How to Choose the Right Credit Card – Part 2

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

When Are CD Rates Coming Back Up? Part 2

Read Part 1 To “When Are CD Rates Coming Back Up?

rates going up graphAnother reason that we’re seeing such low CD rates is that banks are able to borrow from the fed at ridiculously low rates. As of October 14, 2009, banks are able to borrow from each other at .25% and directly from a Federal Reserve bank at .50%. If this is the case, why would a bank borrow from you (for example, issuing a CD) at three, four, or five percent? The fact of the matter is that they will not.

You can use this truth to gain an advantage though, even in this economy. Banks that are doing more lending need more funds from customers, as there are minimums that banks must maintain in order to borrow from the Federal Reserve, or from other banks. These healthy banks will often offer some of the highest interest rates in order to attract more deposits. Banks really make their money on lending anyway, so it’s in the best interest of these banks to offer attractive rates.

Another way to find higher rates is to look for banks that are in trouble. You can often find the highest CD rates at these banks as they are desperate to bring in more deposits in order to hedge up their losses on loans that have gone bad. Please note that I do not advocate this method. I would rather earn a lower rate and know that my money is safe and secure. However, if you know that your funds are FDIC insured and you are okay with the possibility of having to claim your funds through the FDIC in case of a possible bank failure, go for it. Like I said, you can get some of the best rates from these banks. Be aware that FDIC insurance only guarantees the principal of a CD, not the interest earned. However, if another bank buys your failed bank, you should still get all the interest you’re entitled to.

Best 24 Month CD Rates Stay At 2.50%

Over the past month the best 2 year cd rates have not change even though the average returns on a 24 month certificate of deposit plunged to record lows.

In September the top rates ranged from 2.50% APY to 2.40% APY, the same as in the new October ratings that have just been released.

Here are the best deals nationally on the 24 month CDs:

2.50 APY from Hudson City Savings Bank with a minimum deposit $5,000. If you live near one of their branches in New Jersey, New York or Connecticut your minimum deposit drops to $500.

2.50 APY from Frontier Bank with a minimum deposit of $50,000 for “Silver CDs” which has 50 branches in Washington and Oregon.

OR

2.40% APY from Frontier Bank with a minimum deposit of $500.

2.40% APY from Equity Bank in Dallas Texas with a minimum deposit of $1,000.

Check out the best CD rates currently from dozens of other banks as rates change all of the time.

How To Choose the Right Credit Card – Part 1

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.)

Highest CD Rates In Portland, Oregon – October 2009

Here is a list of the best CD (certificate of deposit) rates to the residents of Portland, Oregon. We have posted the rates in the form of 6 month CDs, 12 month CDs and 24 month CDs. After going through many local banks and credit unions serving the city of Portland as well as most of Oregon we have found that rates provided within Portland may be slightly higher than the national averages.

CD rates are time sensitive in nature and are constantly changing, so be sure to check with the date of this article for accuracy. You can always check our CD Rates page for the most up to date CDs available nationwide.

How we came up with this information:

As it is known, the highest CD rates are available to the longer maturities and since we did not want to post the best CD rates, we wanted to give our readers options. Also some of the highest CD rates require much larger deposits, therefore we wanted these rates to be obtainable for the majority of our readers.

Highest 6 Month CD Rates In Portland, Oregon:

  • Providence Health System Federal Credit Union – 6 month CD yields (currently the highest 6 month CD rate) of 2.96% APY with a minimum deposit of $1,000.
  • Pacific West Bank (Lake Oswego, OR) – a promotional 7 month CD yields 1.75% APY with a minimum deposit of $5,000.
  • Frontier Bank – 6 month CD yields 1.65% APY with a minimum deposit of $500.

Highest 12 Month CD Rates In Portland, Oregon:

  • Pacific West Bank – a promotional 13 month CD yields 2.25% APY with a minimum deposit of $5,000.
  • Frontier Bank – 12 month CD yields 2.05% APY with a minimum deposit of $500.
  • HomeStreet Bank – 12 month CD yields 2.0% APY with a minimum deposit of $500.

Highest 24 Month CD Rates In Portland, Oregon:

  • Hudson City Savings Bank – 24 month CD yields 2.50% APY with a minimum deposit of $5,000. This is a national institution and will accept deposits nationwide.
  • Washington Federal Savings and Loan Association – 24 month CD yields 2.50% APY with a minimum deposit of $500.
  • Pacific Continental Bank (Vancouver, WA) – 24 month CD yields 2.47% APY with a minimum deposit of $1,000.

All of these banks and credit unions are federally insured by either the FDIC or the NCUA. Be sure to check the current status of these banks and credit unions and never deposit any money with a bank that is not federally insured. If you live in Portland Oregon or anywhere in the state of Oregon and know of better CD rates from your local bank, then please let us know.

Mortgage Rate Analysis-Wednesday October 14th, 2009

Today is a great day if you are trader on Wall Street or anyone that is following the overall economy as we have received several reports in the past 24 hours that indicates that we are pulling out of the recession!  JP Morgan posted profits that simply blew the projections out of the water, because a mini sell off of Mortgage Back Securities.  Simply put, as the stock market looks more attractive to investors they will sell their safer bonds for higher reward stocks.

Rates are up across the board today

Rates are up across the board today

To entice those investors back to MBSs we will see the bank raise their rates so the return for the investors is more attractive.

There was also a report release from the Mortgage Bankers Association that indicate that bases on the economy and where we are heading that they believe that rates are going to hold around 5% for the rest of the year, and then in 2010 we could see a slow climb up to around 5.5%.  Now if you are looking at the low point we hit a while back of 4.5% you might say that those are really high, but as my father likes to remind me, “when your mother and I bought our first house we had an 18% rate, and were so happy when we refinanced it down to 16%!”.  Great mortgage rates are very relative to where you are in life!

We are now pretty much at the end of qualifying for the First Time Home Buyers Tax Credit, as you will need 30-45 days to close a loan and the deadline is November 30th.  That means you need to have your deal closed on the 30th, not a “cute house” picked out by then.  We will post any updates that we hear concerning an extension or modification to the tax credit, similar to the one we talked about yesterday for active military personal.

lock_iconWe are defiantly of the opinion that today is a day to lock and not float!

Online Banks Offer Best CD Rates For Week Of October 12, 2009

online bank cd ratesThis past weekend was the first time in three months that no bank failures where announced, while the number of closed banks for this year is currently set at 98 failed banks. While skipping a week of no bank failures is a welcome reprieve as the FDIC is still feeling the strain of the cost of the 98 current failed banks. When a week goes by that a bank does not fail, it’s a big help to the FDIC and the funds available for the banks that will be failing in the future.

Is this a foretaste of better things that are coming? You cannot come to that conclusion just yet, while the larger banks are trying to build back their assets as the economy slowly gets better, the banks that are “too small to survive” will eventually have to close shop within the next few years causing more bank failures.

While the country is still looking forward to a best case scenario ending, we cannot help but wonder how this will affect the country’s savers. People who have lost so much not only in the stock market and real estate markets but also trying to save money and invest into CDs becomes harder. With such low interest rates you might wonder, what’s the point?

For those who have been diligently saving up, there are still options when looking for competitive CD rates than just going to your local bank. As more and more banks come online, banks that are in ‘healthy’ economies are able to offer even better than average or local rates. The best CD rates this week come from online banks. Here is the full list:

6 month CD Rates

Ascencia is offering the highest 6 month CD at 1.76% APY. According to bankrate the national 6 month cd average is sitting at 1.29% APY. Another short-term investment comes from Everbank’s Yield Pledge Money Market Account which still guarantees 2.51% APY for the first three months.

12 Month CD Rates

Last week Umbrella Bank was offering a 12 month cd rate of 2.15% but currently dropped their rate down to 2.02%. What you lose from Umbrella Bank you can make up with Amboy Direct and ING Direct this week, which are both online banks offering 2.10% APY for a 1 year CD.

With ING Direct, they have options that the customer can opt in with its Added-Value CD that will give the customer an additional 0.15% for new funds deposited. Banks are looking for new money and this allows ING Direct to offer a higher percentage. With this promo the depositor would get a total rate of 2.25% APY, the highest in the nation currently. MetLife Bank’s promo rate would also match the 2.25% APY offered by ING Direct but MetLife requires a $25,000 minimum while with ING Direct you can deposit any amount.

24 Month and 36 Month CDs

Flagstar Direct and E-Loan are at the top of the 2 year CD rate and 3 year CD rates. E-Loan is currently offering 2.37% for the 24 month CD, while Flagstar Direct’s 36 month CD is sitting at 3.00% APY.

48 Month CD Rates

The best 4 year CD rate is offered by Intervest National  Bank, which just lowered their rate from 3.20% to 3.15% APY

60 Month CD Rates

During an economical down turn its not wise to invest in CDs longer than just a few years. Even though the longer term CDs have better rates, your money will be locked in at that rate even as rates continue to increase. If you are looking to stash your money away and not worry about it for the next 5 years then this 5 year CD might be for you.

Citibank just dropped its rate from 3.50% to 3.25% APY which brings other banks close or even better than Citibank in the rates offered for the 60 month term. Ally, Discover Bank, E-Loan and Onewest Bank all offer 3.40% for this long term CD.

How To Avoid Overdraft Fees

If you have a banking account you most likely have over drafted at one time or another. These fees can range from $10 to $38. Most major banks average between $25 and $30 per overdraft, which they usually cap at four per day. These fees can cost you a lot of money if you do not catch it right away. With the current economy most consumers are having troubles from avoiding this problem and as banks struggle to find increased profits they have adjusted policies and raising penalty fees.

A recent New York Times article pointed out that banks are making millions of dollars by charging their large overdraft fees.

“Consumers who overdraw often do not realize that overdraft coverage is automatic and that the bank will not simply cut them off when their balance hits zero. Many banks then refuse to turn off the coverage, even when a consumer calls to request a change.”

Overdraft FeesWith these tough times there are still ways of protecting yourself from getting fee’d to death. By knowing your bank’s overdraft policies, opting into the right protection and also choosing alternatives are ways of avoiding overdraft fees. Most banks allow you to add a credit card onto the checking account so if you where to overdraft the bank would take the funds out of your credit card as a cash advance to cover the negative balance. You still have to be careful because even having a credit card on the account banks still charge a fee, most as low as $5.

Know Your Bank’s Policy

Go into your local bank and ask them what their policy is regarding overdrawn accounts. How much do they charge per overdraft and what kind of protection can you add to your account. Most banks offer over draft protection in the form of using your savings account or a credit card that is added to your checking account. Bank can stop your account from being overdrawn by not allowing your purchases to go over your current balance but most banks will not put this protection on. I have found that you must ask your banker if they can put this protection on your account for you and sometimes they will. The only way to find out is to ask.

Consider Prepaid Debit Cards

Debit cards are a necessity that most people carry instead of cash. Debit cards make transactions so much easier since you do not have to deal with change or cash. When a debit card is connected to a checking account, you still run the risk of overdrafting the account.

An alternative method to avoiding overdraft fees is to get a prepaid debit card. They are the same as any other debit card but not attached to your checking account. This will make it easier to make purchases since you don’t have to deal with exact change and also it will keep you from overdrafting your account. There are many places you can go to get prepaid debit cards, such as any cash advance store like ACE Cash Express. Not only are there no overdraft fees these cards can help you stay within a monthly budget.

Talk to a Bank Manager

When an overdraft fee does happen it can cause a lot of stress but do not panic as you do have options. If you do choose to dispute the overdraft fee(s), do not call customer service. You will be better off by going to your local branch and talking to the manager. Be sure that the fees have already been posted on your account since they cannot do anything until they have posted.

What seems to work best is making an appointment with your bank manager and politely explain your situation. If you have a valid reason, they may be willing to help you out. If this is your first time overdrafting most banks will show grace and reverse the charges. If you have overdrafted before they can still show mercy and reverse one or two of the fees or even completely reverse them all, do not count on that though. Banks have the power to reverse overdraft fees and in tough times they may be more willing to help their loyal customers, so ask and be proactive on reversing your overdraft fees.

Mortgage Rate Analysis-Tuesday October 13th, 2009

With the bond markets being closed yesterday we really came off the weekend today, even though several lenders did issue rate sheets.  Today we saw little to no movement in rates as we get ready for a couple different reports that will be coming

Rates are holding steady today

Rates are holding steady today

out to help us to determine how the overall economy is fairing.  There are lots of different companies out there that offer all sorts of different rates, so make sure you are taking the time to check for the best mortgage rates in Seattle.  Right now is a very good time to consider locking in a low fixed rate.

One big piece of news is that congress voted to extend the First Time Home Buyer Tax Credit…but before you get to excited it is important to know that the extension is only for active duty military personal.  To qualify you must have been deployed for over 90 days in 2009.  For the rest of us you have until November 30th to qualify for your $8000 tax credit.  We are still waiting to hear if that also will be extended, although it is very unlikely that anything will be announced until we are right on the deadline.

Today's suggestion is to lock your rate

Today's suggestion is to lock your rate

I have received several emails and calls asking if you should lock today to “float” and wait for a better rate.  As with anything in our industry I don’t pretend to know the future, but I am going to do the best I can in these reports to suggest if locking is suggested or not.  My only disclaimer is this is going to be my “best guess” and you have to make the decision that is best for you.

Where To Save Your Money In Tough Times

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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