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Closing your credit card? Here are the dos and don’ts!

Closing your credit card? Here are the dos and don’ts!

Closing down your credit cards might seem to be a very fruitful decision as you just want to cut down a big liability.

We believe that unused credit cards are a burden, and it’s better to get done with them for good.

But is it really that sensible to close the card you don’t use? “Think twice” is the phrase that comes to my mind whenever I want to close mine.

The subject of today’s article is common. Most of us have come across several pages showing the “Dos and Don’ts of closing credit cards”. But we only get confused the more we read.

So, I will try to simplify this post as much as possible, and even see it for myself, how to successfully close a credit card.

There are many factors that work behind the scene when it comes to credits and debts. Needless to say, we have the big determiner called credit score.

The credit score speaks about our credit behavior, and having a blank record of consumer credit will highly affect the score! So, if you close your card, then the credit report will not show any continuing credit line on your credit report, and that will be seriously reflected by your credit score!

Why should you keep at least one open credit card account?

Many financial professionals argue that it is good to have at least one credit card account open, which is reported periodically to the credit bureaus.

The most obvious reason behind this is that it helps to maintain a proper credit profile for you. A good credit account report influences your credit score.

Consider maintaining your payments on a regular basis and try to keep your credit utilization ratio low.

So, if you have only one credit card with you, then probably closing it is not a good idea. Rather you should use it sensibly and see that the utilization ratio for it is not exceeding 35%.

The utilization ratio is a percentage calculated by the balance due on credit accounts divided by total available credit.

So, if you have one credit card with a limit of $5000 and your outstanding balance is $2000, then the ratio is 2000/5000, which is 40%.

That was just an example. Your target should be to keep this ratio between 30-35%.

The credit utilization ratio is a big contributor to credit score and closing the only account you have will result in 0% ratio, which might have a negative impact on your credit score.

Why should you keep your oldest credit account open?

Another aspect to keep in mind is to have your oldest credit card open, as long as you can, unless another card of yours has the potential to replace it!

Our credit reports are made up of credit history. Every lender will have a look at your past to see how responsible you can be with a new line of credit in the future.

If your credit report displays a credit account with a good and long credit history, then you will have more advantage while taking out a new loan.

But the only thing that’s important is that the record of this old credit line should be noteworthy and clean!

If you believe that this old card is a nuisance and you don’t have any decent record to show off with it, then probably closing this credit card is a better idea!

What is residual interest and how can it be a problem?

You should clear your balance in full before you close your credit card. It’s so because you will otherwise have a balance with no available credit limit, which might sound you have maxed out your card!

Here comes the point of residual interest. It is the interest that gets accrued on credit accounts even for a small period of time, like say for one minute as an example?!

Suppose today your credit account bill has been issued and it stands at some $500 balance. Then by tomorrow, your bill will slightly increase, and no matter how hard you try, you can’t pay off the account in full, as interest will grow even for seconds. This is called residual interest.

Hence before you close your card, ask the company’s REP and your due balance on the specific date you will payoff your card debt and close it permanently!

Here are the dos and don’ts of closing credit card:

  • Do see that you’ve paid off the balance in full with the residual interest in mind and then close the card.
  • Do see that it is well reported to the credit bureau that your account is closed with a good marking.
  • Don’t close the oldest credit card, if it is not much of a hassle for you, and if it doesn’t inflict your lifestyle and financial liabilities.

Don’t close the only credit card you have, as if you manage it responsibly, it might help you have  a good credit score and credit profile.

By carol on April 6th, 2018

Credit card fraud – Types and characteristics you need to know

Credit card fraud - Types and characteristics you need to know

Credit card fraud can happen in various forms. The prime reasons for credit card fraud may also be different. Some of them are planned to steal funds from accounts, while some of them are functioned to buy goods without paying the money.

Furthermore, it is important for you to realize that credit card fraud is related closely to identity theft.

As per the FTC (Federal Trade Commission), the population over the age of 16 is the prime victim of identity theft and credit card frauds cases. The numbers are great; nearly 5% of them are currently affected by credit card fraud.

So, It is important to remember that hackers and identity thieves are becoming more tactical while doing this kind of criminal activity. So, you should be aware of the different types of credit card frauds that affect people’s financial data online.

Below are the most common credit card frauds that you can experience these days.

  1. Application fraud

Application fraud is another part of the identity theft. It happens when a fake person applies for a new credit card by someone else’s name.

The scammers will steal your personal documents, and use them to support their application.

Fraudsters often call people as telephone employers to confirm their identity. If anyhow the customer reveals his/her personal details, those fraudsters forge documents and provide false telephone numbers to authenticate the card.

Presently, banks have taken numerous safety measures to stop this type of fraud from happening.

Documents are checked through various processes and only original documentation are taken into consideration.

  1. Fake cards

It takes quite a bit of effort and time to make fake cards, but once it is done, it can steal a good amount from you.

A credit card contains the magnetic strip, the electronic chip, and holograms. It is difficult to make a fake card, but a skilled conman can forge this type of cards easily if somehow he/she can manage to get the original names and numbers.

Fake cards can be made using fake names and numbers, too. The fake card isn’t actually linked to an account; so, the credit card company will not take the liability to settle the payments for the transactions since they cannot link it to a genuine customer. By that time, the fraudster will be out of your reach with the purchases.

  1. Electronic or manual credit card imprints

Another advanced form of credit card fraud is making credit card imprints.

This technology helps somebody to fetch information stored on the magnetic strip of your credit card.

By using your card information, criminals may encode a fake card to perform fraudulent transactions.

  1. Counterfeit card fraud

Counterfeit card fraud is normally done through skimming. The criminal might get hold of  a fake magnetic swipe card containing all of your actual card details.

This fake card then might be used in the place of a fully working card, as it is an exact copy of your original card.

So, the fraudsters may swipe the fake card on any machine and spend on certain goods. This type of fraud can also be performed by a person who knows your card details like the PIN, EXPIRY DATE, CVV, etc. These information can be used to create a ‘fake plastic credit card’.

  1. CNP (Card Not Present) fraud

Practically, CNP means that a criminal is using your credit card without actually being there physically. If any person knows the EXPIRY DATE and CREDIT CARD ACCOUNT NUMBER, they can commit a CNP fraud against you. This fraud can be performed through phone, mail, or through the internet.                                         

This scenario happens most of the time when we shop online.

To safeguard this situation, the merchants will need the card verification code, known as OTP (One Time Password).

Because of this security check, making CNP fraud is getting difficult for criminals these days.

But, if a fraudster somehow grabs your phone or can get your Email id access or account number, he/she might know that OTP too. So, keep your cards safe as well as your phone and Email, too.

  1. Assumed identity

In this situation, a fraudster may use a temporary address and a fake identity to apply for a credit card.

For getting a solid protection against this type of fraud, there are several system checks in the banks.

For example, banks may ask new customers to submit account references. The more reference you can submit, the more the banks will be convinced and it’ll become easier to get your card being a genuine customer.

Customers can be asked to provide birth certificates, original copies of driver’s license, or passports, and so on to prove their authenticity.

  1. Account takeover by someone else

Account takeover is practically the most common example of a credit card fraud. Basically, a criminal will somehow manage to get his hands on your card information and related documents.

This is mostly an online scam.

The fraudster contacts the credit card company as “you” and asks for address modification. They also submit ‘proof’ of identity that they hacked from you. After verification, a replacement card will be issued to that the new address and the conman will be able to use your card.

Unfortunately, it isn’t rare for this type of fraud to occur. So, protecting your personal information will be the best thing you need to do for preventing such frauds.

This means using strong passwords, periodic password changes, using two-step-verification, and not leaving your personal details in the open sight.

Examples of credit card fraud:

There are few examples of credit card frauds that are famous in the credit industry.

“…Albert Gonzalez was a capable computer hacker who had previously been involved in credit card fraud cases, though nothing akin to what made him most infamous. Gonzalez and the group of hackers he led successfully hacked TJX Companies, stealing 45.6 million credit and debit card numbers over 18 months. He and his team went around from store to store, using wireless networks to steal credit card information from a number of different stores, including T.J. Maxx, Barnes & Noble, and Sports Authority.”

Another recent incident exemplifying credit card fraud cases involved Julio Lopez and Anett Villar, two members of a southern Florida gang that purchased stolen credit card numbers through the Internet and used them to cause over $75 in damages. The credit card numbers were paid for through the E-Gold online payment system, giving fraud investigations a way to track the perpetrators.”

After purchasing the numbers, Lopez and his gang then made physical cards using the stolen numbers. He then proceeded to sell those physical cards, which were fully functioning credit cards with all the necessary security features. The Secret Service arrested Lopez, Villar, and four others, charging them with numerous fraud cases...”

For more details visit here.

You can also check out a few statistics to get a clearer picture of  how much credit card frauds affected us till now:

Data courtesy – creditcards.com

By carol on March 23rd, 2018

Know whats of debit cards and how to use it wisely!

Debit cards are useful. No doubt in that. But is it the most convenient way to live a cashless life? Obviously not, because we have credit cards and other prepaid cards.

Giving a one-liner, debit card grants you direct access to your personal savings/checking account, hassle-free and easily.

But one can seriously argue, why to use debit cards, when we have credit cards, prepaid cards, and retail cards!

In this post we will try to give an overview of debit cards, how significant it is to use debit cards, and the dos and don’ts of debit cards!

What is a debit card? And how is it used? An overview:

A debit card can be called your portable savings or checking account that you can carry with you anywhere.

With the coming of debit cards, the need to carry liquid cash has decreased quite a bit.

Even if you need liquid cash somewhere, you can easily go to the nearest ATM and have your cash withdrawn.

But remember, unlike credit cards, debit cards access cash straight away from your personal bank account. So, if you are not responsible while using your debit card, then you will just drain out all the cash from your personal account.

Previously the only convenient way to withdraw money from an account was to use cheques and withdrawal slips available at the cashier’s counter.

But now we have debit cards to ease out the process and make money transfers and withdrawals lot less time taking.

How significant is it to use debit cards?

This question is a bit childish but I hear it quite often even among my peer groups.

We have progressed to debit cards from paper cheques and slips because of a lot of reasons.

The first was the invention of ATM cards that were only used to withdraw liquid cash from ATM counters.

Then these cards could be used to make purchases at few popular stores and while booking flight tickets, movie shows, etc.

But finally, we have debit cards, which we can use nearly anywhere we want, from normal day to day transactions to transferring money from one account to another.

So the above question is pretty much invalid in the present day as nobody wants to carry on with liquid cash, which is so inconvenient and dangerous in bigger amounts when we can use square inch sized thin plastic that fits in our pockets.

Moreover, debit card withdrawals are not limited as before. Previously your total transaction amount could not exceed your total available account balance.
As of now, every bank has an allowance called overdraft limit to cater the emergency needs of a debit card holder.
You can now exceed your account balance limit while doing transactions, but there will be interest for the extra amount you withdraw, just like a credit card.

So, if your account balance is $1000 and overdraft limit is $200, then if you finish your account balance completely, you can then withdraw an extra $200, but you will be charged extra on this amount.

But with every single invention comes more and more problems associated with it.

Since debit cards are directly linked to your personal accounts, there are bigger chances of fraud activities taking place surrounding debit cards.

One such example could be identity theft. Your debit card can exactly reveal the same information as displayed in your personal account details, like your account no, and other important hidden codes.

Losing such information can bring in huge problems, with the biggest one being your account getting hacked!

Keeping all the things in mind here are the dos and don’ts of debit cards:

  • Never try to exceed your account balance while doing transactions, because this amount works like credit and you will have to repay it back with interest.
  • Never disclose your account information, card number, or other details to any third party, so as to avoid chances of fraudulent activities and account hacks.
  • Usually, it is advised to do online purchases with credit cards, especially during Cyber Monday or Black Friday shopping, coz if you want a refund on any item and you don’t get it, at least your personal account balance won’t get dinged.
  • Change your debit card PIN at least twice a year to avoid getting your PIN getting copied or duplicated.
    Also don’t set predictable PIN as hackers are really brilliant at finding probable PINs while initiating fraud activities.
  • To avoid hefty debit card fees, try to avoid overseas transactions and have a detailed talk with your respective bank’s personnels to see how you can cut down debit card fees.

I hope by now it is clear how a debit card works and how you should use it.

Debit cards are very personal items and should be used carefully. If lost, you can block your debit card over the phone by calling your respective bank’s customer care support and issue a second card within a few days time.

By carol on March 9th, 2018

How to help your kids build their own credit?

How to help your kids build their own credit?

To be true, there’s no specific age to help your kids build their own credit.

I can understand how worried you are about your kid’s ‘credit future’, given the current debt crisis our country is going through. Good credit seems to be a precious jewel to preserve nowadays.

But worry not. Building a good credit portfolio from an early age is actually very easy. Only you just have to have patience and play a few tricks to set the good credit scores rolling.

So how to build credit for kids?

  • First teach them healthy money habits:

Proper training crafts the brightest of soldiers.

First teach your kids how to use money wisely.
Soon they will be playing fireball with loans and cards. Hence build the platform for them.

Show them the differences between spending and saving.

Tell them that the more they save, the more can they spend, and the less will they have top borrow from people.

You see I can’t tell you how to teach your child financial ethics, because that will be beyond the scope of this article.

But all I can say, is that, your son should at least know 3 basic things.

  • Nothing comes for free in this world. (Never give them pocket money for free, make them do some work)
  • Credit is what he borrows from others.
  • And credit once taken, must be repaid
  • Have them open their first savings account:

This is the second thing you should do. When they will have their first savings account and a debit card, they will know the basics of banking.

If they are responsible in using a debit card, then they will grow the habit of using plastics cards wisely.

Also having a savings account open, will bring in them the tendency to save money. You need to teach them that savings is way more important than spending.

  • You can make them the authorized user of your credit card:

The first step toward helping your child build credit history, is to make them the authorized user of your own credit card, if they can’t qualify to get their own.

Now few things are completely up to you, like how you will teach your kid, not to overuse the card or that this card is not for your kid to use, but to only establish credit history.

Making your kid the authorized user, will open his credit history. So your transactions will be reflected in your kid’s credit report too. Your payment report will impact directly your kid’s report.

Only you need to be aware of the dark side, that if your kid abuses the card and do haphazard transaction and spending, then you will have to do the hefty payments.

Hence, get these few things clear with your kid, and then go for this authorization option.

  • If they want their own credit card:

First they will have to be at least 18 years old. Next they must have a stable source of income.

So if your kids have just entered the college premises, then you can motivate them to get their own job.

After they can show the bank, that they are capable to use credit cards, then they can have their first credit account opened, on their own.

Else you can cosign a credit card with them, if they want a credit card, without meeting all the required financial obligations.

But remember, co-signing your child’s credit card, can turn out to be hectic. If your child abuses the card, and becomes helpless, in paying back the outstanding balance, then the bank will charge you, and you will be responsible to pay back the balance, because your name is on the card too!

  • If nothing works, then get them a secured credit line opened:

A secured credit card will demand you to make a security deposit, before the bank hands over to you the credit card.

The security deposit you make will be a lump sum amount, and this money will both be the collateral and the limit for the credit card.

So if you make a $1000 deposit, then the card limit will also be $1000, or a bit less, but not more.

Now if your kid can’t handle the debt payments, then the bank will confiscate the security deposit, and the account might be dissolved.

People take out secured credit cards to build credit history from scratch.

Actually it’s not at all difficult to build credit from young age. To be precise, I in fact inspire parents to consider credit as a part of their children’s education.

If we can teach the children from an early age, the use and misuse of credit accounts, only then can we expect to see a future generation in our country, who knows how to use credit wisely, and ward off the devil debts, under which our country’s economy is crushed right now!

By carol on February 9th, 2018

The mistakes with reward credit cards – How to avoid the pitfalls

The mistakes with reward credit cards - How to avoid the pitfalls

People love credit cards that earns good points and miles. They always look for cards with big sign-up bonuses and attractive annual benefits. But most of the time, people feel that these rewards cards are unworthy, when at the end of the year they tally up their finances.

If you often travel with your credit cards, you should use a rewards card every time.

But if you’re planning for a tour just because you can’t resist the mentality of collecting points, then you might be addicted to using one or more reward cards which will actually cost you more money.

To be on the safer side and protect your finances, make sure you avoid these mistakes with reward credit cards:

1. Missing the “minimum spend” criteria for sign-up-bonuses

Most of the rewards credit cards come up with a catchy sign-up bonus that requires a minimum amount to be spent by you.

The maximum time limit for the transactions varies between the first 90 to 180 days of card membership.

Few cards have different criteria such as a certain amount for a single purchase. But in both cases, the minimum amount spend remains as high as $5,000 (for example – the American Express Platinum card) or more than that.

People who are too much ambitious about getting these initial bonuses, points or offers, are often drawn by the lucrative promises. But actually, most of them fail to meet the minimum criteria to become eligible for the offers. So, they never get the bonuses.

**How to avoid such a mistake:

Make a proper plan as soon as you apply for a new rewards card. It’s better if you apply for a new card when you have a big expense nearby. The expenses may include home repairs, summer vacation trip, or back-to-school shopping. Make a note of your deadline to reach that minimum spend, ask the card issuer, and verify the date properly.

2. Overspending to earn bonuses or miles

Earning credit card points is very interesting. We don’t just use our credit cards to purchase things we need; we also make payments for services with the plastic cards so that we can grow miles and points balances.

We swipe our cards more because we get 5x or more rewards during a quarter (for example – Chase Freedom and Discover it Cash Rewards), or we make payments online with surcharges rather than using cash payment option because we really want a good amount of points in our account.

But we are doing wrong. Yes, we tend to overspend and throw our budget plans out of the list when we focus on the rewards and not on the price tags.

**How to avoid such a mistake:

Always watch how your credit card usage and earning points are changing your spending behavior. If you think your purchases are justified because you’re earning points, it might be the best to think why you’re using that rewards card. If you’re avoiding taking out money from the ATM to pay for something, you probably shouldn’t use your reward card for buying things unnecessarily.

So, if you want to avoid such mistakes with reward credit cards, think before you swipe or make online payments.

3. Not comparing card benefits with the annual fee

Usually, most of the good points-earning reward credit cards have an annual fee.

But, do you ever think how to compare the benefits that you are getting from the reward card with the money you actually pay to be a card-carrying member?

For example: Suppose you’re paying $500 a year for an airline credit card which comes with free access to a club lounge. But, every year  year, you travel by air only two or three times. In this case, you’re the loser.

The benefit of free lounge access is worth if you travel at least 10 times a year by air. You’d be better off financially if you avoid that credit card and pay $50 for a lounge day pass every you travel; it’s cheaper.

On the other hand, if you’re using a hotel credit card that gives you one free night every year by just paying $49 annual fee, you can use the benefit every year by spending at a hotel that costs $400 per night; that’d be a great choice.

**How to avoid such a mistake:

You can perform a personal annual fee checking of your cards. Don’t be overwhelmed by the benefits that sound too good to pass up without considering the card’s annual fee. Calculate and compare the value of the card’s benefits with the amount you are paying towards annual fee; trust me…it works.

 4. Earning but not using your points

One of the major mistakes the  reward credit cards users make is never using their reward points and miles. Billions and billions of points and miles are getting wasted every year just because the credit card holders don’t use them.

Isn’t it weird that people work hard to earn card benefits, sometimes even overspend, but end up with such a waste of resources?

There are many reasons for which  people waste their points and miles. You might be saving your miles for a yearly perfect trip, and avoid using those miles on some less valuable trip, or you might just want to show off to your friends that you’ve got a million points in your balance.

Most of the time the problem arises when airlines and hotels suddenly change the valuation of your points and miles. You might be thinking about buying a first-class ticket worth 70,000 points, but next month it might cost you 100,000 points.

Apart from that, some airline miles may get expired if you don’t make any activity in your account for a certain period. So, keep those things in your mind.

**How to avoid such a mistake:

You can practice the “earn and burn” method used by the frequent flyers. Make sure you are using the points and miles you have in your account and prepare plans to earn more.

By using your point and miles time to time, you can surely redeem your reward card benefits for  the best experiences  you can get.

 

By carol on January 26th, 2018

5 unavoidable reasons to boost your credit score

5 unavoidable reasons to boost your credit score

Your credit score is  your financial responsibility. It is a sign that you are capable of paying down the loans and other acquired debts.

So, if you’re having a lower credit score, then you should try to boost your credit score to a healthier level. There are other several reasons why you should try hard to increase your score.

Let’s check out 5  important reasons for working on increasing your credit score:

  1. Buying a car or a bike

Many people opt for an auto loan when they decide to buy a new vehicle. If you have a bad credit history, you may find it difficult to achieve that goal.

On the other hand, you might be asked to deposit a larger down payment than normal as you don’t have a good credit score.

After buying the car or bike, your insurance premiums can also become very high. A good credit score will help you to save the highest amount of money not only from the price of the car but also from the added associated costs with a new car.

  1. Buying a new home or renting an apartment

One of the most important reasons of all – you should showcase yourself in a positive way while buying a home. If you like to invest in real estate, you should secure your position so that lenders approve your home loan application. Not only approval, but you need to qualify for the lowest possible rate.

The lower your credit score, the higher will be your interest rate.

Even if you think about applying for an apartment, it also requires a credit check. The landlord will definitely check your credit score to verify your dependability in the past. So, you should make sure to keep your credit score as high as possible.

  1. Starting your own business

If you are planning to start your own business with a low credit score in your pocket, you might want to think twice.  Without an optimal credit score, it’s difficult to gather finances for your small business. You may have to prove your creditworthiness to your lenders through your credit score and a good credit history. You should  convince them that you are capable of handling new finances and also ensure its optimal success. Therefore, you can successfully run a business.

  1. Keeping good relationships

A terrible credit score can hamper your relationship instantly. As per a U.S. News & World Report, a bad credit score can have a negative effect on your personal life. Just like emotional conflicts can trigger serious issues with your loved one, so can your low credit score. If someday, while opting for a loan or buying a house for your special one, your credit score impede your lover’s ability to qualify, it could be.

  1. Improving your spending habits

Once you’ve decided to boost your credit score, it’s a good initiative to practice healthy spending habits. With a good credit score, you’ll be more confident of making smart financial moves with your card.  You’ll realise the reasons for which you arrived at a lower credit score. You’ll also figure out the perks of having a higher score, so you may work hard to build a better score and avoid any fluctuations.

Your credit report will be your financial friend for the rest of your life. So, make sure it portrays your accurate financial history and credit score.

MyFico suggested that people should regularly check their credit reports and dispute the errors. Few negative items on your credit report might damage your credit score badly. You should consider these few items as mistakes and work on to rectify them. Removing these errors will surely increase your credit score and provide you a boost to move ahead with a strong financial profile.

By eliminating debts and making all the loan payments on time, you may improve your current credit score. If you want to reduce your debt amount, consider setting up payment reminders or set up ACH for bills.

So, manage your finances well, pay off your bills timely, balance your spending with your monthly paycheck to build  your credit score gradually. Don’t forget to check your credit report periodically and dispute errors if you find any.

By carol on January 12th, 2018

Unusual ways to help you keep a good credit score!

Unusual ways to help you keep a good credit score!

The worst part of being a consumer these days, is probably maintaining an excellent credit score!

We need loans, we need to swipe credit cards every now and then, and we have good amount of debt payments to make!

One skipped debt payment or a slight default on loans will start dinging credit scores to some extent!
Actually, there’s only one specific rule to maintain a good credit score. The rule is, if you are taking out credit, then make sure to pay it back on time!

But this rule doesn’t always ensure a scratch-free credit profile.
If you are supposed to pay back a few hundred dollars by the end of this month, and you are paying it back 2 months later, then your credit scores will fall!

Now you would say that you are paying it back, your intentions were never wrong, only that you need a little more time!

Well, these excuses won’t work with the credit scoring models that the credit bureaus use to evaluate your credit score!

Here are a few unusual ways to keep a good credit score:

  • Try not to max out your credit cards.

 

Of all the consumer debts in our country, the maximum number of debts are incurred through credit cards.

Now a life without credit cards is practically impossible. You need credit cards for nearly any transaction you do, as carrying liquid cash every time is not convenient!

So, always try to use credit cards within the credit limit.

There is this small but crucial thing, called the credit utilization ratio! It makes up 30% of your credit score.

You should always try to keep your credit utilization ratio below 35% !

Hence, whenever you max out your credit cards, the credit utilization ratio goes above 100%, which is the worst case scenario!
My suggestion would be, always pay off your credit card balances and keep room in your credit cards, so that you don’t have to exceed your credit limit!

  • Having only one credit account is not enough:

 

The real game is to have multiple credit accounts, with all bearing positive feedback.

The information about the types of credit accounts you have, will be used by the credit bureaus to calculate your credit score!

So, your target should be to handle multiple credit accounts at the same time, with no payment defaults on them!

Example of such a thing could be, having at least 1 secured loan and 2 credit cards!

Now you surely can ask, why should you diversify your credit profile? Well, any lender should have enough information about your credit behavior before you qualify for a loan.

The lender would like to believe that you can handle multiple credit accounts, and have enough experience in the field of debts.

Just walk in the shoes of a lender once. How can someone’s expertise in credit card debt, is enough to qualify for an auto loan?

So, to get better loan terms and good credit score, you should know how to juggle with more than one or two credit accounts!

  • Beware of hard inquiries:

 

You are always advised to apply for loans or credits only if you have the highest chance of qualifying!

Hard inquiry takes place when you approach a bank or a lender for any kind of credit.
The lender will go through your credit reports and will add the amount of the new credit to see whether or not you will be able to handle it!

This temporary addition of the new credit will increase your existing debt, and therefore hurt your credit score!

Hence your credit score may fall.

So, don’t apply for loans without checking out if you have high possibility to qualify for it; else you can decrease your score for no good reason!

  • The 2017 credit report changes is what you should know of:

 

In the recent times, people are actually worried about medical debts, as these debts come into our lives as unexpected expenses and as a surprise!

Also, hospital bills, doctor fees, and the price of medicine are very high in our country. But as of September 2017, the credit report changes are doing us a favor!

The bureaus have decided to give us 6 months of time to figure out the best way to deal with our medical debts before they start getting reported to the credit bureaus!

Hence use this time if you are a victim of medical debt.
This is a great way to increase your credit score and also to prevent it from falling!

Here are some other short tips to help you keep a good credit score:

 

  • Always look out for credit report errors, and whenever you find one, you should dispute. There are a few common errors that many people have to deal with occasionally. These errors break your credit reputation and decrease your credit score. 
  • Learn to spend within your means. There’s no magic spell you can use to increase your credit score. Practice good spending behaviour and see how your credit score gradually increases!

 

If your credit score has fallen significantly, and no one’s ready to offer you a loan or credit card, then you seriously need to consider rebuilding your credit score. You can do this by taking out a secured credit card. You give a cash deposit to your creditor, and this amount will be your credit limit. This way, you will be able to reestablish your credit score!

By carol on December 29th, 2017

9 essential tips to follow if you rent a car using your debit card

9 essential tips to follow if you rent a car using your debit card

Thinking about using a debit card to rent a car? It is quite possible, but it’s not so easy. Normally, rental car companies prefer that their customers use credit cards instead of debit cards.

There are strong reasons behind this typical mentality of rental car companies. Most of the time, they become anxious. What if the debit card renter returns the car with empty gas tank and don’t pay for it? The renter’s insurance policy doesn’t cover that loss at all. So, they have no choice left rather than pushing their customers to use credit cards.

However, the rental car companies also want to keep their customers happy. So, on many occasions, they’ll allow you to rent a car using your debit card. But there are some strict rules.

While renting your card through a debit card, you might have to encounter few hassles and spend a longer time at the rental car counter due to those rules.

So, let’s talk about how you can ease up the process of renting a car using a debit card.

Read on and know about some situations you might have to face, and a breakdown of policies by the rental car companies.

  1. You’ll need cash available in your account

You need to have enough money in your bank account or the debit card you are using. It is quite possible that the rental car company might lock up the full rental amount in advance. They might also deduct a little more initially to cover up any sudden mishaps. The extra money will be refunded back to you when the rental deal ends. The entire process may take up to three weeks to complete.

  1. You may encounter a credit check

Many rental car companies will perform an automatic credit check for customers who wish to rent a car using their debit card. If you have a low credit score, the car company might reject your application. You might know that every time someone runs a credit check on you, it can practically harm your FICO score from 5  points to much more.

  1. You need to carry extra ID proofs

In addition to a driver’s license, you might have to provide few more IDs. So, keep all of your iDs’ up to date, especially your passport. You can also use your utility bill as an address proof if the address is similar to  the one on your driver’s license.

  1. You’ll need proof of insurance

Many car rental companies will ask you to submit your insurance policy papers. The process will take time as the rental car agent will verify the documents by contacting your insurance company. If you do not have enough  coverage, or if the agent finds anything fake or inappropriate, the agent will ask you to buy a proper policy. If you don’t respond to them positively, they’ll just  deny your application to rent a car using your debit card.

  1. You might be asked for evidence of return travel

Some car rental companies may ask you to show your return tickets too . This practice may depend on  company to company, and even from one place  to another .

For an example – Enterprise, Alamo, and National car rental companies” may want you to produce your return ticket if you want to use your debit card for non-airport locations. The ticket could be for an airline, a cruise, or a train.

  1. You can expect a cap on vehicles types

There are also some top class cars that you cannot hire. A Mercedes sedan, a Lincoln Navigator, a Volkswagen Touareg, or a Land Rover SUV – all these cars are not rentable with a debit card at several  rental locations. If somehow you manage to rent any of these luxury cars, their charges will be very high and the deposit money also is  huge.

  1. Your age might be a restriction

Some rental car companies do not allow people below a certain age limit to hire their cars. For an example – Budget and Avis company provide cars to the people over the age limit 25,  with debit card payment facility. Thrifty also provides same service for off-airport locations. Other companies may also need  more than one age proof for the car rental service.

  1. You’ll pay full amount at vehicle return

Normally, rental car companies are interested to take your money as soon as you book the car. They’ll accept the money through different monetary forms like cash or credit cards, debit cards, etc. Hertz and Thrifty will offer you to pay only a part of the rental money upfront when you book a car from them at least 30 days in advance with of their Cash ID cards. However, you’ll have to pay $15 surcharge for a new card every time you reserve a car from them.

  1. Rental policies may change according to your location

You should  know the debit card policies at your rental car location. You can check out the policies by logging into their website online. Select your location where you plan to rent and then check the fine print at the bottom. Review all the details of that location’s policy and choose accordingly.

Apart from that you can call the agency directly and get quotes. You can visit their local office; it is the best way to verify and negotiate rates.

By carol on December 15th, 2017

All you must know about promotional prepaid cards!

All you must know about promotional prepaid cards!

Prepaid cards and gift cards are taking the market at  their fingertips. Day by day people are getting more inclined towards buying gift cards, rebate cards or promotional prepaid cards to save money and grab offers!

But how significant and important are these prepaid cards?

Do you really need them around, or you are better off with traditional debit and credit cards?

You might hear every now and then that if you shop goodies worth $500 or more at a particular store, then the store might gift you a promotional prepaid card, worth $25 or $50.

But why is that store so eager to promote their business by offering you a prepaid card?

To make things crystal clear I will be dividing this post into two sections. One part will deal with why prepaid cards are important from a company’s perspective, and the other will be from the consumer’s viewpoint.

Part- I

Why companies prefer promotional prepaid cards than traditional marketing?

Let me come straight to the point.

It is actually an 80-20 situation, where the company, that’s giving away the prepaid cards, benefits the maximum (say 80% benefit) than you (you are on the lower side with 20% benefit).

A company chooses promotional prepaid cards for marketing because:

Promotional prepaid cards have this Call-To-Action property that compels the consumer to take immediate action! These include buying more products for limited offers, or activating the card right away, which makes you a potential customer.

  • The companies to track consumer mindset! Your purchases with that prepaid card will be accounted and the details will be used for the company’s benefits!
  • The prepaid cards have a response rate much higher than discounted products, bonus points or coupons.

The promotional prepaid cards (also known as prepaid incentive cards) are designed to reward potential and profitable consumers, and sometimes the employees of the company. These promotional prepaid cards are simple, flexible and convenient to use!

The card’s money can be redeemed and reloaded easily if the company wishes to do so for a better marketing prospect!

Incentive cards, gift cards, reward cards, promotional prepaid cards or whatever you would love to call them, also have other perks in addition to the above-mentioned benefits:

    1. The cards help to drive consumer traffic to any target store.
    2. The cards encourage consumer visits and help in repeat business for any particular product!
    3. Increase average purchase amounts.
    4. Help in building goodwill, and relationship marketing.
    5. Help to establish tasks like targeting a specific group of audience!

So, we have discussed the benefits for a company, if they market their products or business goals through promotional prepaid cards or gift cards or reward cards.

Part -II

Now we will see whether or not these promotional prepaid cards are good for us to buy!

I would like to start off with this small conversation that took place between two Wall Street Journal reporters, Tanya Rivero and Robin Sidel.

Here Tanya Rivero asks Robin Sidel to confirm that she has heard of a guy who uses prepaid cards and gift cards to pay off his mortgage.
In reply, Robin says,You can’t pay mortgage with credit card, so he uses a third party vendor, so he’s still using a credit card to buy the gift cards to pay the mortgage”!

So that’s making it clear I guess that how badly you can eventually make use of your promotional prepaid cards!

But sidekicks and jokes apart, let’s talk about the real deal.

Pros and cons of falling for promotional prepaid cards:

The Pros:

  • In general prepaid cards give you the freedom, from carrying cash with you, when you are on a trip or so!
  • There’s no access to your checking account, so your bank vaults are safe, and you have got a certain limit, within which you can spend without worrying about interest charges and debts like you do with credit cards!
  • Act as good gifts to give anyone you love. It will drop the brainstorming about what to give on your kid’s 16th birthday, or so. Moreover,  it also takes away the awkward look from people’s faces when you give them liquid cash as gifts!
  • With promotional prepaid cards, the offers and rewards are sometimes pretty cool to let go of! Like, say $50 off on a $150 purchase at one specific store!
  • They are easy to use, and some cards are also reloadable.
  • You can customize your prepaid card just as you want; you can add your pictures, your favorite quote, your name and whatever!

The cons:

  • The hassle of activating them. As you might already know, these cards need to be activated and at times the online forms are quite troublesome!
  • It takes away from you the freedom of making choices. So, if you have a Walmart card, then you can only buy from walmart and not from Amazon or anywhere else!
  • They have expiry dates.If you think you can drag on your $200 prepaid card for  2 years, then that’s just not gonna happen!
  • As promotional cards are displayed on racks at stores, scammers can easily take the code, reading it right away from the back of the card, and can later steal money once you buy and activate the card!

Now it’s completely up to you, if you are in for a promotional prepaid card or not.

But for your knowledge, these thin cards have become an acclaimed promotional strategy for companies and businesses!

By carol on December 1st, 2017

Beware: 8 Things that can kill your credit

Beware: 8 Things that can kill your credit

Most of us know that our credit score plays a significant role in our financial life. We also know how to build a good credit score.

But are you aware of those things that can kill your credit score?

Here are some ways you are hurting your valuable credit score.

1. If you make late payments or not pay at all

Remember, 35% of your credit score is based on your payment history.

If you always make late payments, then it will be on your credit history which can hurt your credit score. Also not paying the credit card bills can affect your score negatively.

If you don’t make payments for 6 months or more, your accounts may get charged off and your score will suffer significant damage.

Thus, it is imperative to pay the entire credit card bill on time every month.

2. Using the debit cards to rent a car

Some car rental services accept debit card payment method. Once you use your debit card to make the payment, a hard inquiry will be added in your credit report, which can ding your credit score by a few points or remain on your credit report for 2 years.

According to the credit reporting agencies’ clause, they will pull the consumer’s credit report if they use a debit card to pay.

3. If your account goes to the collection agency

If you don’t pay off your credit card bills, the creditors may appoint debt collectors to collect the payment from you. The creditors can send your accounts to them before or after charging them off. This will get updated on your credit report accordingly and will drop your score significantly.

4. Freezing credit cards for a long time or closing old accounts

If you don’t use your credit cards for a long time, the credit card issuer can close your account due to zero activity. This will be bad for your credit utilization ratio. Also, closing old credit card account is not a wise idea as it will certainly decrease the length of your credit history which can hurt your score.

5. Considering credit card debt settlement

Choosing debt settlement method to pay off the credit card debts can hurt your credit score.

Because in this process, creditors will get less amount; they accept that the debtor is unable to pay them the total amount. So, you need to pay less money than you owe. Thus, it is considered to be creditor’s loss and your gain. Therefore, it can hurt your credit score.

6. Filing bankruptcy

If you file bankruptcy to get rid of your debts, your credit score will drop significantly. Most of the credits will not consider you as a responsible credit card user and can deny to give you further lines of credit. Once you file bankruptcy to pay off your debts, it will stay on your credit report for 7-10 years which can drop your score by about 120-130 points depending on your present score.

7. Applying for too many credit lines or loans

Credit inquiries can affect your credit score. Making too many credit or loan applications within a short time can drop your credit score. However, if too many credit or loan applications take place within 45 days, it will be considered as 1 credit inquiry. Following this condition will not hurt your credit score much.

8. Having no debt at all

Living debt free is good; but not accumulating debt altogether will not let you build credit fast. Having no credit is as bad as having a bad score. It is important to have a line of credit and use it responsibly.

Lee Gimpel, co-creator of The Good Credit Game has said, ” Building a good credit score comes from a responsible pattern of using credit — and a long history of years is better than a short history of a few weeks or months“.

Lastly, understanding exactly what is hurting your credit score is important but difficult. Remember, even small things can have a bad effect on your score. Thus, it is important to review your credit report from time to time. By doing so, you can check whether or not there is any mistake. Sometimes wrong listing or error can affect your credit score badly. So, dispute the error with the three major credit bureaus as soon as you find any mistake in your credit report. Doing so, you will have an accurate credit report which will help you raise your score.

By carol on November 17th, 2017