100 on your balance, if you make another $500 purchase, the interest will start accruing on that $500 <em>immediately</em>.</p> <p>In order to reinstate your grace period, you&rsquo;ll need to pay off your balance <em>before</em> the statement closes (not when it closes and bills you), because interest accrues during the time the statement closes and your bill is due. If the new billing cycle starts with a zero balance, then the grace period will be reinstated.</p> <p>On more note on grace periods: Grace periods generally only apply to purchases, which is one of the many reasons that cash advances and credit card checks can be expensive. Because there is no grace period for cash advances, you start paying interest on the transaction date, even if you pay the balance of the advance in full before your next billing cycle. Plus, the APR for cash advances is usually higher than the purchase APR &ndash; often well over 20%.</p> <h2>Penalty APR</h2> <p>In addition to APRs, deferred financing, and grace periods, there is also a <strong>Penalty APR</strong> to consider when you use your credit card. Not all credit cards charge a Penalty APR, but if they do, it&rsquo;s important to understand how it can affect your payments.</p> <p>Penalty or default APRs vary and have changed according to the <a href="https://www.congress.gov/bill/111th-congress/house-bill/627">Card Act of 2009</a>. For consumer credit cards, a penalty APR can result in an increase to your interest rate if you miss a payment, make a late payment, or exceed your credit limit. For the most part, it means a significantly higher interest rate (often double what you start with) on new purchases. However, if your payments become 60 days late, the penalty APR can apply to your existing balance as well. However, if you end up in this situation, you aren&rsquo;t permanently stuck with the penalty APR. According to the Card Act, once your rate is increased the card issuer must reconsider the penalty APR in six months and in most instances your APR will return to the non-penalty APR after making the next six consecutive payments on time.</p> <p>Keep an eye on your fees and don&rsquo;t hesitate to call your credit card to ask for a fee to be waived or lowered if it was just a one time mistake and you&rsquo;ve been a good customer.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/christina-majaski">Christina Majaski</a> of <a href="http://www.wisebread.com/everything-you-didn-t-understand-about-credit-card-interest-grace-periods-and-penalty-aprs">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-best-credit-cards-with-0-apr-for-purchases">5 Best Credit Cards with 0% APR for Purchases</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-dirty-secrets-of-credit-cards">The Dirty Secrets of Credit Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/lower-credit-card-rates-just-ask">Lower Credit Card Rates? Just Ask!</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-signs-its-time-to-break-up-with-your-credit-cards">7 Signs It&#039;s Time to Break Up With Your Credit Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/i-dont-love-capital-one-how-to-get-a-lower-apr-or-possibly-not">How to Get a Lower APR, or Possibly Not</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards APR credit card interest finance charge grace period Mon, 23 May 2016 10:30:06 +0000 Christina Majaski 1710058 at http://www.wisebread.com 7 Signs It's Time to Break Up With Your Credit Cards http://www.wisebread.com/7-signs-its-time-to-break-up-with-your-credit-cards <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-signs-its-time-to-break-up-with-your-credit-cards" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/credit_card_dollar_000079523783.jpg" alt="Man learning signs it&#039;s time to break up with his credit cards" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Just as unresolved conflicts can lead to a breakup in a relationship, there are signs of credit card misuse that should signal it's time to break up with your credit cards &mdash; at least for awhile.</p> <p>Here are seven signs to look out for.</p> <h2>1. You Can Only Afford the Minimum Payment</h2> <p>Prioritizing bills isn't easy. After paying the rent, grocery, water and electricity bills, and other basic necessities of life, it can be difficult to pay off a credit card bill, too. If you can only afford the minimum payment on the credit card, then you probably have some spending problems.</p> <p>Making only the minimum payment on a credit card will keep your account up to date and in good standing, and that's a good start. But it will take years to knock down the balance, and even longer if you continue charging purchases on the card.</p> <p>Here's an example: If you owe $5,000 on a credit card at 18% interest, paying the minimum amount due each month (assuming 3% of balance) will take you <strong>over 16 years</strong> to pay it off. Along with paying the $5,000 principal, you'll have paid $4,698.46 in interest. (See also: <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=cc_article">Best Credit Cards with Low Interest Rates</a>)</p> <p>If instead you pay $200 each month, that will cut down the repayment time to under 3 years, at which point you&rsquo;d have paid $1,313.96 in interest.</p> <h2>2. You Play the Transfer Balance Shell Game</h2> <p>One way to get out of paying interest on a credit card balance is to <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">transfer it to a 0% APR balance transfer card</a>. You can save thousands of dollars in interest, but usually only for one year during the introductory period. After that, you're back to paying interest again.</p> <p>If you're constantly moving credit card balances to <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">0% APR cards</a> so you can avoid paying interest, it's a sign your credit card spending is out of control.</p> <p>It's one thing if you're using that year of no interest payments to pay off a credit card. But if you're still running up the balance, you're getting nowhere in paying off the debt. (See also: <a href="http://www.wisebread.com/what-you-must-know-before-transferring-credit-card-balances?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=cc_article">What You Must Know Before Making a Balance Transfer</a>)</p> <h2>3. You're Maxed Out</h2> <p>Your credit cards have credit limits, and if you're close to those limits it can be difficult to extend more credit when you really need it &mdash; such as in an emergency.</p> <p>Maxing out your credit cards can also hurt your credit score because your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">credit utilization ratio</a> &mdash; the percentage of available credit being used &mdash; should be under 30% for a top credit score.</p> <h2>4. You Make Impulse Buys on Credit</h2> <p>Credit cards are easy to pull out of a wallet or purse to pay for anything, from a candy bar or drink to a down payment on a new car. If you're using credit cards to buy anything you want whenever you see it, such as a sweater you see in a store window or an ice cream cone on a hot day out, then you're more likely to rack up debt faster without realizing it.</p> <p>Paying cash for such purchases can help you control spending. If you don't have the cash on you, then you won't be able to make the impulse buy when it pops up.</p> <h2>5. You Buy Things You Can't Afford</h2> <p>Along with impulse buys, credit card users can get in over their heads in debt by charging every expense &mdash; including ones they can't really afford.</p> <p>If you're using cash to buy groceries, for example, you're less likely to get that extra box of cookies if you don't have enough money with you. But with a credit card, the sky's the limit. (See also: <a href="http://www.wisebread.com/the-best-5-credit-cards-for-groceries?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=cc_article">Credit Cards That Offer Cash Back for Groceries</a>)</p> <h2>6. You Hide Debt From Your Spouse</h2> <p>If getting the mail makes you anxious because your spouse may see your credit card bill, you have a debt problem and need to tackle it <em>together</em>.</p> <p>Hiding debt from your spouse can also hurt your relationship, so working together on this can solve two problems simultaneously.</p> <h2>7. You Have Credit Cards From Every Store</h2> <p>Store-branded credit cards can be enticing at the checkout counter. They often offer discounts of 20% or more on purchases that day, and approval is almost automatic.</p> <p>But they also have high interest rates of up to 29%, setting you up for more interest payments if you don't pay the balance in full each month. Store credit cards also offer an easy excuse to go shopping. (See also: <a href="http://www.wisebread.com/store-credit-cards-that-dont-suck?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=cc_article">Store Credit Cards That Don&rsquo;t Suck</a>)</p> <p>And since a store's credit card can only be used at the issuing business &mdash; you can only use a Nordstrom card at Nordstrom stores, for example &mdash; you'll need credit cards from every store you shop at if you want to take advantage of the deals they offer.</p> <h2>What to Do</h2> <p>There are things you can do if you spot any of the above signs in your financial life. To recap, here are a few things to try before using your credit cards again:</p> <ul> <li>Seek credit counseling. The Federal Trade Commission offers advice on how to find a <a href="https://www.consumer.ftc.gov/articles/0153-choosing-credit-counselor">reputable credit counseling agency</a>.<br /> &nbsp;</li> <li>Put your credit cards away and pay with cash only.<br /> &nbsp;</li> <li>Pay more than the minimum on your credit cards and tackle the debt.<br /> &nbsp;</li> <li>Ask your credit card company for a lower rate.<br /> &nbsp;</li> <li>Transfer balances to a 0% APR card and work on paying off the principal within a year.</li> </ul> <p><em>Have you ever broken up with your credit cards? How long was the split?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/aaron-crowe">Aaron Crowe</a> of <a href="http://www.wisebread.com/7-signs-its-time-to-break-up-with-your-credit-cards">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-dirty-secrets-of-credit-cards">The Dirty Secrets of Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-moves-to-make-before-cutting-up-your-credit-card">6 Moves to Make Before Cutting Up Your Credit Card</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/i-dont-love-capital-one-how-to-get-a-lower-apr-or-possibly-not">How to Get a Lower APR, or Possibly Not</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-a-balance-transfer-offer-a-good-deal">Is a Balance Transfer Offer a Good Deal?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-questions-to-ask-before-accepting-a-credit-card-offer">10 Questions to Ask Before Accepting a Credit Card Offer</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards APR balance transfers debt high interest rates minimum monthly payments overspending paying cash Fri, 20 May 2016 10:30:08 +0000 Aaron Crowe 1713706 at http://www.wisebread.com 10 Questions to Ask Before Accepting a Credit Card Offer http://www.wisebread.com/10-questions-to-ask-before-accepting-a-credit-card-offer <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/10-questions-to-ask-before-accepting-a-credit-card-offer" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_shopping_credit_card_000069657419.jpg" alt="Woman asking questions before accepting credit card offer" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Unsolicited credit card offers can flood your mailbox and email inbox, and in most cases, you may not give these offers a second glance. But once you're ready to add a new credit card to your financial portfolio, it's important to understand the basic features of these offers and choose the right card. Credit cards are not one and the same, so it's important to ask yourself these 10 questions before accepting an offer. (See also: <a href="http://www.wisebread.com/pre-approved-for-credit-card-offers-are-you-pre-qualified?ref=seealso">How to Understand Pre-Approved and Pre-Qualified Credit Card Offers</a>)</p> <h2>1. Is This the Right Time to Apply for a Card?</h2> <p>You may not know this, but there are right and wrong times to apply for a credit card. Typically, you don't want to apply for new credit if you're in the process of or thinking about financing a home. Anytime you get a loan, lenders take your current debt load into consideration. If you get a new credit card and amass a large balance fairly quickly, this can increase your debt ratio and reduce purchasing power. There's nothing wrong with getting a new card, just make sure that the decision to accept an offer doesn't interfere with your ability to get financing in the near future.</p> <h2>2. Am I the Right Candidate?</h2> <p>There are credit cards for every type of borrower. Before accepting a credit card offer, read the fine print and know the qualifications for the card, or else you'll waste time applying for cards you're not eligible to receive. Some credit cards are designed specifically for people with excellent credit, whereas other cards are suited for people with low credit scores. (See also: <a href="http://www.wisebread.com/the-5-best-credit-cards-for-people-with-fairaverage-credit?ref=seealso">Best Credit Cards for People with Fair or Average Credit</a>)</p> <p>Credit card companies typically prescreen and match recipients with the appropriate credit card offer. So if you receive an offer in the mail, you're more than likely a suitable candidate. But if you're researching offers on your own, be aware of basic qualifications.</p> <h2>3. What's the APR?</h2> <p>If you'll carry a balance from month to month, make sure you know the card's annual percentage rate (APR). This rate lets you know how much you'll pay in interest if you don't pay off the card in full every month. Interest rates vary and depend on your credit score. Ideally, you want the lowest rate so that you pay the least amount in finance fees.</p> <p>See also: <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?ref=seealso">Best Cards With the Lowest APRs</a></p> <p>Credit card applications feature the APR prominently. A credit card may offer interest rates ranging from 10.99% APR to 21.99% APR, in which case borrowers with the lowest scores pay the highest rates. Some cards also have low introductory rates, such as <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">0% interest on balance transfers</a> and standard purchases for a certain number of months. The interest rate on a credit card can also be fixed or variable. A fixed rate remains the same, but a variable rate can move up or down based on the market.</p> <h2>4. Is There an Annual Fee?</h2> <p>Some credit cards charge an annual fee which can range from $50 to $450. The fee often depends on the number and level of cardmember perks. Make sure you read the fine print for information on annual fees. Not every credit card has an annual fee. If you're looking for a basic, no-frills credit card and you don't care about cardmember perks, it is possible to find <a href="http://www.wisebread.com/the-5-best-credit-cards-with-no-annual-fees">credit cards with no annual fees</a>.</p> <p>See also: <a href="http://www.wisebread.com/how-to-decide-if-an-annual-fee-credit-card-is-worth-it-for-you?ref=seealso">How to Decide if an Annual Fee Card Is Worth It for You</a></p> <h2>5. Is There a Rewards Program?</h2> <p>Many credit cards offer rewards, such as miles, points, or cashback for every dollar you spend. A rewards credit card can work if you use credit cards frequently. But it's important to find a credit card with rewards that fit your lifestyle. If you're a frequent traveler, you can search specifically for <a href="http://www.wisebread.com/5-best-co-branded-airline-credit-cards">airline credit cards</a> or a credit card that lets you <a href="http://www.wisebread.com/top-5-travel-reward-credit-cards">earn miles or points redeemable for travel</a>. The point of the rewards is to get something back for spending (as an incentive for spending, too), so you might as well get something you want or need.</p> <p>See also: <a href="http://www.wisebread.com/cash-back-vs-travel-rewards-pick-the-right-credit-card-for-you?ref=seealso">Cash Back vs. Travel Rewards: Which Credit Card Is Right for You?</a></p> <h2>6. Does the Bank Report to the Bureaus?</h2> <p>Not every credit card company reports to the three major credit bureaus on a regular basis. Whether you want to build or <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score">improve your credit score</a>, choose a credit card company that will report your activity to the bureaus on a monthly basis. You can find credit bureau reporting information in the terms of agreement on the application, or you can call the bank for this information.</p> <h2>7. Do I Need Another Credit Card?</h2> <p>Getting a credit card offer in the mail doesn't mean you have to complete the offer. Consider whether you need another credit card. Will the new credit card offer you <a href="http://www.wisebread.com/10-awesome-credit-card-perks-you-didnt-know-about">additional perks and benefits</a>, or save you money by <a href="http://www.wisebread.com/5-best-cash-back-credit-cards">offering cash back</a>? Is there a card with an <a href="http://www.wisebread.com/5-best-sign-up-bonuses-for-airline-miles-credit-cards">enticing sign up offer</a>? Then again, if you can't keep up with your current monthly payments, or if your current credit cards are maxed out, adding a new card may further complicate your finances.</p> <p>See also: <a href="http://www.wisebread.com/how-to-save-an-extra-109486-a-year?ref=seealso">How to Save $1,094.86 a Year With Credit Cards</a></p> <h2>8. What Are the Credit Card Fees?</h2> <p>The cost of owning a credit card doesn't stop with the annual fee and APR. Credit cards include a variety of other fees, and it's important to count the cost before accepting an offer. You need to consider the late fee, the cash advance fee, and the balance transfer fee. Additionally, if you used the credit card in a foreign country, would you be charged a foreign transaction fee? Credit card fees add up quickly. You can save money by picking a card with the least amount of fees.</p> <p>See also: <a href="http://www.wisebread.com/5-best-credit-cards-with-no-balance-transfer-fees?ref=seealso">Best Credit Cards With No Balance Transfer Fee</a> and <a href="http://www.wisebread.com/smarter-security-and-no-foreign-transaction-fees-the-best-credit-cards-to-use-while-on-vacation?ref=seealso">Best Credit Cards With No Foreign Transaction Fees</a></p> <h2>9. What Else Can the Card Offer Me?</h2> <p>Besides reward programs, credit cards include a host of other offers and incentives to lure customers. For example, some credit cards give cardholders <a href="http://www.wisebread.com/the-5-best-credit-cards-that-offer-free-credit-scores">free access to their credit scores</a> and the ability to download an app and manage their account from a mobile device. Other cards include <a href="http://www.wisebread.com/what-does-car-rental-insurance-really-cover-on-your-credit-card">car rental insurance</a>, trip cancellation insurance, <a href="http://www.wisebread.com/how-to-take-advantage-of-free-extended-warranty-from-your-credit-card-issuer">extended warranty protection</a>, price protection, and many other perks.</p> <p>See also: <a href="http://www.wisebread.com/the-best-credit-card-perks-beyond-points-and-miles?ref=seealso">The Best Credit Card Perks Beyond Miles and Points</a></p> <h2>10. How Does the Offer Compare to Other Offers?</h2> <p>It isn't enough to review the specifics of a particular credit card offer, you should also determine how this offer compares with other offers. The truth is, you can't truly identify a good credit card offer until you make comparisons. After receiving an offer, the fees and interest rate may seem fair and reasonable. But shopping around may open your eyes to something better. This doesn't mean you have to spend weeks comparing different credit cards, but you should compare at least three cards before making a decision.</p> <p><em>What do you consider before accepting a credit card offer?</em></p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <p style="text-align: center;"><a data-pin-do="buttonPin" data-pin-color="red" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F10-questions-to-ask-before-accepting-a-credit-card-offer&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F10%2520Questions%2520to%2520Ask%2520Before%2520Accepting%2520a%2520Credit%2520Card%2520Offer.jpg&amp;description=10%20Questions%20to%20Ask%20Before%20Accepting%20a%20Credit%20Card%20Offer"><img src="//assets.pinterest.com/images/pidgets/pinit_fg_en_rect_red_28.png" alt="" /></a></p> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/10%20Questions%20to%20Ask%20Before%20Accepting%20a%20Credit%20Card%20Offer.jpg" width="250" height="374" alt="" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/10-questions-to-ask-before-accepting-a-credit-card-offer">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-a-balance-transfer-offer-a-good-deal">Is a Balance Transfer Offer a Good Deal?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-important-things-you-should-know-about-balance-transfer-cards">7 Important Things You Should Know About Balance Transfer Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-signs-its-time-to-break-up-with-your-credit-cards">7 Signs It&#039;s Time to Break Up With Your Credit Cards</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-my-family-scores-free-travel-with-credit-cards">6 Ways My Family Scores Free Travel With Credit Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-airline-or-travel-rewards-credit-cards-the-better-deal">Are Airline or Travel Rewards Credit Cards the Better Deal?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards applying for credit APR balance transfers cashback fees rewards Wed, 20 Apr 2016 10:30:10 +0000 Mikey Rox 1690617 at http://www.wisebread.com 7 Important Things You Should Know About Balance Transfer Cards http://www.wisebread.com/7-important-things-you-should-know-about-balance-transfer-cards <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-important-things-you-should-know-about-balance-transfer-cards" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_credit_card_tablet_000089260129_0.jpg" alt="Woman considering things before transferring credit card balance" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Zero-interest credit cards can provide a valuable solution for anyone who is attempting to pay off a card with a high interest rate. They can help you <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt">pay off debt faster</a> and <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">save money on interest</a>, help consolidate your monthly card payments, or increase your available credit, thereby improving your credit score. (See also: <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?ref=seealso">How to Raise Your Credit Score with Credit Cards</a>)</p> <p>However, there are also a number of reasons you may want to avoid a zero-interest credit card altogether. Consider these potential pitfalls before making the switch.</p> <h2>1. Balance Transfer Fees</h2> <p>Usually when you execute a balance transfer, you will be subject to a transfer fee, which can be between 3%&ndash;5% of the total amount transferred. This can be a hefty amount added to your total balance due. But, in comparison to a high interest rate card, you might still end up saving money. You'll have to calculate your monthly interest, how much you would save with an interest free credit card, and whether that is more than the balance transfer fee.</p> <p>There are some cards, however, that <a href="http://www.wisebread.com/5-best-credit-cards-with-no-balance-transfer-fees">don't have a balance transfer fee</a>. For example, <a href="http://www.wisebread.com/chase-slate-visa-review">Chase Slate</a> offers a 0% Intro APR on purchases and balance transfers for 15 months, and no intro balance transfer fee if you transfer a balance within the first 60 days of account opening. As long as you can pay off your debt within the intro period, you will save a load of money on interest, and pay no fees on it, either.</p> <h2>2. It Might Hurt Your Credit Score</h2> <p>Applying for any credit card will result in a hard inquiry on your credit report whether you are approved for it or not, which can result in your credit score taking a hit of somewhere between three and five points. This means that even if you aren't approved for the new credit card, your credit score could decline.</p> <p>If you close the original credit card after making the balance transfer, the average age of your accounts will drop. It will also cause your total available credit to decrease. These factors will negatively affect your credit score. To combat these problems, simply keep the original credit card open (with a $0 balance), even after transferring the balance out of it. However, if you will be tempted to spend money on the old credit card, then it is best to just close it.</p> <h2>3. It's Only Temporary</h2> <p>Zero-interest offers are temporary and usually last between six to 24 months. You shouldn't get comfortable with this low APR because it will revert to a higher APR once the intro period is up. When making a balance transfer, it is most important to commit to paying off the balance within the intro period. Otherwise, the interest will start accruing again and it would be a waste of an opportunity to get rid of your debt completely.</p> <h2>4. You Might Not Qualify for 0%</h2> <p>Keep in mind that you don't have a 0% promotional interest rate until you are approved for it. Receiving an application or <a href="http://www.wisebread.com/pre-approved-for-credit-card-offers-are-you-pre-qualified">pre-approval in the mail</a> does not guarantee that you will get it. Also, a 0% balance transfer credit card can't help you if you get approved, but the credit limit on it is so low that it can't cover the amount you want. You'll just end up having two payments every month instead of one.</p> <p>Always be sure to read carefully what you are applying for. Balance transfers aren't always included in promotional APR offers, so read the offer to see if the 0% applies to <em>purchases</em> and/or <em>balance transfers</em>. Sometimes they only offer 0% for one, not the other.</p> <h2>5. You May Not Be Able to Transfer the Balance at All</h2> <p>Most issuers won't allow a balance transfer from another one of their cards. You'll need to get a card that isn't issued by the same bank as the card you want to transfer the balance from. Here's a list of the <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">best promotional balance transfer offers available</a>.</p> <h2>6. You May Be Tempted to Only Pay the Minimum</h2> <p>Many borrowers who open a new zero-interest credit card will be tempted to only pay the minimum amount due, rather than what they were paying on their original credit card. Just because you have a lower intro APR doesn't mean you should be paying any less than you were before. In fact, now is the time to pay off the credit card, when you don't need to worry about interest, so make sure to pay at least as much as you were paying on the original credit card.</p> <h2>7. You May Be Tempted to Spend More</h2> <p>If you have a hard time keeping credit cards open without spending, you may not want to open another card. Adding more debt defeats the whole purpose of opening a card for a balance transfer, and will put you in an even worse position than when you started. And sometimes the 0% doesn't apply to new purchases, which means you'd immediately start accruing interest on any new purchase you make. So the best thing you should do when opening a card for a balance transfer is to not add any new purchases on that card.</p> <h2>How to Make the Most of the Card</h2> <p>If you decide to pursue a balance transfer offer, make sure you are fully aware of the terms beforehand. You'll want to know when the intro APR is up, what the intro APR will be, what the APR will be after the intro rate expires, the minimum monthly payment, and how much the balance transfer fee is. To make the most of the offer, pay off your balance before the 0% intro APR offer ends. Otherwise, you will end up wasting more on the balance transfer fee and the new credit card go-to APR.</p> <p>The key is to use this card strategically to decrease your debt. If you don't use it for any other purchases and keep your eye on the intro APR expiration date, you should be fine.</p> <p><em>Do you know of any other pros and cons associated with opening a zero-interest credit card? Please share your thoughts in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/7-important-things-you-should-know-about-balance-transfer-cards">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-a-balance-transfer-offer-a-good-deal">Is a Balance Transfer Offer a Good Deal?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-questions-to-ask-before-accepting-a-credit-card-offer">10 Questions to Ask Before Accepting a Credit Card Offer</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-moves-to-make-before-cutting-up-your-credit-card">6 Moves to Make Before Cutting Up Your Credit Card</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-signs-its-time-to-break-up-with-your-credit-cards">7 Signs It&#039;s Time to Break Up With Your Credit Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-rebuild-your-credit-in-8-simple-steps">How to Rebuild Your Credit in 8 Simple Steps</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards APR balance transfers credit score fees zero interest Tue, 19 Apr 2016 09:00:11 +0000 Andrea Cannon 1691579 at http://www.wisebread.com 5 Best Credit Cards with 0% APR for Purchases http://www.wisebread.com/5-best-credit-cards-with-0-apr-for-purchases <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-best-credit-cards-with-0-apr-for-purchases" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/happy-shopper-iStock_000072291563.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you've got a big purchase planned (or a bunch of small ones), and you don't think you can pay it off within the month to avoid interest charges, you might consider a credit card that offers a promotional 0% APR on purchases. This will give you some time to pay off your new purchases without the stress of interest charges building up. Here are the best credit cards that currently offer 0% intro APR on new purchases.</p> <h2>BankAmericard Cash Rewards&trade; Credit Card</h2> <p><img width="154" border="0" alt="" style="float:right;margin:0 5px 5px 10px;" src="http://wisebread.com/files/fruganomics/BoA_Cash_Rewards.jpg" /><a style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;" rel="nofollow" target="_blank" href="http://ct.wisebread.com/click.php?pg=160&amp;pid=106&amp;pp=1&amp;uv=xcardbutton"><img alt="" class="img-button" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" /></a>The <a href="http://ct.wisebread.com/click.php?pg=160&amp;pid=106&amp;pp=1&amp;uv=xname">BankAmericard Cash Rewards&trade; Credit Card</a> offers 0% introductory APR for purchases and balance transfers made within 60 days of account opening, for 12 billing cycles. After that, you pay the standard variable APR of 13.24% to 23.24%. Plus, you get 3% cash back on gas and 2% cash back at grocery stores and wholesale clubs, up to $2,500 in combined purchases each quarter, and 1% cash back on other purchases. Bank of America customers can earn a 10% bonus when redeeming cash back into a Bank of America&reg; checking or savings account. This bonus can be 25% or more if you are a Preferred Rewards client. New cardholders also earn a $100 bonus after spending $500 on the card in the first 90 days of account opening. There is no annual fee for this card.&nbsp;</p> <p><a href="http://ct.wisebread.com/click.php?pg=160&amp;pid=106&amp;pp=1&amp;uv=xend"><strong>Click here to learn more and apply for the&nbsp;BankAmericard Cash Rewards&trade; Credit Card today!</strong></a></p> <h2>Chase Slate&reg;</h2> <p><img width="154" border="0" style="float:right;margin:0 5px 5px 10px;" src="http://www.imgsynergy.com/191x120/chase-slate-060216.png" alt="" /><a style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;" target="_blank" rel="nofollow" href="http://ct.wisebread.com/click.php?pg=160&amp;pid=39&amp;pp=2&amp;uv=xcardbutton"><img alt="" class="img-button" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" /></a><a href="http://ct.wisebread.com/click.php?pg=160&amp;pid=39&amp;pp=2&amp;uv=xname">Chase Slate&reg;</a>&nbsp;offers a 0% intro APR for 15 months on purchases and balance transfers, along with no intro balance transfer fee for balance transfers made within the first 60 days of opening the account. After the introductory period, a standard rate of 13.24%-23.24% variable APR applies. Thankfully, paying late won&rsquo;t affect your interest rate as this card has no penalty APR. You can access your monthly FICO score for free and receive tips on managing your credit health. Finally, you can utilize Chase's innovative Blueprint program which allows you to save money on interest charges by paying some purchases in full while carrying a balance on others. This card has no annual fee.</p> <p><a href="http://ct.wisebread.com/click.php?pg=160&amp;pid=39&amp;pp=2&amp;uv=xend"><strong>Click here to learn more and apply for the Chase Slate&reg; Credit Card today!</strong></a></p> <h2>Citi&reg; Double Cash Card - 18 month BT offer</h2> <p><img width="154" border="0" alt="" style="float:right;margin:0 5px 5px 10px;" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u784/CitiDoubleCash.jpg" /><a style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;" rel="nofollow" target="_blank" href="http://ct.wisebread.com/click.php?pg=160&amp;pid=47&amp;pp=3&amp;uv=xcardbutton"><img alt="" class="img-button" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" /></a>The <a href="http://ct.wisebread.com/click.php?pg=160&amp;pid=47&amp;pp=3&amp;uv=xname">Citi&reg; Double Cash Card - 18 month BT offer</a> from our partner Citi offers an intro 0% APR for 18 months on balance transfers, after which you will pay the standard interest rate of 13.24% to 23.24% variable APR. This cash back card lets cardholders earn 1% cash back on all purchases and an additional 1% cash back when paying off a balance. There are no category restrictions and no limit to the amount of rewards you can earn. In addition, Citi provides a number of services to cardholders including Price Rewind, a program that refunds the difference in cost of an item if Citi finds it cheaper within 60 days of purchase. You also have access to Private Pass, which allows you to buy pre-sale and exclusive tickets to entertainment and special events. This card automatically waives your first late payment fee, and has no annual fee.</p> <p><a href="http://ct.wisebread.com/click.php?pg=160&amp;pid=47&amp;pp=3&amp;uv=xend"><strong>Click here to learn more and apply for the Citi&reg; Double Cash Card - 18 month BT offer today!</strong></a></p> <h2>Amex EveryDay&reg; Credit Card from American Express</h2> <p><img width="154" border="0" alt="" style="float:right;margin:0 5px 5px 10px;" src="http://www.imgsynergy.com/191x120/amex-everyday-credit-card-111115.png" /><a style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;" rel="nofollow" target="_blank" href="http://ct.wisebread.com/click.php?pg=160&amp;pid=2&amp;pp=4&amp;uv=xcardbutton"><img alt="" class="img-button" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" /></a>Travelers looking for a promotional financing offer will enjoy the <a href="http://ct.wisebread.com/click.php?pg=160&amp;pid=2&amp;pp=4&amp;uv=xname">Amex EveryDay&reg; Credit Card from American Express</a>, which offers 0% APR on both new purchases and balance transfers for the first 12 months after account opening. After that, the standard interest rate will be 13.24% to 23.24% variable APR. Cardholders earn 2x points per dollar at US supermarkets (up to $6,000 in purchases per year) and one point per dollar spent on other purchases. If you use the card 20 or more times in a billing cycle, you can earn 20% more points on purchases during the period. New applicants can earn 10,000 points after spending $1,000 in purchases in your first three months. There is no annual fee. Terms and conditions apply.</p> <p><a href="http://ct.wisebread.com/click.php?pg=160&amp;pid=2&amp;pp=4&amp;uv=xend"><strong>Click here to learn more and apply for the Amex EveryDay&reg; Credit Card from American Express today!</strong></a></p> <h3>Citi Simplicity&reg; Card - No Late Fees Ever</h3> <p><img width="154" border="0" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u784/CitiSimplicityCard-0601.jpg" class="img-exempt" style="float:right;margin:0 5px 5px 10px;" alt="" /><a style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;" href="http://ct.wisebread.com/click.php?pg=160&amp;pid=54&amp;pp=5&amp;uv=xcardbutton" target="_blank" rel="nofollow" alt="Citi Simplicity&reg; Credit Card" title="Citi Simplicity&reg; Credit Card"><img alt="" class="img-exempt" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" /></a>The <a href="http://ct.wisebread.com/click.php?pg=160&amp;pid=54&amp;pp=5&amp;uv=xname" target="_blank" rel="nofollow">Citi Simplicity&reg; Card - No Late Fees Ever</a> offers 0% intro APR on purchases and balances for an impressive 21 months! After the intro period, the variable APR will be 13.24%-23.24%. While there is a balance transfer fee of $5 or 3% of the amount of each transfer (whichever is greater), this card has no late fees, no penalty APR, and <strong>no annual fee</strong>. Simple, right?</p> <p><strong><a href="http://ct.wisebread.com/click.php?pg=160&amp;pid=54&amp;pp=5&amp;uv=xend" target="_blank" rel="nofollow">Click here to learn more and apply for the Citi Simplicity&reg; Card - No Late Fees Ever today!</a></strong></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/jason-steele">Jason Steele</a> of <a href="http://www.wisebread.com/5-best-credit-cards-with-0-apr-for-purchases">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The 5 Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-5-travel-reward-credit-cards">5 Best Travel Reward Credit Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-secured-credit-cards">The 5 Best Secured Credit Cards</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-best-cash-back-credit-cards">5 Best Cash Back Credit Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-5-credit-cards-for-groceries">The 5 Best Credit Cards for Groceries</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards APR best credit cards Mon, 18 Apr 2016 10:30:05 +0000 Jason Steele 1667669 at http://www.wisebread.com Is a Balance Transfer Offer a Good Deal? http://www.wisebread.com/is-a-balance-transfer-offer-a-good-deal <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-a-balance-transfer-offer-a-good-deal" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_credit_card_000030704826.jpg" alt="Woman learning if balance transfer is a good deal" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>A credit card balance transfer is a practical way to consolidate debt, save money, and ditch a high-rate credit card. This involves transferring the balance from a higher-interest credit card to another, <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards">lower-interest credit card</a>.</p> <p>There are various balance transfer offers, but unfortunately, not every offer is financially rewarding. To know whether you're getting a solid deal, you have to consider the costs associated with a particular offer.</p> <h2>Balance Transfer Fee</h2> <p>In a perfect world, there wouldn't be any fees to transfer a balance &mdash; or at the very least we would pay a low, flat fee &mdash; but this is rarely the case. The typical fee is $10 or 3% of the transferred balance, whichever is higher. Some balance transfer credit cards charge a 5% fee.</p> <p>Balance transfer fees are charged directly to the card balance and reduce the actual savings of switching to a low-rate card. For example, if transferring your balance to a low-rate card saves $900 in interest, but you paid a $200 balance transfer fee, you actually only saved $700.</p> <p>Since nearly all cards have no cap on how much you pay, the bigger your transfer, the bigger the fee &mdash; hence the importance of comparing different balance transfer offers to make sure you're getting a deal. Shopping around can be the difference between paying $300 and $500 for a $10,000 balance transfer.</p> <p>There are, however, a few cards that don't charge a balance transfer fee. These can include cards offered by smaller banks and credit unions, as well as bigger financial institutions. Here are two cards from major issuers that do not charge a balance transfer fee:</p> <ul> <li><a href="http://www.wisebread.com/chase-slate-visa-review">Chase Slate</a>&nbsp;doesn't charge a balance transfer fee, but only if you transfer balances within the first 60 days of opening an account. Transfers made after that introductory period are charged 3% or $5.<br /> &nbsp;</li> <li><a href="http://www.wisebread.com/the-best-cash-back-card-for-average-credit-capital-one-quicksilverone-cash-rewards-credit-card">Capital One QuicksilverOne Cash Rewards credit card</a>&nbsp;also doesn't charge a balance transfer fee, but there is a $39 annual fee. That amount is pretty much the equivalent of paying a fee if you're transferring a balance of $1,000 or less (so it's still a better deal than most cards if you're transferring more than $1,000).</li> </ul> <h2>Longest 0% APR vs Low Standard APR</h2> <p>For a balance transfer offer to make sense, the interest savings should be significantly greater than any fees paid to transfer your balance. To win your business, many cards offer an introductory 0% interest for a set period.</p> <p>There are currently <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">offers of 0% APR up to 21 months</a>. This teaser rate eventually disappears, but if you pay off your credit card balance before the regular interest rate kicks in, you don't pay a penny of interest.</p> <p>However, some people make the mistake of only looking at the introductory rate when selecting a card, and they forget to consider the ongoing or regular APR once the promotional period ends.</p> <p>When you don't compare rates, you could unknowingly apply for a card with a regular APR that's higher than what you're currently paying. Which isn't that awful if you pay off the card during the introductory rate period. But if you don't pay off the entire balance before the end of the 0% APR period, the new interest charges might cancel out some of the potential savings.</p> <p>Let's say you have a credit card with a $2,000 balance and a 20% interest rate. If you transfer the balance to a card with 0% interest for 12 months and a balance transfer fee of 3%. You'll save about $340 over the introductory rate period.</p> <p>If the card had a 16% regular APR, you'd save about $7 per month after the intro 12 months. But if you qualify for a card with a regular interest rate of 10%, you would save $17 per month.</p> <p>Ideally, you want to find a card that has both a long intro 0% APR period <em>and</em> a low regular APR afterwards. Here's are two good choices:</p> <ul> <li><a href="http://www.wisebread.com/bankamericard-credit-card-review">BankAmericard Credit Card</a>&nbsp;gets you 18 billing cycles of 0% APR on balance transfers made within the first 60 days. Afterwards, the regular APR is 11.24%-21.24%.<br /> &nbsp;</li> <li><a href="http://www.wisebread.com/the-discover-it-card-attractive-cash-back-awards-for-shoppers">Discover it</a>&nbsp;also offers 18 months of 0% APR on balance transfers (6 months for purchases), followed by a regular APR of 11.24%-23.24%.</li> </ul> <h2>The Low Rate May Not Apply to New Purchases</h2> <p>The rules regarding interest and balance transfers vary, so it's important to read the fine print and understand an offer before you apply &mdash; or else you could end up paying interest unexpectedly.</p> <p>Some credit cards have 0% introductory rates that apply to both new purchases and balance transfers, whereas other cards only apply the teaser rate to balance transfers. So if you transfer a balance to a card, and you also use this card for new purchases, you'll have dual interest rates and you'll pay regular interest on all new purchases.</p> <p>To keep it simple, choose a card that offers a promotional rate on both purchases and balance transfers.</p> <h2>Protect Your Credit When Transferring a Balance</h2> <p>Applying for a new credit card and transferring your balance can potentially harm your credit score &mdash; but only if you do it the wrong way.</p> <p>A new card triggers an inquiry on your credit report, and each inquiry can drop your credit score by a few points. This isn't the best news, but at the end of the day, it isn't a big deal as long as you don't apply for too many new accounts in a short span of time.</p> <p>As mentioned, a balance transfer is one way to simplify your finances. You can transfer all your balances to a new card and only worry about one monthly payment. The problem, however, is that a balance transfer could throw off your credit utilization ratio if you cancel the old card that no longer has a balance on it.</p> <p>Credit utilization is your percentage of outstanding balances compared to your total credit limit. This ratio should never exceed 30%, and if your ratio is higher than this percentage, your credit score suffers.</p> <p>The way you approach a balance transfer can either help or hurt your credit score. To illustrate, imagine you have two credit cards:</p> <ul> <li>Credit card #1: $1,000 balance with a $2,000 credit limit<br /> &nbsp;</li> <li>Credit card #2: $4,000 balance with a $5,000 credit limit</li> </ul> <p>In this example, you owe a total balance of $5,000 with a total credit limit of $7,000, resulting in a total credit utilization ratio of 71%, which is more than doubled the recommended max percentage of 30%.</p> <p>Let's say you then get a new credit card with a credit limit of $10,000 and transfer both balances to this card, this new card increases your total available credit to $17,000, which drops your credit utilization ratio to 29% &mdash; but only if you keep the old paid-off accounts open!</p> <p>If you're going to open a new account and transfer balances, don't immediately start closing accounts. Run the numbers first, and only close accounts if your credit usage is no more than 30%.</p> <p><em>Have you transferred a balance? How did you make out? Let's discuss in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/is-a-balance-transfer-offer-a-good-deal">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-dirty-secrets-of-credit-cards">The Dirty Secrets of Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-questions-to-ask-before-accepting-a-credit-card-offer">10 Questions to Ask Before Accepting a Credit Card Offer</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-important-things-you-should-know-about-balance-transfer-cards">7 Important Things You Should Know About Balance Transfer Cards</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The 5 Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/all-the-ways-minimum-payments-are-evil">All the Ways Minimum Payments Are Evil</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards Debt Management APR balance transfers credit utilization ratios debt reduction fees interest rates Wed, 09 Mar 2016 11:30:05 +0000 Mikey Rox 1669479 at http://www.wisebread.com Best of Personal Finance: Credit Where Credit Is Due Edition http://www.wisebread.com/best-of-personal-finance-credit-where-credit-is-due-edition <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-of-personal-finance-credit-where-credit-is-due-edition" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/credit cards.jpg" alt="Stacked." title="" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>Welcome to this weeks Best of Personal Finance round-up!</p> <p>Ah, credit. What would we do without it, besides live simpler lives with smaller televisions? </p> <p>We here at Wise Bread are fans of Credit Karma, and we're not alone.<a href="http://frugalbabe.com/2009/03/23/credit-karma/"> Frugal Babe</a> gives the<strong> free credit score service</strong> a try, and reports her findings.</p> <p>Believe it or not, the US government is fighting overdraft fees by reforming some banking legislation that you've never heard of (OK, that I've never heard of). And Uncle Sam is soliciting your feedback on the matter, reports <a href="http://www.usnews.com/blogs/alpha-consumer/2009/3/26/uncle-sam-wants-your-opinion-on-card-fees.html?s_cid=rss:alpha-consumer:uncle-sam-wants-your-opinion-on-card-fees">Alpha Consumer</a>.</p> <p>You might think that only people with lousy finances get their credit limit slashed, but even financially well-off people are finding that credit card companies are willing to take away their credit limits, as <a href="http://www.walletpop.com/credit/article/_a/bbdp/credit-limit-slashed-be-very-afraid/396490">Wallet Pop</a> notes.</p> <p><a href="http://www.fivecentnickel.com/2009/03/20/debt-reduction-vs-retirement-savings/">Five Cent Nickel</a> is asked if one should pay off debt or save for retirement first.</p> <p>WSJ blog <a href="http://blogs.wsj.com/wallet/2009/03/25/bofa-drops-spending-caps-on-upromise-credit-card/?mod=rss_WSJBlog">The Wallet reports that Bank of America is taking over the Upromise credit card</a> (the credit card that supposedly helps parents help save money for their children's college tuition) from Citigroup, and may lift the cash back limits on the card.</p> <p>Even if you have credit cards with zero balance that you aren't using, you don't want to close the accounts, and <a href="http://www.moneyunder30.com/closing-credit-card-accounts-fico-score">Money Under Thirty</a> is here to tell you why.</p> <p>Then again, <a href="http://www.askmrcreditcard.com/creditcardblog/should-you-close-your-credit-card-once-you-pay-it-off/">Ask Mr. Credit Card says that your credit score will probably recover </a>if you simply hate the thought of having old, unused accounts lying around.</p> <p><a href="http://www.thesimpledollar.com/2009/03/25/the-low-interest-debt-debate/">The Simple Dollar </a>explains why taking out a low-interest car loan may be a better idea that paying all of the money upfront in one huge chunk.</p> <p>One of the few good things about AmEx (and other major credit card companies) is their chargeback (refund) policies, which tend to favor the consumer. <a href="http://consumerist.com/5185159/woman-who-missed-obamas-inauguration-starts-10000-amex-chargeback">Consumerist </a>writes about a woman who submitting a chargeback for 10k that she spent to secure a spot at the Presidential inaguration in January, which she never got to see.</p> <p><a href="http://www.richcreditdebtloan.com/9-steps-for-establishing-credit/">Rich Credit Debt Loan</a> discusses how to establish credit, assuming that you are one of the few people left in the world without a line of credit (or a young adult, just starting out in a world of owing).</p> <p>Breaking the credit card habit can be hard, but <a href="http://www.ncnblog.com/2009/03/19/how-to-break-the-credit-card-habit/">No Credit Needed </a>was up to the challenge.</p> <p><a href="http://www.doughroller.net/book-reviews/debt-cures-kevin-trudeau/">Dough Roller </a>looks at Kevin Trudeau's Debt Cures and finds them lacking.</p> <p>What do you do if your credit report shows a delinquent account that you never opened and you can't get the collections agency to talk to you? Readers respond at <a href="http://www.freemoneyfinance.com/2009/03/help-a-reader-credit-report-problem.html">Free Money Finance</a>.</p> <p>And although this is not related to credit cards, it is a blog post simply too awesome to pass up: Trent at The Simple Dollar offers <a href="http://www.thesimpledollar.com/2009/03/26/most-time-management-is-rubbish-here-are-ten-things-that-work-for-me/">honest-to-goodness productivity tips that really work</a>. For him, anyway. See if they work for you.</p> <p>If you have a suggestion for the next edition, please <a target="_blank" href="../../../../../../forums/bloggers-corner/best-web-suggest-link-718.html#post5984">share them in the forum</a>!</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-karim">Andrea Karim</a> of <a href="http://www.wisebread.com/best-of-personal-finance-credit-where-credit-is-due-edition">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/uk-banks-are-blocking-customers-credit-cards-will-the-usa-be-next">UK banks are blocking customers&#039; credit cards. Will the USA be next?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-dirty-secrets-of-credit-cards">The Dirty Secrets of Credit Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tips-for-increasing-your-financial-literacy">Tips for Increasing Your Financial Literacy</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/funding-your-401k-when-youre-in-debt">Funding your 401(k) when you&#039;re in debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-the-best-way-to-get-out-of-debt">What&#039;s the Best Way to Get out of Debt?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Debt Management amex APR credit card interest rates credit cards debit debt finances interest rates loans MasterCard VISA Thu, 26 Mar 2009 22:40:29 +0000 Andrea Karim 2980 at http://www.wisebread.com Your Interest Rates Are About to Go Up http://www.wisebread.com/your-interest-rates-are-about-to-go-up <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/your-interest-rates-are-about-to-go-up" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/visavisavisa.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>The thing about financial crises is that they never fail to affect everyone. Just because your entire investment portfolio didn't implode when the dotcom bubble burst doesn't mean that you weren't <a title="Tips and resources for the recently laid off" href="http://www.wisebread.com/lost-my-job-tips-for-the-recently-laid-off">laid off</a> like thousands of other people. Didn't get sucked into a subprime mortgage? Lucky you. You still need to watch your back, because your fiscal responsibility <a href="http://www.twincities.com/ci_9727875">doesn't mean that you're safe from the crisis fallout</a>.</p> <p>Our economy is in the midst of a serious slide (bordering on a full-fledged recession). The causes for it are numerous, but the subprime mortgage crisis is causing some of the most accute problems.</p> <p>One of these problems is that your credit card company might decide to raise your interest rates. How is this different from the way credit card companies usually behave? The problem is that now, credit card companies are going to start raising interest rates for customers with an excellent credit history.</p> <p>Why? Because banks are hurting financially. Their problems are two-fold <strong>and</strong> causal:</p> <ul> <li>Banks are losing millions on defaulted subprime mortgages.</li> <p></p> <li>Americans have been running up huge credit card bills in the past few years, with the assumption that a home equity loan could be secured to pay off the personal debt. Now that home equity loans are difficult to get, credit card delinquencies are on the rise.</li> </ul> <p>This means that banks need to make some money, stat. How do they plan on doing this? They're going to raise interest rates on new and existing lines of credit and charge you even more in junk fees.</p> <p>It doesn't matter to banks that you're a good customer with a good credit standing. What matters to banks is their bottom line, and the only way they can think of to prevent more massive financial losses this year is to rip off their remaining customers. The result is that banks are looking for reasons to consider you an &quot;at-risk&quot; customer.</p> <p>Traditionally, at-risk customers are usually customers who run up a huge debt, pay late, only make minimum payments (although this is a tough one, as banks also LOVE you for only making minimum payments), or who have delinquent accounts. But now that banks and credit card companies are faltering, they're willing to look for all kinds of other at-risk factors, such as:</p> <ul> <li>Paying for necessities, like food, gas, or your mortgage, using credit.</li> <p></p> <li>Buying items that aren't considered high-quality, like retread tires (that's right - according to Robert Manning, your credit card company is monitoring your purchases and will raise your rates if they think your purchases indicate that you are entering a time of financial difficulty).</li> <p></p> <li>Paying your bill too close to the deadline.</li> </ul> <p>This is bad news for people who buy everything on credit in order to earn air miles or other bonus rewards. It's also drastically unfair and an incredible invasion of privacy. It's also another example of how we all end up paying for the collective financial stupidity of a few rogue investment bankers and mortgage lenders (yeah, I'm looking at <em>you</em>, Countrywide).</p> <p>Although you are always supposed to keep an eye on your credit rates, be especially vigilant in the comings months - check every statement for bogus fees and unnecessary rate hikes. You may consider not purchasing items like groceries&nbsp;with a credit card&nbsp;for the&nbsp;considerable future.&nbsp;Be sure to call and harangue your credit card company if they try to peg you as at-risk despite a clean payment record. Try to pay your credit card bill at least three days in advance of the due date, if not significantly sooner.</p> <p>Tedious though it may be, close monitoring of your statements can save you hundreds of dollars in the long run.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-karim">Andrea Karim</a> of <a href="http://www.wisebread.com/your-interest-rates-are-about-to-go-up">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-dirty-secrets-of-credit-cards">The Dirty Secrets of Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/i-dont-love-capital-one-how-to-get-a-lower-apr-or-possibly-not">How to Get a Lower APR, or Possibly Not</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt">The Fastest Method to Eliminate Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/avoid-these-5-common-mistakes-while-rebuilding-your-credit">Avoid These 5 Common Mistakes While Rebuilding Your Credit</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-things-people-with-good-credit-never-do">8 Things People With Good Credit Never Do</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards Debt Management APR bank fees credit card debt housing bubble loan subprime mortgage Wed, 02 Jul 2008 20:38:52 +0000 Andrea Karim 2215 at http://www.wisebread.com Credit Card Fees: Hidden and Otherwise http://www.wisebread.com/credit-card-fees-hidden-and-otherwise <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/credit-card-fees-hidden-and-otherwise" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/credit card fees.JPG" alt="please dip your credit card" title="please dip your credit card" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p class="MsoPlainText"><span>Annual fees, grace periods, balance transfer options&hellip;it's a wonderful world of <a title="Guide to Using Credit Cards Wisely" href="http://www.wisebread.com/credit-card-guide">credit card jargon</a> out there, and depending on your needs and planned uses for credit cards, it pays to look at your options. </span></p> <p class="MsoPlainText"><span>Following are the various ways in which credit card companies can get some money out of you: </span></p> <p class="MsoPlainText"><span> </span></p> <h2><span>Interest Rates</span></h2> <p class="MsoPlainText"><span>All credit cards levy an interest rate, the main difference being the percentage charged. Obviously you want to choose the card with the lowest rate. If you already have a card with a higher interest rate but that <a target="_blank" href="/credit-card-rewards-programs">you like for other reasons</a>, then try calling and asking for an interest rate reduction. According to a 2002 Public Interest Research Group study, 56% of people who called their credit card issuer and asked for a reduction were successful. </span></p> <p class="MsoPlainText"><span> </span></p> <h2><span>Early Interest Posting Dates</span></h2> <p class="MsoPlainText"><span>If you are in the market for a new card, find out if interest is charged from the date the charge is posted, or the date of purchase. Most will now charge from the date of purchase (which is usually a few days earlier than the posting date), but if you can find one of the other kind, it may be worthwhile. </span></p> <p><span>This is only really an issue if you plan to carry a balance on your credit card at any time, which if it can be avoided, would be preferable. </span></p> <p class="MsoPlainText"><span> </span></p> <h2><span>How Interest is Calculated</span></h2> <p class="MsoPlainText"><span>Some cards will charge interest on the balance owing at the month or billing cycle's end. Makes sense, right? </span></p> <p class="MsoPlainText"><span>Well, there is a growing trend now to charge interest instead on the average daily balance. So if you charge $1,500 in September, and pay $1,000 of it off on the due date, the following month you will actually be charged interest on the $1,500 average daily balance instead of the actual $500 left owing. </span></p> <p class="MsoPlainText"><span> </span></p> <h2><span>Grace Periods - or Lack Thereof</span></h2> <p class="MsoPlainText"><span>Usually, a grace period will allow for a responsible credit card user to pay off all their purchases within 24-30 days without paying any interest. </span></p> <p class="MsoPlainText"><span>But as some readers pointed out in the comments on <a target="_blank" href="/top-seven-reasons-why-i-use-my-credit-card-for-everything">another article</a>, even those dutiful credit card users who pay off their balance in full each month can sometimes get duped by circumstance (like the bank processing a transfer late) and miss the payment due date by a sliver. </span></p> <p class="MsoPlainText"><span>For those people above and for those who regularly carry balances, even grace periods won't save you: if you have an outstanding balance, you are charged interest on new charges from the date of purchase. (All the more reason not to carry a balance)!</span></p> <p class="MsoPlainText"><span> </span></p> <h2><span>Nuisance Fees</span></h2> <p class="MsoPlainText"><span>In a world of increasing fees for every little thing from booking airline tickets to doing your banking, credit cards are no exception to this bandwagon. The latest in nuisance fees can include: </span></p> <ul> <li><span>Late payment fees (as high as $40)</span></li> <li><span>Over-the-limit fees (as high as $25)</span></li> <li><span>Inactive account fees</span></li> <li><span>Not carrying a balance fees (or carrying a balance under a certain amount)</span></li> <li><span>Monthly fees that are a percentage of your credit limit</span></li> <li><span>Annual flat fees</span></li> <li><span>Balance transfer fees</span></li> <li><span>Credit limit increase fees</span></li> <li><span>Set-up fees</span></li> <li><span>Return item fees</span></li> <li><span>Fees for paying by telephone</span></li> </ul> <p class="MsoPlainText"><span>&hellip;and on it goes. </span></p> <p class="MsoPlainText"><span> </span></p> <h2><span>Cash Advance Interest Charges</span></h2> <p class="MsoPlainText"><span>Many cards charge higher interest rates on cash advances in addition to transaction fees. </span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span> </span></p> <h2><span>What They Have to Tell You About</span></h2> <p class="MsoPlainText"><span>When you are searching for a new credit card, the following items are required by law to be disclosed:</span></p> <ul> <li><span>Annual Interest Rate (also called annual percentage rate or APR)</span></li> <li><span>The teaser or introductory rate, along with the details of when and how the regular rate kicks in</span></li> <li><span>How the variable rate is determined (if applicable)</span></li> <li><span>Penalties for late payments</span></li> <li><span>Annual, periodic, or membership fees</span></li> <li><span>How the balance is computed for interest purposes (ie: average daily balance or balance owing methods)</span></li> <li><span>Minimum charge</span></li> <li><span>Grace period (the period of time you have to pay off the balance without incurring interest)</span></li> </ul> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span> </span></p> <h2><span>My Card Sucks! I Want To Cancel</span></h2> <p class="MsoPlainText"><span>If after reading this you think you have one of those cards with too many fees, you can cancel it. However, there is a chance that it may reduce your credit score. Check out <a target="_blank" href="http://www.myfico.com">FICO</a> to find out what FICO scores consider, as well as how best to understand your credit score. </span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span><br /> To that end, you should be aware of <strong>soft and hard closes</strong>, and how they affect you. </span></p> <p class="MsoPlainText"><span> </span></p> <h3><span>Soft Closes</span></h3> <p class="MsoPlainText"><span>With a soft close, the credit card company will acknowledge that you want to close out the card, but they will automatically reactivate it if charges go through. Their rationale is that they are saving you embarrassment of the card being rejected if you happen to be out shopping and inadvertently whip their card out! </span></p> <p class="MsoPlainText"><span>Hence, a soft close will also often affect your credit score and ability to qualify for large loans later on if the lender does a credit check and sees that you have all sorts of credit available to you, but doesn't see that the credit is soft closed. </span></p> <p class="MsoPlainText"><span>It also makes you vulnerable to fraud, since if a professional steals your identity, they can order another card from a soft-closed account and start charging. </span></p> <p><span> </span></p> <h3><span>Hard Closes</span></h3> <p class="MsoPlainText"><span>Ensuring your account is hard closed entails a little more follow-up work, but can pay off in the end. You must first request a hard close when you are cancelling the card, and follow up with a confirming letter. In your letter, tell the credit company to report &quot;closed by consumer&quot; to the credit bureaus as well, and keep copies of everything. </span></p> <p class="MsoPlainText"><span>Some issuers will refuse to do this: their policy might instead be to process a soft close first and a prescribed time period, at which point it reverts to a hard close. Find out how long that period of time is, and ensure that the account is hard closed with a letter at the end of that time. </span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span> </span></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nora-dunn">Nora Dunn</a> of <a href="http://www.wisebread.com/credit-card-fees-hidden-and-otherwise">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-dirty-secrets-of-credit-cards">The Dirty Secrets of Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-a-balance-transfer-offer-a-good-deal">Is a Balance Transfer Offer a Good Deal?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The 5 Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-credit-cards-with-no-annual-fees">The 5 Best Credit Cards With No Annual Fees</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt">The Fastest Way to Pay Off $10,000 in Credit Card Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards annual fees APR balance transfer credit card fees grace periods interest calculation interest posting dates interest rates nuisance fees Sun, 23 Dec 2007 23:14:26 +0000 Nora Dunn 1535 at http://www.wisebread.com Huge Tax-Free Investment Returns http://www.wisebread.com/huge-tax-free-investment-returns <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/huge-tax-free-investment-returns" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/pantry.jpg" alt="Kitchen pantry" title="Kitchen pantry" class="imagecache imagecache-250w" width="250" height="323" /></a> </div> </div> </div> <p>What sort of investment return would it take to get you excited? You can get 5% or so on cash these days. The average return from the stock market runs in the 10%-12% range, depending on how you measure it. The fact is, though, you can pretty easily get 30% or more on investments that are not only very safe but come with built-in inflation protection.</p> <p>Don't get too excited--this isn't a new idea. It's just working through the math on an idea that you already know: buying in bulk and stocking up during sales saves you money. If you calculate the money savings as an investment return, it turns out that stocking up on groceries and other things you use will yield a much better investment return than your mutual funds are likely to.</p> <p>Suppose your household drinks a $9 bottle of wine almost every day. Now suppose that you negotiate a 15% discount for buying 30 cases--a year's supply--all at once. Saving 15% is well and good, but it's not an investment return to get all excited about. But if you do the math, your annual return is quite a bit better than that. In fact, it comes to over 33%.</p> <h2>The math</h2> <p>If you have a financial calculator, here's how to do the calculation. (If you don't, there are plenty of <a href="http://www.arachnoid.com/lutusp/finance.html">financial calculators</a> on the web.)</p> <p>Your investment is $2754 ($9 times 12 bottles-in-a-case times 30 cases = $3240 minus your 15% discount), so plug that in as the Present Value. Your Future Value will be zero (once you've drunk the wine, it's gone). Your Payment is $9 (the value of the bottle of wine that you take out of your wine cellar each day). The Number of Payments is 360 (the number of days your investment pays off). Hit the Interest Rate button to find that your return per period is 0.092644%. Multiply that by 360 to get an annual rate and you get 33.35%.</p> <p>It's not just a fluke, by the way, that the investment return is about double the discount: your return is steady day after day, but on average over the course of the year you've only tied up half your investment. (That is, on day one you've tied up $2754, but a day later you'd have bought a bottle of wine, so that's $9 less that's tied up. After six months you'd have bought 180 bottles of wine so that's $1620 less that's tied up in your wine cellar.)</p> <p>You don't have to buy a full year's worth of something in advance for this to work. In fact, if you can get the discount on one case at a time, the investment returns are much larger on an annualized percentage basis, because you have so much less &quot;invested&quot; at any one time. If you can get 10% off by buying one case of wine, and then repeat the transaction every two weeks, you're getting an annualized return of 260%. (It's basically pay-day loan math, but in your favor.)</p> <p>It works for small transactions as well. If tomato paste usually costs 45&cent; a can and you find it on sale for 33&cent; a can and buy a year's worth, your &quot;return on investment&quot; (treating each can taken from the stockpile as being worth 45&cent; until, a year later, they're all gone) comes to better than 65%.</p> <h2>Advantages beyond the outsized return</h2> <p>The &quot;investment return&quot; isn't the only advantage to buying cheap and stockpiling. Your investment is also:</p> <h3>Tax-free</h3> <p>Suppose a bank would take your $2754 investment and give you a CD that paid $9 a day for 360 days. No bank would offer you a deal like that, but if you found one that did, it would report the $486 in interest you got as taxable income. Taking a bottle of wine out of your cellar, though, incurs no tax liability.</p> <h3>Secure</h3> <p>Your wine cellar is not going to abscond to Rio nor declare chapter 11. It's not going to take a beating if the Fed raises interest rates or oil prices go though the roof. It's just going to sit there letting you take $9 bottles of wine out all year. It's vulnerable to ordinary hazards like theft and fire, but you are protected by your homeowners insurance.</p> <h3>Inflation-protected</h3> <p>Even if you could get that imaginary CD that paid $9 a day, if prices go up to where wine costs $10 a bottle, you're still out of pocket an extra dollar every day. Your wine cellar, though, will keep giving you bottles of wine. If you care to, you can whip out your financial calculator and calculate that your average return just got even better.</p> <p>There are also some non-financial advantages. Your whole household runs more smoothy when you don't have to rush to the store to pick up something you've run out of. And, with staples on hand, you're a lot less vulnerable when a blizzard or a flood prevents suppliers from restocking the grocery store.</p> <h2>Disadvantages (obvious and not-so-obvious)</h2> <p>There are also disadvantages. They don't invalidate the strategy, but you need to be aware of them. Some key ones are:</p> <h3>Illiquid</h3> <p>If you need the money for medical bills or a car repair, you're not likely to be able to sell the wine or tomato paste to raise cash.</p> <h3>Bulky</h3> <p>There's no way I could fit 30 cases of wine in my apartment. (I could probably fit one case, though.)</p> <h3>Changed tastes</h3> <p>Suppose a month after you lay in 30 cases of wine you convert to a religion that prohibits drinking alcohol? Or you quit eating beef and what had been enough red wine to last a year is now a lifetime supply? Or you simply decide that the robust shiraz that you liked so well lacks subtlety--leaving you with 24 bottles that you're never going to want to drink.</p> <h3>Increased consumption</h3> <p>Suppose you drink a bottle of wine once a week or so, and decide to buy four cases, thinking it will last you almost a year. It could very easily turn out that, having just the right wine already on-hand each day at mealtime, you find yourself opening a bottle way more often than when you had to make a special trip to the store to pick up a bottle. The investment return is still there, but it (and more) will end up being eaten up by your increased standard of living.</p> <h3>Risk of spoilage</h3> <p>Wine keeps pretty well. So do cans of tomato paste. But other things don't, and if you try to stockpile something that goes bad, you can lose much or all of your investment.</p> <h3>Research costs</h3> <p>Success depends on buying things at a good price, so you need to know what a good price is. (There' s no point in stocking up on 69&cent; cans of tomato paste from the convenience store.) You could spend quite a bit of time and effort tracking prices and still occasionally make a mistake and buy a bunch of something that you could have bought a lot cheaper later. (Of course, that's true of Wall Street investments as well.)</p> <h3>Deflation</h3> <p>Just as the system shines during a period of inflation, it does poorly if prices are falling. If something is going to be cheaper in a few months anyway, why not just wait until then to buy it?</p> <h3>It's not sexy</h3> <p>When a guy at a party mentions that he's got a 50% gain in some biotech stock people will be a lot more impressed than when you claim that you've made 65% in tomato paste. Bring out a financial calculator to do the math for them and their eyes will glaze over. Short of claiming that you've made 65% in tomato paste futures, I'm afraid you're stuck.</p> <h2>Not a solution to all your investment needs</h2> <p>The investment return on stockpiling your ordinary goods when you can get them at a good price is a lot better than most people will get on most of their investment portfolio. And yet, people still invest in stocks and bonds. There are two big reasons for this.</p> <p>First, a stockpiling strategy is inherently limited. It's limited by storage space, shelf life, and the fact that tastes do change, making it unwise to buy a multi-year supply of almost anything. It's also limited by the size of your budget: these outsized returns only apply to the things you actually use--there's no advantage in stockpiling stuff you're not going to use, no matter how good the discount is.</p> <p>Second, stockpiling won't make you rich. When people invest in the stock market, it's with the dream that they'll eventually be millionaires who can quit worrying about whether 38&cent; is a good price for tomato paste.</p> <p>What stockpiling can do is free up a lot of money without reducing your standard of living at all. Look at that money as an investment return, and maybe it will motivate you to grab some of it--which you can then invest in something that does have a chance to make you rich.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/huge-tax-free-investment-returns">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stockpiling-is-rarely-the-answer">Stockpiling Is Rarely the Answer</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/contributing-to-a-roth-versus-paying-down-debt">Contributing to a Roth Versus Paying Down Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/best-of-personal-finance-credit-where-credit-is-due-edition">Best of Personal Finance: Credit Where Credit Is Due Edition</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-personal-finance-letter-id-write-to-my-younger-self">The Personal Finance Letter I&#039;d Write to My Younger Self</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-money-moves-to-make-before-the-leaves-change">10 Money Moves to Make Before the Leaves Change</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance APR investment return pantry stockpiling Sat, 29 Sep 2007 00:47:14 +0000 Philip Brewer 1228 at http://www.wisebread.com Lower Credit Card Rates? Just Ask! http://www.wisebread.com/lower-credit-card-rates-just-ask <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/lower-credit-card-rates-just-ask" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000042428154.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When&rsquo;s the last time you saw the interest rate and fees on your credit card go <em>down</em>? Yes, you read that right. <em>Down.</em></p> <p>If you&rsquo;re like most Americans, the likely answer to this question is never. Now, what if I told you that eliminating your fees and slashing your interest rate by five, ten or fifteen percent is as easy as picking up the phone and dialing the number on the back of the card? Yes, seriously! Just follow these two easy steps, and you&rsquo;ll be on your way to lower credit card rates and more money in your pocket! (See also: <a href="http://www.wisebread.com/10-monthly-bills-you-can-slash">10 Monthly Bills You Can Slash</a>)</p> <p>The first step to reducing your <a title="Guide to Using Credit Cards Wisely" href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards">credit card rates</a> is to know your history. What rate are you paying now? How many years have you been with the company? Do you always make, at least, the minimum payment? Have you ever been late? This information will come in handy when asking the credit card company for a lower rate.</p> <p>The second step is to call the company, and tell them you want a lower rate. More than likely, they will tell you no the first time you ask. Why? Because the higher your rate, the more money they make! But don&rsquo;t take no for an answer! If they tell you no, inform them of your positive history with the company. Remind them how you&rsquo;ve been a loyal customer for 10 years, or have never paid late. If the answer is still no, ask to speak with a supervisor. If the supervisor says no, wait 15 minutes and call again. You&rsquo;ll be speaking with an entirely different person.</p> <p>What if they keep telling you no? Or what if you&rsquo;ve been a less than stellar client? What if you haven&rsquo;t paid on time or didn&rsquo;t make the minimum payment? Then it&rsquo;s time for the Credit Card Rate Hail Mary. Tell them that you&rsquo;ve received other offers in the mail, and if they do not meet those offers you will cancel your card. (Make sure you have a few real or pretend offers to give to them as examples.)</p> <p>The key to lowering your rate is to be persistent and to remember that the credit card business is fiercely competitive. They would rather keep you as a customer than spend money on attracting a new customer. Even if you aren&rsquo;t a great customer, you should still ask for a lower rate. If you <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">carry a balance</a>, two or three percentage points lower on your credit card rate can make a sizeable difference! Remember: If you don&rsquo;t ask, you&rsquo;ll never know.</p> <p>Below is a sample script to read to the credit card company:</p> <blockquote><p>&quot;Hi, my name is __________________ . I have been a good customer for _________ years, but I&rsquo;ve received numerous offers in the mail from other companies offering much lower rates. For example, I have an offer here for a _________ APR. I want to stay with your company, but I also want a lower rate on my card. What can you do for me?&quot;</p> </blockquote> <p>These tips will also work for increasing your limit. Just replace &ldquo;lower rates&rdquo; with &ldquo;higher limits&rdquo; and &ldquo;APR&rdquo; with &ldquo;limit&rdquo;.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/jessica-harp">Jessica Harp</a> of <a href="http://www.wisebread.com/lower-credit-card-rates-just-ask">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-best-credit-cards-with-0-apr-for-purchases">5 Best Credit Cards with 0% APR for Purchases</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-dirty-secrets-of-credit-cards">The Dirty Secrets of Credit Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/everything-you-didn-t-understand-about-credit-card-interest-grace-periods-and-penalty-aprs">Everything You Didn’t Understand About Credit Card Interest, Grace Periods, and Penalty APRs</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-signs-its-time-to-break-up-with-your-credit-cards">7 Signs It&#039;s Time to Break Up With Your Credit Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/i-dont-love-capital-one-how-to-get-a-lower-apr-or-possibly-not">How to Get a Lower APR, or Possibly Not</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards APR limit lower APR script Thu, 07 Jun 2007 17:59:11 +0000 Jessica Harp 711 at http://www.wisebread.com The Dirty Secrets of Credit Cards http://www.wisebread.com/the-dirty-secrets-of-credit-cards <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-dirty-secrets-of-credit-cards" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000008262025.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The average American household carries almost $16,000 in <a href="http://www.wisebread.com/credit-card-guide">credit card</a>&nbsp;debt (only counting indebted households), according to a recent study by Nerdwallet. If that&rsquo;s not bad enough, the credit card companies are involved in what can only be described as a conspiracy to keep Americans in debt, permanently.</p> <p>I watched an incredible PBS documentary online last night called &ldquo;Secret History Of Credit Cards&rdquo;. You can watch the 5-part eye-opener <a href="http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/">here</a> at your leisure. But if you don&rsquo;t have an hour to spare, here are some of the biggest dirty secrets for you. You may want to sit down for these.</p> <h2>1. Minimum Payments Are Ripoffs</h2> <p>The minimum payments banks require on your monthly bill are not regulated. Banks are required to set minimum payments that will allow borrowers to pay off the debt in a &quot;reasonable&quot; amount of time, but after that, it's up to the banks to calculate their own minimums. The result is often minimums that shave only a few percentage points off the principal, which extends the time borrowers pay interest. Here's an example. Let's say you owe a modest $2000 on a card with a decent interest rate of 13% and a minimum payment based on paying 2% of the principal. Your minimum payment would be a mere $40, but it would take you almost 15 years to pay off&nbsp;the balance! Before that debt is retired, you will have paid the bank $1813 in interest. Cha-ching.</p> <h2>2. A Late Payment Can Skyrocket Your APR</h2> <p>Before the CARD Act became law this was really bad, and thankfully, that law has mostly eliminated the practice of &quot;Universal Default,&quot; which allowed banks to hit you with a skyhigh APR if you were late paying <em>any </em>creditor, not just your credit card company. And while things are definitely better, the banks can still bump your APR to 25% or 30% or even higher if you make even <em>one </em>late payment. This &quot;<a href="http://www.extension.org/pages/38098/what-is-a-penalty-apr-on-a-credit-card#.VfsuqPlVhBc">Penalty APR</a>&quot; will be noted in your card agreement and will be applied to all new purchases. If your payment is really late, 60 days or more, the bank can apply the penalty APR to your existing balances, too. (Ouch!)&nbsp; Card issuers are required to review any account that has been slapped with a Penalty APR after six months of on time payments, but that's no guarantee the Penalty APR will be reduced.</p> <h2>3. Late Payments Can Cost You More Than a Late Fee</h2> <p>Have you seen the credit card commercials that claim cardholders won't be charged a fee if they make a late payment, especially if they've been good customers? First of all, every cardholder should know that it's easy to get a late fee waived: Just call and ask. Every cardholder should also know that a late pay can hurt in other ways, too. For one, if you've been avoiding interest charges by paying your balance in full each month, a late payment will immediately incur an interest charge on your balance, and it may take two billing cycles for the grace period to get put back in place. Depending on how late you are, the bank may report your account to the credit bureaus as a late pay, dinging your credit score. If the account has been open for a year or more, the bank could apply the Penalty APR to future purchases. Finally, every day you're late is another day you're paying interest on that debt.</p> <h2>4. There Is No Federal Limit on Interest Rates</h2> <p>Don&rsquo;t you find it odd that in a time of very low interest on anything from car loans to mortgages, credit card companies can hand out APRs that embarrass loan sharks? Well, it&rsquo;s not unusual to see 34.99% APRs, especially as a penalty rate, and the reason is simple. Most credit card companies reside in states like South Dakota or Delaware, states that have very weak or even no &ldquo;usury laws.&rdquo; So, there&rsquo;s no cap on interest. By law, there&rsquo;s nothing to stop them charging whatever interest they want. Here&rsquo;s a <a href="http://www.pbs.org/wgbh/pages/frontline/shows/credit/more/map.html">map</a> that links to the locations of top 10 credit card issuers.</p> <h2>5. Grace Periods Are Getting Shorter... or Being Eliminated</h2> <p>There's nothing in the law that requires banks to offer a &quot;grace period&quot; on purchases before charging interest. It's a holdover from the beginnings of the industry. Still, most cards continue to offer them as a perk, and it really is a good deal for consumers, as long as they pay their balances in full and on time. Slip up and leave a small balance for next month, however, and you'll lose your grace period and start incurring interest from the moment you make a purchase. Worse, it can take two months of paying balances in full to reinstate the grace period, if it can be reinstated at all. Check your card agreement and pay off those balances!</p> <h2>6. Cash Advances Hit You Twice in the Wallet</h2> <p>First, as I&rsquo;m sure you know, you&rsquo;ll get a different, higher APR applied to your cash advances. But you also get hit with a transaction charge, around 2.5%. Even credit cards that confidently announce &ldquo;no finance charges&rdquo; can still bill you for these transaction charges.</p> <h2>7. Good Payers Are Called &quot;Deadbeats&quot;!</h2> <p>Deadbeat &ndash; it&rsquo;s what credit card companies call those folks who are responsible and pay off the balance each month. They don&rsquo;t like those people, not one bit. That&rsquo;s because they make little to no money off of them. No, credit card companies like you to carry a nice hefty balance and pay only the minimum each month. If you&rsquo;re one of those people, known as &lsquo;revolvers&rsquo;, you&rsquo;re part of the crowd that contributes roughly 90% of the credit card company&rsquo;s income. What a crazy upside-down world credit is.</p> <h2>8. You Can Demand, and Get, a Better Deal</h2> <p>APR too high? Hate the annual fee? Want a longer grace period? It turns out your credit card company may just have to do your bidding. See, the fees they charge are not considered a necessary cost of doing business, so you can request, firmly, that they be reduced or eliminated. Now, imagine what would happen if we all did that? No wonder they want that one kept secret. And remember, if all else fails, find a lower cost APR card and transfer your balance. You have at least that going for you.&nbsp;</p> <p>That&rsquo;s the scoop, folks. If you happen to be in spiraling credit card debt, there are places you can go to for help. PBS has a great list of resources right <a href="http://www.pbs.org/wgbh/pages/frontline/shows/credit/more/where.html">here</a>. And from now on, I hope you all look a whole lot closer at that handy piece of plastic in your wallet. It&rsquo;s far more ominous than it first looks. Pleasant dreams everyone.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/the-dirty-secrets-of-credit-cards">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/i-dont-love-capital-one-how-to-get-a-lower-apr-or-possibly-not">How to Get a Lower APR, or Possibly Not</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-a-balance-transfer-offer-a-good-deal">Is a Balance Transfer Offer a Good Deal?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/best-of-personal-finance-credit-where-credit-is-due-edition">Best of Personal Finance: Credit Where Credit Is Due Edition</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/your-interest-rates-are-about-to-go-up">Your Interest Rates Are About to Go Up</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The 5 Best 0% Balance Transfer Credit Cards</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards Debt Management APR debt financial problems. Hidden fees interest rates Secrets Thu, 08 Mar 2007 00:02:22 +0000 Paul Michael 332 at http://www.wisebread.com