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Archive for Personal Finance – Page 7

How to Choose the Right Credit Card – Part 4

By BankAim · Comments (0)
Saturday, October 17th, 2009

To read the prequels to this article click…

Part 1 – Uses of Credit Cards, Finding the best rates, Different Types of Rates.

Part 2 – Credit Card Fees, Credit Limits, Grace Periods

Part 3 – Interest Calculations, Cash Advances, Premium Credit Cards, Credit Card Features.

Understanding the Terms of Service and Application

By law, credit card companies must show you all the terms of the credit card.  Reading through the terms of service may seem like a daunting task, but if you break it down it is not too bad.  Use How to Choose the right Credit Card Parts 1 – 4 as a guide to help you sift through the information.

Look for the disclosure box which breaks down the

  • Rates
  • Grace period
  • Calculation Methods
  • Fees
  • Minimum Finance Charge
  • and all the other pertinent information.

What to do About a Stolen Credit Card

If your credit card is stolen (or lost/presumed stolen) report this information to the credit card company immediately.  You will be able to find the phone number on your credit card statement or on the credit card companies website.  When you report the card stolen the credit company will immediately put a stop on any further purchases or transactions made from your card.   From that point on that credit card will be useless.  The credit card company will issue you a new credit card if you desire.

You can take precautionary measures by recording your credit card information and phone numbers in a secure location.  If your purse or wallet gets stolen you will be able to contact all your credit cards and banks immediately without having to try and find a whole bunch of phone numbers.

If your credit card is used after it has been stolen you will never be liable for any charges over $50.  The federal truth in lending act protects purchase made without permission that exceed $50.  Extra insurance can be purchased to protect the entire amount if the credit card is stolen and used.

Dealing with Mistakes on Your Bill

If you find a mistake on your bill then there is a few steps you can take to dispute the error.

  1. Place a phone call and speak with a representative. If the error is small they can often times take care of the issue immediately.
  2. If you cannot settle the dispute by phone you must write a letter to the credit card company within 60 days of the statement.  There will be an address on the bill where you can send the dispute.  Include:
  • Full Name
  • Date
  • Account Number
  • Explanation of the Error
  • The Dollar Amount of the Error

You still must pay all the other parts of the bill, but the disputed amount does not need to be paid until settled.

If the error was the credit companies fault, they will correct the bill and you will not have to pay the disputed amount or any interest charges.

If there is no error the credit company is require to write you a letter back explaining the bill.  They must also include a statement indicating how much you owe from the disputed amount, including interest charges.

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How to Choose the Right Credit Card – Part 3

By BankAim · Comments (0)
Friday, October 16th, 2009

Click to read…

Part 1 – Uses of Credit Cards, Finding the best rates, Different Types of Rates.

Part 2 – Credit Card Fees, Credit Limits, Grace Periods

Interest Charges Calculations

Current account balance and the interest rate are the two primary factors typically used to determine the amount of your Interest Charges every month.

The balance may be calculated in 3 different ways.

  1. Calculated over 1 to 2 billing cycles.
  2. Calculated using the adjusted balance, average daily balance or the previous balance.
  3. Calculations may or may not include recent purchases within the current grace period.

Typically the lowest interest charges will accrue with the 1 cycle, with no recent purchases included is the calculation used.

Minimum Finance Charges

Most credit companies have minimum finance charges.  For example if you owe only $50, the calculated interest charge is $2, but the minimum charge is $5, you will pay $5.  The extra will be applied to the principle balance on the account.

Using The Cash Advance Feature

Some credit cards have a cash advance feature.  This allows you to pull cash out from the credit card, and your balance will increase in the amount of cash you withdraw. Cash advances can usually be accessed from ATM machines or the credit company will send you checks in which you use to get cash.

When using this feature there are a few things you need to know. Most credit card companies treat cash advances differently then regular purchases.  They may have different rates and fees.  Keep in mind these things when using a cash advance.

  • The Interest Rate is Usually Higher for Cash Advances.
  • There are usually fees associated with cash advances.
  • There are typically limits to the amount of cash you can withdraw.  A percentage of the balance or a fixed amount will determine the maximum cash advance you can receive.
  • Sometimes your monthly payments will apply first to standard purchases until they are paid off.  At that point payments will be applied to cash advance money.  Since the interest is usually higher on cash advances this means the credit company can collect more interest charges on the cash advance money.  This is why they do not pay that money off first.  Often times you can request to have extra payments applied to the cash advances.

Use the cash advance feature with caution. Read the terms of service regarding cash advances before you ever use the feature.  After fees and higher interest cash advances can be pretty expensive.

Standard, Secure and Premium Credit Cards

  • Standard Credit Cards – A standard credit card is what most people qualify for.  There are usually no extra special features, and do not typically have annual fees.  The high credit limit is usually not as high as the premium cards, but can be increased with good credit history.
  • Secure Credit Cards – Secure credit cards are normally for people with bad credit, no credit or people that are trying to rebuild their credit.  Secure credit cards require a security deposit, the amount of which will help determine the high credit limit.  The more the security deposit the higher the credit limit.
  • Premium Credit Cards – Premium credit cards often have annual fees, but come with all the bells and whistles.  They usually have warranties, protection, traveler bonuses and many more.  Usually the premium credit cards have the highest credit limits.

Credit Cards Special Features

Credit cards, especially the premium cards discussed above, can come with special features to benefit customers and entice borrowers to use the credit card more.  Although there are hundreds of different features out there, here are a few of the more common features you will see.

  • Air Miles – Credit cards often offer air miles for every dollar spent, which can be redeemed for airline tickets to fly around the world.  Usually for every $1 spent you receive 1 mile.  Some cards or certain usages of cards will give you 2 miles for every dollar spent.  For example a credit card from a specific airline will offer you double the miles if you purchase your airline ticket through them, using their card.
  • Rebates - Rebates are a popular feature.  You can receive money back for every purchase you make.
  • Warranties - Credit card warranties will help protect the purchases you make using the credit card.
  • Rental Car Benefits - Many credit companies will provide rental car insurance or special offers, like upgrades, if you use their card to rent the car.
  • Travel Insurance – Protect your travels with insurance from some credit cards.

There are some other credit card features that can be purchased. These features are usually insurance type deals that will help pay your bill if you become unemployed.

Many of these features either cost money or come with cards that have annual fees.  Be sure you will use the features, otherwise you will just be throwing your money away.

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How to Choose the Right Credit Card – Part 2

By BankAim · Comments (0)
Thursday, October 15th, 2009

To Read Part 1 of this Series Click – Choose the Right Credit Card Part 1

Part 1 covers the many ways to use a credit card, how you will use yours, understanding all the different types of rates and finding a good interest rate for your needs.

Know the Credit Card Fees

There are many types of fees associated with different aspects of a credit card. Most people think that the only fee with a credit card is an annual fee. This is incorrect as there are many different fees. A fee is not the interest you pay on the credit card. Fees are extra costs, either to have the credit card or use certain features of the credit card.

  • Annual Fee – Some credit companies charge a yearly fee in order for you to use the credit card.  These fees are popular for points and mileage reward credit cards. The annual fee can often times be billed monthly.
  • Late Payment Fees – If you miss the due date of your payment you will be charged a late payment fee.
  • Overdraw Fee – If you borrow over your credit limit you may be charged an overdraw fee.
  • Balance Transfer Fee – Some credit companies will charge a fee to transfer your balance from one credit card to another credit card.
  • Cash Advance Fee – Charged when taking a cash advance.  This fee may be a percent of the cash advance or just a flat fee.
  • Credit Limit Increase – Some credit companies will charge a fee for increasing the amount of your credit limit.
  • Bounced Check Fee – If your check is returned with insufficient funds you will be charged a fee.
  • Credit Card Set Up – In order to set up a credit account some companies require a fee.
  • Payment Fees - Some types of payments can have fees attached to them.  For instance some companies charge a fee to make a payment by phone, or to make a same day payment if you are about to be late on that months payment.
  • Customer Service Fees - There are some fees that may be accrued for certain customer service actions.

Remember to always review your credit card statements at least once a month.  If you see any fee’s that do not seem right place a call to your credit company.  Many credit companies are willing to work with you, and often times you can get fees removed with just a phone call and asking them to be removed.

Credit Limits

Your credit limit will be set by the credit card company based on what you qualify for.  Your credit limit is the maximum that you can borrow against the credit card.  Adding all types of transactions including purchases, transfers, advances and any other usage of the credit card will cause your balance to get closer to your credit limit.

There may be a fee if you exceed your credit limit.

Your credit limit may increase or decrease depending on credit activity, payment history, credit scores and many other factors.  You can request that your credit limit be increased, but this may accrue a fee.  Be sure to check before making the request.

Grace Period

The grace period is the number of days you have to pay your credit card bill before accruing any interest charges.  If you make a purchase and want to pay it off before any interest accrues then you have to pay it off within the grace period.  Most of the time there is no grace period for transfers and cash advances.  Interest will accrue immediately on those forms of borrowing.

Some credit cards only extend a grace period if the bill is paid in full every month, within the grace period.  Once a balance is carried from one month to the next the grace period may be forfeited from that point on.  Be sure to read the grace period terms in your credit card contract.  If you are confused or need help be sure to ask the credit provider to explain in detail.

To Conitue this article… Click How to Choose the Right Credit Card – Part 3

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How To Choose the Right Credit Card – Part 1

By BankAim · Comments (0)
Wednesday, October 14th, 2009

Choosing the right credit card for your needs is important and will save you money in fees and interest.  Not all credit cards are the same.  They have different rates, fees, benefits, features, points, ratings, limits, cash features and the list goes on and on.

Use these tips to help you pick the right credit card.

1. Determine how you will use your Credit Card

Yes there are different ways to use a credit card. Here are a few of the more common ways to use a credit card and the benefits of each.

  • Purchasing an item and paying only the  minimum payment.  This usage of a credit card is typically discouraged. If you only pay the minimum payment, you will carry a balance from month to month and be charged an interest fee.  Even if you pay extra every month, but still carry a balance to the following month you will be charged interest on the balance.  If you anticipate this action on your credit card you will want a card with a low interest rate.
  • If you plan to use your credit card and pay the total balance off before the end of the month, rate will not be as big of a factor.  Look for a card with a longer grace period and one that has no annual fees.
  • If you plan to take cash advances on your credit card you will want to find a card with little or no cash advance fees.  Also keep in mind the interest rate on cash advances.  Often times money taken on a cash advance will accrue higher interest credit used for a standard purchase.
  • Collection of Miles and Reward Points is common use for credit cards.  Often times people combine this technique with paying off the total balance every month.  Selecting a few common purchases like grocieries and gasoline will help build points and miles quicker.  Remember miles or points credit cards typically have annual fees, and cash advances do not usually accrue miles.

2. Finding the Best Interest Rates

The interest rate on a credit card is stated as the APR or Annual Percentage Rate.  The interest rate will determine the interest accrued for cash advances, transfers and balances carried from month to month.

Credit cards can carry different rates for many different aspects of the borrowing process.  Here are some of the APRs you may encounter with a credit card.

  • Introductory Rates: Credit Cards will often times offer a lower rate for purchases made within the introductory period of the card.  The Introductory period lasts from the time you open the card until the introductory term expires per the contract.  Many times the introductory rate will be 0% or close to that in order to entice you to borrow or transfer money immediatley after opening the credit card.
  • Purchases, Cash Advance and Transfers: Credit cards may have different rates for common purchases, cash advances and transfers from other credit cards.  Most of the time the cash advance and balance transfers will have higher interest rates then standard purchases.
  • Balance Rates: Credit Cards may charge different interest rates depending on the balance of your credit card.  For example: If you have a balance of $1-$500 you may have a rate of 13%. And for a balance over $500 your rate may increase to 15%.
  • Penalty Rate: A penalty rate will typically occur when you have been late on a monthly payment.  Penalty rates are usually very high.  For example, your rate may be a 14%, but if you miss a payment or miss a few payments within a certain time frame your penalty rate of 28% may now apply.
  • Post Dated APR: You will see these usually as special offers.  A credit company may offer no interest for 6 months, or no interest until a certain date.  Be sure to know what the interest will be after the special offer expires.  Note: Most of the time if you do not have the balance paid off before interest starts accruing the credit card company will charge interested based on either the original balance or current balance, which ever is HIGHER.  That means if you started out with a $2,000 purchase, have paid it down to $300, but your no interest time frame expires they can charge interest on the $2,000.

Fixed and Variable Credit Card Rates

A fixed rate credit card does not necessarily mean that the rate will be fixed the entire time you have the account open.  It will remain fixed, but if the credit card company changes the rate they are required by law to notify you of the change.

The Variable rate credit cards are usually based on other financial market information.  Most follow the prime rate, and if the prime rate moves up or down your credit card rate will follow.

(To Continue Reading Click How to Choose the Right Credit Card Part – 2. Learn about fees, credit limits and your grace period.)

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Where To Save Your Money In Tough Times

By BankAim · Comments (1)
Tuesday, October 13th, 2009

Its been just over a year after the collapse of Lehman Bros. and now Americans are starting to spend less and save more. Of course this can be a good thing during a financial crisis that America is currently going through.

Piggy BankSaving your money might help lower your stress level and help you sleep at night, but it sure won’t make you rich or even close to wealthy. The interest rates of very low risk investments such as CD’s (certificates of deposit) and money market funds, are almost too low to make anything from. You should not expect to make a bundle from your emergency savings account and even now, interest on a $1,000 investment in a one year CD will hardly pay for a movie ticket, a coffee from Starbucks or a dinner at your local family restaurant.

Is there good news? Most definitely yes. The situation that Americans are in now cannot last forever as the economy recovers so will interest rates. Take a look at what you can do to get the most out of some popular low-risk investments while we all wait for the economy to recover:

  • Certificates of deposit. Right now the average rate for a one-year CD is 1.71%, according to bankrate.com. By investing in a five year CD, you will bump that rate up to 2.9%, but locking up your money for five years is a bad idea at such a low interest rate. As rates continue to rise you could be stuck at that rate and earn much less than if you had waited a year to invest. Greg McBride, senior financial analyst for bankrate.com says, Investing in CDs with shorter maturities, “will give you the flexibility to reinvest at regular intervals and catch the eventual uptick,” in interest rates.

  • There are many high yield bank accounts that are paying a little higher interest rates than CDs right now but income looking retirees are still better off with CDs because they offer predictability.
    “Even if you lock in a one-year CD at a rate slightly lower than that for a savings account, you know what you’re going to get for the term of the CD.” McBride says. With a high-yield savings account, he notes, “The yield can change at any time.”

  • High-Yield Savings Accounts. Some banks are paying 1.75% or more on their savings accounts, while if you searched you could find banks paying as high as 4.3% according to CheckingFinder. There are some banks and credit unions who offer rewards checking account with rates around 4% or more, but to earn these rates you usually have to set up direct deposit, receive your banking statements online (saves your bank money from mailing them to you) and use your debit card a certain number of times per month.

  • If you are in the search for bank and credit unions who offer rewards accounts take a look at Checkingfinder or Bankdeals.blogspot as they both offer a list of rewards accounts.

    The main reason why someone would opt-in for a high yield savings account is liquidity. You can withdraw your money without taking a penalty. If you are looking at setting up an emergency fund, this would be a great place to park those funds.

    As banks keep failing some people may feel uncomfortable with investing their money in an unfamiliar bank, even if they are offering a higher interest rate than a more familiar one down the street. As long as your bank is covered by the Federal Deposit Insurance Corp. (FDIC), your money will be insured for up to $250,000. Even married couples with joint accounts are safe for up to $500,000. If you use a credit union, make sure they are covered by the National Credit Union Administration and if they are, your money will be insured for up to $250,000.

  • Money Market Mutual Funds. A money market fund is a convenient place to temporarily park money you’re planning to invest in stocks or mutual funds, McBride says. A money market fund allows you to easily move your money quickly if a stock you have been watching hits your target price. To be safe, if you are still looking to stash away some money in your emergency fund, the high-yield bank or credit union accounts are still a better choice.

  • Even the bank that pays the lowest rate will still pay a higher rate than the average money fund. The current seven day average yield on money market mutual funds is 0.05%, according to the Money Fund Report, serviced by iMoneyNet.

Finding the best returns on your savings accounts, CD rates and mutual funds is a worthwhile endeavor, do not lose track of your main goal. The point of investing is to create a cushion against disaster like we are experiencing with the financial crisis of America. Michael Haubrich, a financial planner in Racine, Wis., says he encourages clients to shop around if it motivates them to save, but if they are more likely to save through a payroll deduction plan offered by their employer, that’s fine, too, he says, even if it’s not the best deal around.

The important part is to do something and start somewhere. Start with a certificate of deposit or find a high yield savings account to create an emergency fund.

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