What Should a College Student Know About Credit Cards?

Getting a credit card, whether for the first time or not, while you are in college can be a burden and a blessing at the same time. It gives you something that you have to pay on each month and gets you into debt that you really do not want, but it can also help you to meet the demands of college life, like paying for tuition, books, rent, and food when they are required and in full. Still, there are a few things that college students should be aware of concerning credit cards.

Credit cards affect any person’s life, and starting out using credit cards in college can either help or hurt your future and your finances. Having what it takes to pay your bills, keep your debt low, and stay in a position where you can gain points on your credit score and not lose them takes a lot more skill and discipline than most young people think. The most important thing you can do with your credit card, especially at the difficult and money-tight time of your life, is to control it so that you do not accumulate debt that you cannot pay back soon.

Credit card debt has become a big problem for a lot of people. Many of the younger generation do not realize what a stressful and difficult life they can have if they get themselves into debt so far. The convenience is just not worth it.

One of the key things you need to have when you sign up for a credit card in order to better stay out of debt is a knowledge of the credit card agreement you are signing up for. There is nothing that will hurt you more than misunderstanding how your credit card works, how you will be charged interest, and what kinds of things you do with your credit card that can hurt your credit score.
Make sure that you read the details of the credit card application, call a representative if you have any questions, and make sure you know exactly what you are agreeing to before you agree to it.

What college students often may not realize is that your credit score can often times be a determining factor concerning your prospective employment. Many potential employers are allowed access and will use that access to check your credit score. This alone could possibly sway the employer’s decision about whether or not to hire you, so you want your credit score to reflect a good and disciplined credit history so that you can get the job that you probably desperately need, since you are working to not only put food on the table, but to go to school.

College is a very tender part of life when it comes to having credit cards. It’s good to have them so you can build on your credit score. Still, if they are misused, you will not only be deep in debt, but your credit score will suffer considerably.

How Secure Are Credit Cards?

You have had credit cards for a while, you have a good credit score, you are pretty good at controlling and managing your debt, and you feel that you have handled credit cards and the responsibility that comes along with them fairly well ever since you started out. But how safe are credit cards? Despite the ability you have to keep your credit cards under control, is there anything outside of your control that could hurt you and your credit score?

The form of security differs with each secured credit card. Many credit cards do not have really great security. So when you are shopping for a credit card, make sure you know what you will be protected against and what kind of risks you will be taking.

There are several things that have improved about credit card security, and technology is one thing to thank for that. The security that protects you from getting ripped off has gotten better recently, and is continuing to improve. It is getting more difficult for thieves to get money off of your credit card without you knowing it. Here are few examples of the security that is being used to protect you against such fraud.

One way to protect yourself from getting your credit card misused by someone you do not even know concerns purchases made online. When you buy something off the internet, many places you buy from will ask for a shipping address along with a billing address. This makes it so that if someone who has stolen your credit card account number buys something online, they would have to pick it up at your home in order to get it at all.

Another form of security is basically a fake account number. This is also for online purchases. Certain credit card companies will provide an account number that is different from your credit card number, sending that number instead of your real one to the person you buy from. This allows only you and the credit card company to see and use your real account number, and no one else.

Once the transaction has been done with the fake account number, it is verified through your credit card company, then charged to your real account. A credit card thief would attempt to use the fake credit card number to make other purchases. This person would be denied access to your account, because once the transaction is finished, that number becomes invalidated.

There are these and several more forms of security that will protect you from credit card fraud. Many people out there can get away with purchases made on your credit cards that you end up having to pay for, but the amount of fraud in recent years has gone down considerably, and the credit card world is becoming a little safer. It is important, when you are looking for a credit card, to know what type of security it has, if it has any at all, and the things you should do in case you are a victim of credit card fraud.

How Do You Understand Credit Card Application Terminology?

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Applying a credit card is not easy to begin with, and the words they use that are difficult to understand are not helping any. The one thing you want most, when you are applying for a credit card, is to understand the details of the application and the terms and conditions of the credit card loan. But how could you possibly do that with all the seemingly foreign language they use in the advertisement alone, to say nothing of the actual details.

Knowing what you are reading on a credit card application is important. But sometimes, even talking on the phone with a representative from a credit card company, it can be difficult to understand and follow along. Here are a few words that may be useful to know, what they mean, and what they have to do with getting a credit card.

Collateral

Collateral is some sort of asset, or something that you own that is of value, that you are willing to secure a credit card loan with. It secures your loan so that if you do not pay your bills, whatever you put up for collateral will be taken by the credit card company. If you are applying for a secured credit card, you will be required to pledge something that you own that is worth a certain amount in case you fail to pay your bills, or if you take out bankruptcy.

Credit Scoring System

This refers to the complex equation and factors that are calculated into your credit score. Your credit score and your credit report will determine whether or not you will be approved for a credit card, and how much your interest will be.

Annual Percentage Rate

Usually this is written as APR. Annual Percentage Rate is the percentage of the principle you will be charged in interest per year. This amount compounds each month, so the APR should not be confused with the actual interest rate. They are two seperate calculations of interest.

Fixed Rate

A fixed interest rate is a rate that will not change unless you make late payments. A fixed interest rate basically stays the same if you pay your bills on time and do not incur other penalties on yourself. There are some fixed rates that only last for a certain period of time, but others last for the entire time that the credit card account is open and active.

Finance Charge

Basically, this is what they use to describe your overall interest. A finance charge is a charge or fee they require you to pay for borrowing money on credit. So when you see “finance charge” written on an application, that is the total amount estimated that you will pay in interest.

There are several things you may not understand when you are trying to apply for a credit card. Along with the hassle of applying, you should not have to worry about the terminology. Knowing what you’re getting into is essential, and can save you loads of money in the future.

Can You Do a Balance Transfer From Someone Else’s Credit Card?

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Transferring someone else’s balance onto a card that you carry is possible, but not always wise. It can either be very helpful for the person you are transferring the balance for, or it can be very hurtful to you if you take on the responsibility of someone else’s debt by transferring the balance from their card onto yours. Here are a few pros and cons.

Benefits

Some of the things you can get out of a balance transfer from someone else’s credit card to yours is that they have a much better annual percentage rate. Their credit card interest will go down considerably with a credit card balance transfer. The fact that you have paid your bills on time and have a good credit score and credit history will also be advantageous to them in more ways than one, especially if they have had a bad credit history themselves.

If the person that has recently been added to your credit card has a good credit history and is responsible with their spending, it will be a great benefit for you as well. Their good spending habits will reflect on your credit report as well as theirs, because the card is originally under your name. It is important to know if someone can be of benefit to you in this way before you allow them to transfer the balance of their debt onto your credit card.

Fallbacks

The biggest risk you are taking when you allow someone to transfer their debt onto you credit card is if they spend on your card unwisely and build their debt problem back up to where it was before. A lot of the time, when people get in trouble with interest rates because they have bad spending habits, it is very difficult for them to change those habits in order for it not to happen again. The part that makes the situation even worse than it was before is that it is YOUR credit card, and YOU are going to suffer along with them.

If you have bad spending habits, this will rack up their debt and interest rates as well. Say you just got a brand new credit card with a great APR, but you have had some trouble paying your bills in the past. The people you allow on your credit card are going to want to know about this in order to decide whether or not they will really benefit from joining their balance with yours. Just like they can ruin good interest rates for you, you need to be certain that you will not leave them stuck with higher interest rates than they had on their first credit card.

Tips

You finally decide that it’s safe to do the transfer. Now what? Just like shopping for any other card with low interest rates, you need to be careful of what cards you settle for. Be sure to get one with a low fixed rate, and know how much it may increase, when, and why.

Do You Need Credit Card Insurance?

There are several types of insurance in this world, and finding the right insurance policy for you that will cover you in all the risks you entail by living your everyday life is a difficult feat to accomplish. Still, having the right knowledge about the many different kinds of insurance policies out there will help you to decide which is best for you.

Having credit cards automatically subscribes you for a certain amount of risk. The biggest risks you take involve your money… how much you will be able to keep, how much you will lose, and how much you will not have when the world is demanding it of you and demanding to have it now. So what kind of protection can you receive for these kind of risks, that will allow you to stay within a reasonable debt range and keep a good credit score if your ability to pay your credit card bills suddenly goes down the drain? Credit card insurance is one option, and depending on who you are and what kind of insurance protection you need, it may be just the thing for you.

Types of Credit Card Insurance

Credit Property Insurance

This type of insurance applies when you have bought something with a credit card that you are still paying for, and suddenly one day that thing gets destroyed. Because you have credit property insurance, your debt on that object is cancelled and you no longer owe anymore money on that object. This is great for people who buy expensive things with credit cards that do not have a warranty.

Unemployment Credit Insurance

This is applicable when the card holder is laid off, or unexpectedly removed from employment. It only applies until the card holder finds other employment, and it does not include incidences when the unemployment was voluntary. Because you are unwillingly unemployed, the credit card company will pay the amount you owe on your minimum monthly payment until you can find another job.

Disability

This type of insurance is also only active for a short period of time. It is applicable only when you are medically disabled, and will no longer be active when your disability is over. This will also pay the monthly payment on your credit card, and applies only to existing debt, not to purchases made after the disability occurs.

Credit Life Insurance

This is the kind of insurance that is most helpful to credit card users. It makes sure that whatever you owe after you die is paid in full. That way, whoever you leave behind is not responsible for your credit card debt.

Disadvantages of Credit Card Insurance

Many times, other kinds of insurance will probably cover you in more cases and with more money than credit card insurance. Also, credit card insurance applies only to the specific credit card. If you have more than one card, you have to apply for all the different insurance policies for all your different credit cards, which may not end up saving you money anyway.

What is the Fair Credit Report Act?

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The Fair Credit Report Act is a law that protects and prohibits the distribution and use of your credit information. It protects you from the possibility of your credit history and other credit information getting into the wrong hands. It also prevents the wrong people from changing or manipulating your credit information.

There are several factors that allow your credit information to stay safe, but there are a few people who have access to it when it is necessary. Most of the time it is used to evaluate whether or not you are worthy of getting a loan or a contract similar to that. Here are a few examples:

1. Companies where you have credit can access your credit report so that they can monitor your credit. This way, they know whether or not you are capable of paying back what you owe on credit and how well you can make your payments on time. However, no one is allowed to give out your credit information in these situations except you.

2. Insurance companies are allowed to check your credit report for generally the same purpose. They need to know if you will be able to pay your insurance bills on time. By checking your credit report they can see your payment history and evaluate whether or not you can make the correct payments punctually.

3. Anyone who is allowing you to get credit from them. Whether you get credit by applying for a credit card or for a loan, those who will be your lenders are allowed access to your credit information. The very factor of your credit score and the details on your credit report determine whether or not you get credit in the first place. This allows credit lenders to find out how faithfully you will pay them back.

4. Your employer has the opportunity to look at your credit information, but in this case, it is only your consent that can grant them access to it. The previously mentioned cases may check your credit score whether you want them to or not, but possible employers, when considering you for a position, must have your permission before they see any of your credit information.

The Fair Credit Report Act also protects you from identity theft. Your credit information entails a lot of information about you, including important details like your social security number, date of birth, phone number, etc. Because it protects these details so intensely from getting into the wrong hands, it protects you from other dangers like identity theft.

The Fair Credit Report Act also gives you the right to take action on part of your credit information and request information about it. If you have a problem with your credit report, you have the right to dispute the mistake that you feel was made. If you want to know what your credit score is, you have the opportunity to request a free credit report once a year.

How Soon After Chapter 7 Bankruptcy Can You Get a Credit Card?

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Chapter seven bankruptcy is the most common form of bankruptcy that is used in the world today. It is the type of bankruptcy that liquidates your business or assets to allow them to be used to pay the people that you owe money to that you cannot pay back yourself. This liquidation happens all too often in our atmosphere of misused credit today.

There are several small steps you can take to get back on your feet after bankruptcy. However, most of these methods take time, because it is impossible to be instantly qualified for credit and back on track right after you have claimed that you cannot pay off your debt. Having credit card companies, banks, and other lenders trust you with credit again is going to take some time.

Build Your Credit Score

The best thing you can do to qualify yourself for good credit, better interest rates, and descent credit limits again is to build your credit score. Unfortunately, the only way you can really do this is to use some form of credit, like credit cards. So at first it may be difficult to pay those high interest rates and have such low credit limits, but you must face the consequences of filing for chapter seven bankruptcy and pay the price until you are back on your feet. Once you have again established a good credit rating, you will have lower interest rates and higher limits because you have rebuilt your trust and lowered your risk of another bankruptcy.

Manage Your Credit Wisely

The fact that you had to file for chapter seven bankruptcy alone should be a lifelong lesson that will get you to be more careful about your spending habits and your payment abilities. Now that you are trying to move on, you should create a budget for yourself so that you know just how much you can spend on credit, how easily you will be able to make the monthly payments on that amount, and how many things you could go without so that you can gain a better credit score.

Getting Another Credit Card

Getting a credit card after you have filed for bankruptcy will not be difficult. You will still receive offers and qualify for several different kinds of cards. In fact, if it is used more wisely than it was prior to your bankruptcy, a credit card may be the very thing that gets you out of your slump.

Having a credit card and using it sparingly after bankruptcy will help to build your credit score and get you back to where you were. The way in which you could do this is by getting a card, only spending a small amount of money on it, and paying it off each month. Keeping your credit card account open and paying it off frequently will build your credit score more rapidly than it would if you just let your credit card debt stay at a plateau or continually increase.

How Do I Write a Credit Dispute Letter?

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You have discovered a mistake on your credit report that you are absolutely sure that you had nothing to do with. You want to get it fixed, because it is doing damage to your credit score. But how exactly do you go about getting that repaired?

Writing a credit dispute letter should not have to be so difficult that you would rather have the mistake on your credit report rather than go through the hassle of having it fixed, but sometimes it may feel that way. A credit dispute letter, if done correctly and professionally the first time, will get you the change that you need on your report to gain well deserved points on your credit score. But is there anything that would possibly improve the format and the content of your credit dispute letter, therefore giving you greater chances of having the errors corrected, and having it done quickly?

In fact, there is hope. You deserve to have your credit report reflect the good credit spender you are. Here are a few tips on what kind of things you can do to draft and improve a credit dispute letter:

1. Get right to the point.

Being up front about your complaint is a factor that will get the correction made faster. Being blunt and completely clear will allow them to recognize the problem, find it, and fix it in a more timely manner than they would be able to if you give them only a vague description of your problem.

2. Use proof of the error.

Get as many files as you can from outside sources that prove to the creditors that there has been a mistake made, such as court files or documentation of your payments. Having a sort of map or proof of what the problem is and where things went wrong will speed the process up and give you a better chance of getting the problem fixed with few questions asked.

3. State how it should be.

Do not just show them where the problem is and expect them to know how you want them to change it. Make sure that you tell them why it is an error, and how you know it should be instead.

4. Communicate clearly.

You need to be able to make your letter completely black and white, with no gray areas that creditors may not understand. State that there is a problem, state the problem, state a possible solution, provide documentation, and end it. Simplicity and clarity will allow for the letter to be easily read and more quickly responded to.

Nobody wants their credit score to suffer for some mistake that they didn’t even make. Having a good credit score is something worth fighting for. You should not be cheated out of the credit score you have, and writing a clear credit dispute letter can allow you to get the needed changes made to uphold that right.

Can Your Spouse’s Bad Behavior With Credit Cards Affect Your Credit Score?

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Before the Marriage

So you have fallen in love, and you believe that you have finally found the one that you were always meant to be with. The have all the qualities that you could ever possibly want in a spouse, and you can’t believe you have actually found them. But wait… are there certain things about this love of your life that you should know about before taking the plunge?
Probably the last quality you are going to search for in a companion is their money management skills. Perhaps you do not even know how well he or she can manage their credit until after you are married. But getting to know this side of your fiance will be of more benefit than you think.

If the love of your life has a horrible credit score and a bad credit history, you should probably talk it over. Getting into a marriage that will cause you financial heartache will be a burden that may not be necessary to bear. No, you don’t have to cancel the wedding just because your fiance has money management problems.

Having a spouse will not affect your own personal credit score. However, when people get married, usually they eventually get their credit cards, loans, and other forms of credit merged to make it less of a his and her’s sort of thing. It is important to know what your future spouses credit card behavior is like so that you can determine whether or not this type of merger is a good choice.

During the Marriage

If your spouse has a horrible habit of not paying his credit card bills on time, perhaps a combination of your two accounts may not be such a bad idea, for the reason that you could help build his or her credit score. If you take on the entire responsibility of paying the credit card bills and you are the most responsible out of the two, both your credit scores will thrive. However, there are a few risks you take on when you join your credit card accounts into one.

If You Get Divorced

Despite the idea you had of a lifelong love when you first got married, perhaps the relationship did not work. The last thing you need is another burden like being concerned about your credit score. However, the damage that can be done to your credit score because of their credit card spending habits is an uncontrollable factor that will create problems and even more heartache down the road.

All of the things that are done on your joint account show up on each spouse’s credit report. Because of this, after a divorce, one person’s bad habits will be reflected on another’s credit score, even if that person has good habits. You should get all of your joint accounts dissolved by either paying them off and closing them, or taking one person’s name off of the account, leaving the other solely responsible for that account.

Lowering Your Credit Card Interest Rates: All You Have To Do Is Ask

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The greatest thing about credit card interest rates is that you can call the company and ask them to lower your interest rate. It’s as simple as that. But there are a few conditions. Allowing just anyone to call up and lower their interest rates would be just ridiculous, and it would probably cost the companies quite a bit of money, considering all the irresponsible spenders out there. But this attribute can act as a reward for those who are disciplined in their use of credit cards. Here are a few of the conditions that must be met before your credit card company will lower your interest rates.

1. Have a good credit rating

Maintaining a good credit score will increase your chances of getting an interest rate reduction. Your credit score is what will determine the company’s trust in you, and it will increase or decrease your chances of getting a lower interest rate, depending on how good or bad it is. Having good credit says to the credit card companies that you are dependable, therefore because you are a good customer with good credit, you deserve to have your interest rate lowered.

2. Don’t have a big balance

Having a large balance on your credit card account will lessen your chances of changing your interest rates for the better because if you are deep in debt, credit card companies may believe that your potential to get further into debt is greater. The deeper into debt you get, the more likely you are to fail to pay your bills on time. This will in turn not only disqualify you for a decrease, but it will actually increase your interest rates.

3. Send in more than the minimum

When you pay on your credit card, there is a minimum monthly payment you must make, no matter what. If you have the means to pay a little extra on your credit card bills, do it. This will show that you are eager to pay off your debt, so you are less likely to go bankrupt, and more likely to make your payments on time.

4. Pay on time

Getting an interest rate decrease will be much more difficult if you have not paid your bills on time. In fact, one of the consequences of not paying on time is having your rates INCREASED. You must pay your monthly credit card payment each month, even if it is just the minimum, because the rewards are substantial, but so are the punishments.

Getting your credit card interest rates raised is can be a great advantage to you, but just like any other rewards you might get, you must obey the rules before you reap the benefits. You have to use your credit wisely. You must pay your bills on time and keep your balance at a level in which you can pay it off soon and without strain. These, among other things, will help to raise your credit score, allowing credit card companies a reason to give you a decrease on your interest rates.

Can You Buy a Car With a Credit Card?

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Buying a car is a big step for most people. Whether you have done it once or a dozen times, buying and financing a car is an important issue because it determines where a lot of your money will be going for the next several months. It is kind of like having a credit card. You make monthly payments on something that you have, but that you have not paid for yet. Credit, in that aspect, is quite the same. But the kind of credit that you get is quite different.

So can you kill two birds with one stone and pay for your car with the credit card that you make monthly payments on? Yes. It is possible to buy a car with a credit card. For some people this may be the perfect solution, but it depends on the circumstances.

Buying a car with a credit card requires a much higher credit limit than it would if you were just using the card to make random purchases at a clothing or grocery store, depending on the price of the car. Getting high credit limits can be risky. This is because it could possibly hurt your credit score if creditors believe that you may buy something that expensive on a credit card and not be able to pay it back.

Interest rates

One advantage to financing your car on a credit card is lower interest rates. If you shop around and search for a good deal, you could get a credit card that would allow you to pay less for your car in interest than you would if you took out a loan. This, in the long run, will save you hundreds if not thousands of dollars in interest.

Still, the risk of increased interest rates are greater with credit cards if you make late payments, making it so that you may even spend more on interest. It all depends on the circumstances, and how you will be able to make your payments. It also may depend on the terms of the credit card. Make sure that you know what your introductory interest rates are, if they will change, and what they will change to if they do. Knowing the terms of your contract before you buy a car with that card will make a huge difference in whether or not you save money by taking this route.

Rewards

If you buy your car using a rewards card, you could get benefits that you also would not get by just paying for it by taking out a loan. Rewards cards give you benefits based on how much you spend. Since buying a car is such a huge purchase for a credit card, it would give you many more rewards than it would if you had just used the card to buy groceries. These kind of rewards can be cashed in for things like gasoline, travel, air miles, and cold hard cash. This is another way you can benefit from your purchase.

4 Things To Teach New Credit Card Holders

New credit card customers, especially teenagers who are planning to apply for student credit cards, need to know the basic rules that will keep them financially safe and secure. Some rules are easier than others to follow, but they are all very important.

Increase Credit Card Limits

Some people believe that increasing your credit card limits is too difficult and can only be accomplished by those with at least an upper middle class income. Surprisingly enough, however, raising the limits of your credit cards can be done by anyone, no matter what type of income you have.

High Credit Score

Another important rule includes securing a high credit score. This not only comes from paying off your credit cards, but also from properly upholding every other credit investment that you become involved with: car payments, mortgages, businesses, etc.

Obviously, maintaining good credit and thus increasing your credit score will make it much easier to gain the trust of credit card companies, who, in turn, will feel more secure in raising your credit limit. This may seem like an easy and even apparent rule to remember, but most people are rejected from increased credit limits because they fail to follow this “simple” rule.

Make Payments On Time

Another way to improve your chances is to maintain a good financial relationship with the credit card companies. Making your credit card payments on time is the first step, but by also consistently making big payments on your credit cards, companies will be more than happy to continue to increase your limits. Consistency in making large payments on time is the key to constantly gaining the approval of enlarging your credit card limits.

Using Rewards Cards

When making ordinary purchases, people mostly use cash and/or debit cards, which is a safe yet unrewarding way to increase personal benefits. If people would simply switch their usage of cash and debit cards for reward cards, their amount of skymiles and other financial rewards would automatically increase. When buying gas, going grocery shopping, getting new clothes, paying bills, and making other ordinary purchases, remember to use your rewards card.

This simple technique will help you earn skymiles that would otherwise not be gained, obviously, with cash or debit cards. Although credit cards can cause people a lot of pain when used unwisely, they can also be very rewarding when used properly and wisely.

Other ways to maximize the skymiles on your credit cards is to apply all your major purchases to the credit cards. Wisdom must be used when this technique is used, but when used properly, it can harvest huge skymile rewards. Such major investments on credit cards include buying new or used motorized machines such as cars, motorcycles, dirt bikes, boats, etc.

A brand new credit card customer can be very naïve and sometimes suffers the unfortunate consequences of credit card penalties. If teenagers simply follow the rules stated above, they will be able to avoid unfortunate late fee charges and actually gain real life rewards and advantages in the credit card business.

Top 3 Myths Surrounding Your Credit Limits

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Credit card limits allow us to set a range of the amount of money we can spend on credit. When used appropriately, this limit will help keep us from spending beyond our means to pay back the amount owed plus interest. So why have so many people gotten into credit card debt by spending on a high credit limit when they knew that they would not be able to pay it back?

Sure, a high credit card limit can be alluring because it makes it look like you can spend all you want and have whatever you want. But a smart credit card holder would know the difference between what looks good, and what will save them money in the long run.

Top 3 Myths Surrounding Your Credit Card Limits

There are a few misconceptions that people often experience when they set their credit limit. Credit card companies can lead them into believing myths that will eventually get them into financial trouble. Here are a few of those myths:

• The Higher Your Credit Limit Is, The Better

Credit Card companies would like you to believe that it is good to have a high credit card limit, and that is true… it’s good for them. High credit limits increase the possibility of excess spending, or spending beyond your means. That leads to larger amounts of money to be paid on your bills, which may cause you to make late payments. Of course late payments result in higher interest rates, making it even harder to pay your dues. Eventually it will take you longer to pay off your credit card debt because you spent more than you can pay back.

• Going Over Your Limit Is Okay If Your Credit Card Company Approves It

Whether or not you pre-approve a purchase that will go over your limit with the credit card company, it will still hurt your credit score dramatically. Your credit score doesn’t depend on whether or not you have authorization to go outside your credit card boundaries, it depends on whether or not you can stay within your limit, no matter what it is, and efficiently pay back what you owe. So even if the credit card company says it’s okay, you still appear unreliable because you went over your set limit, therefore significantly lowering your credit score.

• A High Credit Limit Will Not Threaten Your Ability To Pay Off Your Credit Cards

The best way to stay out of debt is to not allow your spending opportunities to go beyond your reimbursement abilities. If you can easily see that you could not pay back the money you would owe if you spent up to the amount on your credit limit, you simply should not set your limit that high. Keeping your debt as minimal as possible is everyone’s goal, and the debt you incur is more likely to increase if your credit limits are high enough to tempt you to spend beyond your means.

What Are The Pros And Cons Of High Credit Limits?

Pros and Cons of High Credit Limits

When using a credit card, a limit is set upon how much you can spend before you max it out. This limit varies for each person and each credit card. So how high can your limits be? Or, more appropriately, how high should they be? Many would agree that a high credit limit would allow you freedom to buy as much as you want of whatever you want. Oh sure, you can pay for it later, it’s no big deal. Others would say that in reality, high credit limits bind you with debt that you cannot pay back. So who’s right? Is it really that bad to have high credit card limits?

Advantages of High Credit Card Limits

• Using your credit card more, as long as you pay the bills on time, adds points to your credit score.
• Purchasing expensive items is less of a hassle.
• You have money on hand for emergencies should the need arise.
• You do not have to worry about maxing out your credit cards.

Disadvantages of High Credit Card Limits

• If you cannot pay your monthly bills, the interest rates increase more quickly with a high credit card limit than if you were to have a low limit.
• Someone may steal your credit card, and with so much space within your limit will allow them to spend more money that you would have to pay back.
• With a higher limit, it would be more tempting to buy things with money you don’t have, even if you know that you could not pay it back.
• There may be less of a risk using some other form of credit, like taking out a loan.

Do It the Smart Way, Or Don’t Do It At All

When you put a limit on your credit card, be sure that even if you got to the limit that you could pay the money back without strain. Anything that you want that is more expensive than the amount you have within your limit is probably more safely purchased with a loan. It may even be worth it to save up money to buy it. Otherwise, if you cannot afford to increase your credit limit, you probably cannot afford to buy something that expensive.

Make It Easy To Give Back What You Borrow

It is good to keep in mind that no matter what you buy on credit, whether it is expensive or not, it is not yours until you have paid back the money that you borrowed to get it. The pros and cons of high credit limits do not change the fact that credit is money that you do not have, and so the best type of credit is affordable credit. Keeping your limits low will allow you to more easily pay your monthly bills and pay off your credit cards more often, and overall, you will be less likely to get trapped in debt that you cannot get rid of.

How Much of My Credit Limits Can I Use Without Damaging My Credit Score?

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You know that your credit score is based on how well you can pay back your credit card bills. So how do we know when we’ve spent too much to pay back? Thank heaven for credit limits. We set these limits so that we do not exceed the amount that we know we can easily afford to pay back. So how close can you get to your limit before it starts to damage your credit score? Here are a few tips to help you understand how much you really should spend within your limit in order to maintain a good reputation in the credit world.

DO NOT go over your credit card limit

No matter how much you want to pay for that riding lawn mower with your credit card, even if it costs more money than you have within your limit, don’t do it! Going over your limit can cause your credit score to go plunge dramatically. Even calling in to the credit card company and prearranging an expense that will exceed your limit will not excuse you from the penalties. If the credit card companies authorize you to go beyond your limit it may exempt you from getting your interest rates heightened, but you will still be subject to the consequences on your credit rating.

Spend only up to about 50% of your credit limit, then pay it off

Sometimes the best way to ensure that you do not go over your credit limit is to set a goal that you will pay off your credit card bills once you have spent half of your limit. That way you will not even get close to maxing out. This also helps you to keep your monthly dues at a reasonable amount, allowing you to pay them easily and on time. Being smart and conservative with your money will show that you are responsible enough to pay your debts, allowing for your credit score to steadily improve over time.

Don’t set your credit card limits too high

You should set your credit limits to an amount that you know you will be able to pay back. Having a limit that is too high puts you at risk of spending more than you can afford to make a monthly payment on. It may be somewhat beneficial to set your limit a little bit above your afford ability in order to keep from getting too close to exceeding it. But having a credit limit that is too high for you to ever be able to pay back lulls many into believing that just because they don’t go over the limit means that it’s okay to go up to that amount.
The main thing to remember when you set your credit limits is that your credit score can benefit only if you do not exceed your limit, and if you pay off your debt before you get too close to that limit. Credit cards can either help or hurt you, depending on how you manage them.

How Many Credit Cards is Too Many?

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Is there such a thing as too many credit cards?

There can be. Honestly, it goes both ways. Most people would agree, though, that they are at a higher risk of getting into debt that they cannot escape if they own way more credit cards than they can control. Having so much credit can be too tempting, and many people have given in to that temptation, spending more than they can pay back and ending up with a bad credit card and debt up to their earlobes.

This is why it is often difficult to keep, or build up to, a good credit score. Creditors look at how many credit cards you have and almost automatically see a potential threat that you will not be able to pay off your debt. This automatically decreases your score, and it also may make it difficult to receive other forms of credit, like a loan, or another credit card.

So how do you escape the automatic assumption that just because you have a lot of credit cards, you cannot pay your debt?

Well, there are some cases in which people do not have a bad credit score, even when they have several credit cards. What did these people have that those with even a few cards did not? A good credit history. That and regular payments helps your credit score either stay in the high numbers, or increase to where you want it to be.

So how do I know how many credit cards I can have?

How many credit cards you can handle is up to you. If you have a large number of credit cards in your wallet and are confused as to why you are having difficulty paying your bills on time, you may want to cut down a bit. Your spending habits and our monthly income are what determine how many credit cards you can have without letting your debt get out of control, and how well you control your debt is what will determine your credit score.

How do I build up a good credit history?

If you are just starting to get familiar with credit, you should probably start out with a low number of credit cards, if not one. Buying too many credit cards at once will make you appear as a potential over-spender, and even worse, someone who will not be able to pay their bills. To start out low and use your credit card wisely, like paying your bills on time and paying your cards off frequently, will eventually prove that you can handle credit cards carefully and result in a very good credit history, allowing for you to build up to an excellent credit score.

How can I show creditors that I’m dependable with my credit cards?

Always pay in full and on time. The thing that will hurt your credit score the most is having frequent occurrences where you make your payments late. Paying your bills on time every time will show that whether you have one or fifty credit cards, you can pay back the money that you borrowed on those cards.

Guaranteed Secured Credit Cards

In the financial world the name of the game is return on investment. I read (okay, I only started reading) a book written by one of Warren Buffet’s two mentors. His name was Benjamin Graham and you could sum up his whole investing philosophy by saying this: “Find investments that offer safety of principle and a reasonable rate of return.”

With this in mind, the credit card companies are very careful about who they issue credit to. They don’t make billions in profits every by throwing their money around willy-nilly to anybody who just walks in and says sign me up. The reality is most people wouldn’t offer “safety of principle and a reasonable rate of return.”

Two of the biggest indicators the credit card companies use when evaluating you are 1) your credit score, 2) your credit history. This is how they judge whether you’re going to pay them back their money or not.

If you have a low credit score or not enough history, you’re not going to get approved for a standard, unsecured credit card. That means a secured credit card is the way for you to go.

To make the start of you credit-building journey as easy as possible, you should be looking for guaranteed secured credit cards. What do I mean by that? I mean you should only apply to credit card companies that offer guaranteed approval. After all, you’re putting down a big security deposit, which means their principle is complete safe and they’re going to make a reasonable rate of return off you. There’s no reason not to approve you.

Is it possible to Get Guaranteed Approval on Non-Secured Credit Cards?

The short answer is no. If you think about everything we just talked about as far as risk and reward for the credit card companies, you realize it would be corporate suicide for them to hand out a credit card to anybody and everybody that wanted one. A lot of those applicants aren’t credit worthy, and they wouldn’t repay their balances. We can’t have that can we?

If you want an unsecured credit card there’s only one way to get it. You’ll have to have some credit history and at least a decent credit score. They may start you small, but if you can get approved for even a small limit it will help you prove yourself to the credit bureaus and soon you’ll be to get as much credit as you want or need. Depending on your discipline and habits, this might be a blessing or a curse. Until your credit is back on track you’ll find that this type of financing – guaranteed loans for bad credit no fees – is really your only option.

Compare Secured and Unsecured Credit Cards

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The credit card industry is one of the biggest, most competitive, and most profitable out there. Credit consumers today have more options than ever and there are a lot factors t to evaluate. One of the first questions is whether to get a secured or unsecured credit card. Some people may not think the choice between secured and unsecured credit cards is a tough one, but it’s not as simple as you might think. There are several angles to consider, but first let’s look at the basic characteristics of both types of credit cards.

Secured Credit Cards

Easy approval, often guaranteed. Great for building credit score and history, or rebuilding after bankruptcy.Requires a security deposit, usually equal to the amount of the credit extended. Often carries a monthly fee to maintain the account. Typically charges high interest rates on purchases, 21% and above.

Rarely offer balance transfers.

Unsecured Credit Cards

Approval based on credit worthiness (score and history). Good for improving your credit if you use them wisely. No security deposit required, limit determined by credit card company (depending on credit score and household income). May or may not charge an annual fee to maintain the account. Cards with rewards such as sky miles often carry annual fees. Interest rates on purchases can range from 9.9% to 21% or more. Often offer balance transfer options with promotional interest rates. It’s obviously easier to get unsecured credit cards with fair credit, and you’d probably rather not have to put down a security deposit.

Basically, unsecured credit cards are the better tool in the long run, but that doesn’t help those people that have bad credit and need some credit now. My advice is that people should get unsecured credit cards with low rates, no annual fee, and a rewards program if possible.

If it’s not possible to get an unsecured credit card, shop around for the best possible rates and try to avoid fees whenever possible. Use the secured credit card wisely for several months and soon you’ll probably get offers from companies for the unsecured variety.

When you get those unsecured credit card offers, look for one with a well-known company and one that offers a low or 0% introductory interest rate for at least six months. That way you get the benefit of using their money for ‘free’ until the promotional period ends. Make sure you pay the balance monthly!

Secured Credit Cards for People With Bad Credit

Everybody goes through rough patches in their financial life. Sometimes there are circumstances that lead to getting behind on your bills, missing a few payments to your debtors. All kinds of things can happen that make it impossible for you to keep up. It could be a layoff or a slowdown at work. Lots of people have unexpected medical bills or car repairs they weren’t planning on. Cash starts to get tight, you have to make tough choices about which bills to pay and which to ignore. The worst case scenario happens and you miss a couple mortgage payments. Why can’t the credit bureaus just let a few slider right? Wrong. Just one or two 30 day or 90 day lates on your report can wreck your score. I guess a credit score is kind of like trust. Have you heard the saying? It takes a lifetime to build trust and only five minutes to lose it. You’ll understand what that means when you don’t send the mortgage check a couple of months in a row.

Luckily, these little financial slip-ups are temporary for most people. Your job will pick back up or you’ll find a new one. Pretty soon you’re sending all the checks in on time and you’re sleeping a little better at night. Once you get your finances in order again you’ll want to get your credit rating back on track as quickly as possible. One solution is secured credit cards for people with bad credit.

Credit card companies and banks are wary of anyone that has missed payments in the past; they think you’ll miss payments again. They don’t want to lend money that’s not going to be repaid. In other words, your good intentions aren’t enough for these guys. Go figure.

Rebuild with Secured Credit Cards

So here’s what you do – remove their risk. They’ll give you a credit card as long as you put something at stake – your cash. Show them you can handle a little piece of plastic with a logo on it, and if you consistently use the card and make payments on time you crawl out of the hole you got yourself in. That’s the best way to use secured credit cards to rebuild very bad credit.

It’s probably not a bad idea to open a few of these cards, and use them for your every day purchases – gas, groceries, clothes – the credit companies will like the fact that you’re handling the credit well.

Low Limit High School Student Credit Cards

To be honest the idea of high school kids running around with credit cards should probably make us all a little nervous. Teenagers aren’t known for their foresight or restraint are they? No, they’re not. They’re known for seeking excess. I’m not saying it’s such bad thing. Teens need to spread their wings a little, rebel a little.

So when we think about the right way to ease kids into the world of credit cards, we want to make sure they have that sense of freedom without giving them the chance to get a headstart down the road to financial ruin.

When I got my first credit card I was 18. I was financially clueless. I was clueless in everything else too. But especially financially. A good friend and mentor advised me to get a credit card so I could establish credit history and get a decent credit score while I was still young. He also advised me to keep the limit low. This was his advice:

“Get a low limit credit card. Everyone screws up and maxes out their credit cards at least once in their life. You’re better off doing it with a $500 credit limit than with a $5000 credit limit.”

He couldn’t have been more right. Sure enough, I maxed that credit card out soon after I got it. Luckily it was only $500 worth, and I only had to see one finance charge on my statement to realize I didn’t want to misuse credit cards ever again. I’ve made my mistakes since then, but I’ve never forgotten the lesson learned from my first credit card.

For parents who want to give their teen an even safer credit learning tool, there are prepaid credit cards. In a sense, it’s not a credit card at all. It’s a charge card. What that means is you load it up with whatever amount of money you’re okay with your teen losing, and then let them experience making purchases with the plastic.

If nothing else, using a prepaid credit card should teach kids that credit cards are ‘real money’. In other words, you may not take the cash out of your wallet and hand it to the cashier, but it’s money you’re responsible for. When you run out of money on the prepaid card, the card is useless. That’s a great thing for a kid to get used to. It should help them understand that credit cards are a tool to be used intelligently.