4 Things You Should Never Do With Your Credit Cards

I can identify with Susan McCarthy in all four areas when it comes to using my credit cards. I have experienced the worst that can happen to me like overblown balance due defaults on payments and sometimes paying only the "minimum payments", letters from the credit card company's lawyers demanding immediate payments in lieu of a court case, worries and nightmares. I am thankful for Susan for this article and I know it will help a lot when you do what she suggest. I did, and I am almost out of my credit card debt.


Susan McCarthy, a financial adviser in Oklahoma City and author of The Value of Money, lists her top four credit card don'ts:

1. Don't make only the minimum payments. This stretches out your payment and, thanks to the interest, significantly increases your overall cost.

2. Don't carry too many cards. Multiple cards make it easier to rack up debt because it's harder to keep track of your spending. Having lots of cards isn't necessarily bad for your credit, but misusing them is. So limit your plastic to two national cards (store cards often carry higher interest rates) that you manage carefully.

3. Don't miss payment due dates. Not only will you be hit with a late fee-as high as $39 on some cards-but your interest rate could also jump. Sign up for online banking or pay over the phone if you're up against the deadline. (You may pay a processing fee, but it will probably be less than the late fee and the possible interest-rate hike.)

4. Don't take cash advances. These advances generally come with sky-high interest rates and service fees, making them a far too expensive way to get cash. Avoid at all costs.


To your debt-free life,
Jimmy


Source: http://shine.yahoo.com/channel/life/4-things-you-should-never-do-with-your-credit-cards-530910/

Top 10 Ways How to Save on Credit Cards

In the Philippines, whenever the "ber" months arrive (starts with September) our instinct for spending kicks in. It's like an addiction that never go. We begin to think of ways how we can increase our spending budget and where we can spend it. The worse thing that can happen to anyone is when we can't raise enough money to spnd, we usually resort to using our credit card with a view to paying it after the holiday season.


I have been encouraged by this article by CredAbility, which they posted on Crown Financial Ministries. They offer ten tips on how consumer can save on credit. I hope you will like it too.

How to be a careful consumer

“A careful consumer looks closely at the cost of carrying a credit card,” says Suzanne Boas, president of CredAbility.
Buy! Spend! Lease! Charge! Refinance! Consolidate! Consumers are bombarded with financial messages, in newspapers and magazines, blaring from broadcasts, popping up on computers. And, the most important messages may be in very small type. “But,” Boas says, “it is a very good idea to read that small type, especially in credit card agreements, to save yourself unnecessary costs.”

CredAbility offers these ten tips to save on credit: 

1. Pay your bills on time. Not only will you avoid late fees and high interest rates, but paying on time is the most important factor in determining your credit scores, which determine the availability and cost of future credit. 
2. Always pay more than the minimum due. Optimally, pay off all charges every month. If you can't do that, try to pay off your bills as quickly as possible. The longer you take to pay down the balance, the more money you pay in interest. Paying the minimum could mean taking 10 years or more to pay off your balance.
3. Pay off high interest cards first. This doesn't mean ignoring the other bills. If you have many cards to pay off, pay the minimum on all except the one with the highest interest rate. Pay as much as you possibly can on that one. This “laddering” technique reduces the overall interest you pay. 
4. Transfer balances to lower interest cards. But, beware of low introductory transfer rates—they may skyrocket if not paid off over a short term. 
5. Negotiate with your creditors. If you receive a late fee and have a good payment history, ask the credit issuer to waive the fee. If your interest rate seems high, ask them to match or beat the rate. If they won't work with you, it may be time to look for a better credit card deal.
6. Shop around for the best deal. Don't just accept whatever pre-approved cards arrive in your mailbox. If you have excellent credit, look for the lowest rate as well as for cash-back rebates, frequent-flier miles, free gasoline, or donations to college savings plans. If you have spotty credit, find cards that have the lowest costs. Watch out for monthly and annual fees, application fees, processing fees, and excessively high interest rates. Even secured cards have varying costs. Compare the many offers on websites such as Bankrate.com and Cardweb.com. 
7. Check the fine print. What are the late fees and over-the-limit fees? What is the grace period? Is the interest rate variable or fixed? Most importantly, read the slips that come with your bills. Issuers can usually change the terms with a 15-day notice. 
8. Read your bills thoroughly each month. Watch out for overcharges, phony charges or billing mistakes. You have 60 days to dispute these items, but after that, you're out of luck. 
9. Close zero balance accounts. If you have accounts you don't use, close them. This will improve your credit score. Most people don't need more than 2-3 cards, and extra cards can only help you dig deeper into debt. 
10. Beware of the extras. Credit Insurance may be more expensive than life or disability insurance, and benefits the lender as well as the cardholder. Most people won't need it. Debt suspension and credit protection programs offer no value to consumers. 

To your debt-free life,

Jimmy

Source:

About CredAbility
CredAbility is a nonprofit, community service agency dedicated to empowering people to achieve a lifetime of economic freedom. CredAbility provides free, confidential budget counseling, community and personal money management education, debt management programs, and comprehensive housing counseling. Contact CredAbility by phone at 1-888-771-HOPE (4673), or visit the Web site.


Photo: http://www.flickr.com/photos/bzaharie/2601729610/sizes/m/in/photostream/

Getting serious in swimming out of debt

If you really want to get out of debt, you have to be serious, really serious about swimming out of it.
I paid my credit card debt today. While on my way to the bank to pay, I was flip-flopping whether to pay it full or just pay enough and use the rest of the money for my upcoming company-sponsored vacation in Boracay.

My idea of a vacation in Boracay next week

I tell you, it was tempting to settle for the less. But because I am determined to wipe out my debt, I went in that bank resolved to pay the balance in full.

If you notice in my statement, there are many charges with the plus (+) sign on it. The Finance Charge, Fees/Other Debits, and Late Charges. the only Negative (-) is the Payments/Other Credits. I want to be in the negative more often.

The figures with red circles are the plus (+) entries

The Plus (+) signs adds to my debts. I used to pay only the  minimal amount called "Minimum Payment", which the company normally suggest you do. With that act, I had and accumulated "entries" in the plus (+) boxes. Adding all the plus (+) amounts since I started using my card, I'd say it cost me a lot, lots of money.

There is really wisdom in paying the full amount and on time. It is a source of additional money that will help you swim out of debt. Be serious and stay focus.

To your debt-free life,
Jimmy

HOW TO GET OUT OF CREDIT CARD DEBT

Did you know there is such a thing as the Credit Card Association of the Philippines (CCAP)? I found out about it last May 26 when Maritess and I were having our breakfast at a fastfood chain, they gave us a free newspaper. As I scanned the paper, I saw CCAP’s report on its annual conference that day at Sofitel Philippines Plaza Manila.

The amazing thing that CCAP said was “with a budget, some dedication, and a lot of discipline, your credit card debts can be wiped out.” It looks like they want you out of debt. Uhmmm.

Here are some recommendations they have proposed to wipe out your credit card debts:

1.       First thing, find out exactly how much credit card debt you can afford to pay off.

2.       Make a budget so you can know how much to pay whom.

3.       It is considered wise to put aside thirty (30%) percent of your monthly income as savings. What is left, after paying off your monthly fixed expenses, is how much you can dedicate to eradicating your debt.

4.       There are two preferred methods for paying off your cards: highest interest rate first, or lowest balance first.

5.       Paying off your credit card with highest interest rate will save you money in the long run, especially if the highest rate card happens to be the one with the highest balance.

6.       Paying the lowest balance first is much easier, and the debt is taken care of much quicker. Personally, I prefer this method as it helps you see the evidence that you are actually zeroing out your debt and gives you motivation to move to the next card and the next, until everything has been settled.

http://www.flickr.com/photos/andresrueda/3027534098/sizes/m/in/photostream/
At the end of the article, CCAP admits that it will take some time to get completely debt-free- but once you are, there is nothing stopping you from investing and making your money work for you instead of the other way around.

This week, I am happy to eradicate one of my credit card debts. As I paid the balance, it became clear to me how much money I lost paying off the finance charges and late payment charges this credit card was charging me month after month.

http://www.flickr.com/photos/baptistefranchina/1891376741/sizes/m/in/photostream/
One lesson I learned and I want to pass on to you: always pay your card on time, and you must always pay your full balance in order to escape the interest that will be levied on you!

To your debt-free life,

Jimmy