Wednesday, October 19, 2011

Credit Card rewards and financial tips

Does anyone take advantage of rewards/points when using any of your credit cards??
Well I know I do. Honestly, we hardly carry cash nowadays. Most places accept credit card or debit card so why bother carrying cash, right??? I have received $$ cash, merchandise and gift cards just by swiping my card each time i purchase something. Some credit cards companies will give you up to 3x points on a particular item. Isn't it awesome?? Yesterday I just redeemed $150 Visa Card from one of my credit card. Before signing up with a credit card just double check if they'll give you rewards/points for every dollar you spent.

My husband and I only own 2 different credit cards. Don't have too many credit card because it'll be confusing and dangerous for you. Before opening a credit card, please read thoroughly the agreement. You should not agree to any credit card that will charge you an annual fee. If you have an excellent credit, normally they'll offer you with a 0% APR for 12 month (take advantage of this!!). Since you're not getting finance fee for 12 months, pay the amount that you can afford for that month. But please be careful... just because you have the ability to make a minimum payment without interest, it doesn't mean you can spent lots and lots of money. This is absolutely wrong, because after that 12 months is up then you might ended up paying a variable finance fee which can range to 15%, 19 and as high as 25%. The way I do it, I make a minimum payment for the first couple months and as my debt gets larger I start to increase my payment. Towards the end of the period, normally 4-3 months, I divide the debt amount and start paying them off... of course I have to consider my monthly budget. After the 12 period is up, I make sure that all my debt is paid off. I try not to pay finance fee ever.

Unfortunately, there are people out there who have debts on several credit cards. My advice is to sit down and analyze the credit card statements. Review which credit cards give the highest interest rate. The ones that gives the highest, you should try to pay them off immediately...pronto!! There is another option, most credit cards offer transferable balance with lower interest rate. If your current credit card is charging you 16% finance fee and another credit card company is offering 0% APR for 12 months and 3% transferable balance, boy you should take it. Let's do the example:

Debt 10,000

Bank A.
16% APR finance fee
10,000 X 16%/12 = $133 paying only interest itself
Say you'll pay $300 for this month ($133 int & 167 principal)
debt decrease to $19,700
9,700 X 16%/12 = 129
Following month make a payment of $300 ($129 int & 170 principal)

Bank B.
0% APR finance fee for 12 months
3% transferable balance
10,000 X 3% = 300
You'll pay $300 for transferring your debt and you will not be charge interest for 12 periods.

As you can see, Bank B will save you some money. On the other hand, you'll be paying interest all year long with Bank A.
So when you have lots of debt on your credit cards maybe try to seek help by consolidating them. Find a right financial institution that will help you and give you the affordable rate.
Do your research and calculation before you do anything.

Remember signing up a credit card every year is not really good as well for your credit.

Good Luck with your financial!

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