The offer can come innocently enough when you’re at the checkout counter at a department store: “Would you like to apply for our store credit card today? You get an automatic 20 percent discount off today’s purchase.”

Immediately, your answer should be “No.”

Without time to go over the written terms of the contract with a busy cashier, and not knowing how the store-branded card can affect your credit score, among other things, that discount of 20 percent or more doesn’t look so good.

Here are three things to consider before applying for a store credit card:

High interest rates

This should be your first concern because if you don’t pay the credit card bill in full by the due date, you’ll be charged interest that can be a lot higher than with a regular credit card. Why? There’s a higher risk for lenders offering cards to a range of customers who have a range of credit scores.

Store-branded cards have interest rates of around 23 percent. Credit cards from banks and credit card companies can range from 10 percent to 21 percent.

And just like any other credit card, a store-branded card has a penalty APR, or annual percentage rate, if you don’t make the minimum payment on time.

Effect on credit score

Department store credit cards have more lenient lending standards, making them easier for young adults with little or no credit history to be approved for.

Using store credit cards wisely can establish a good credit history. But opening too many accounts at one time can hurt a credit score through what are called hard inquiries. Having too many balances can also be a bad sign, showing the possibility of default.

The cards usually have low spending limits, creating high utilization ratios that show you’re using a high percentage of your available credit and are close to maxing out your credit cards.

Overspending with store credit card

Store credit cards are meant to bring customers back, and credit cards have been shown to get people to pay more for something than they would with cash. And because their credit cards are only accepted at their stores, retailers know you can only shop with it at one place.

Just like a sandwich shop gives you a free sandwich after you buy 10, a department store credit card may offer you exclusive discounts if you spend so much money a year with its credit card.

If you’re not already a loyal customer to the company offering you a 20 percent discount for signing up for its credit card, you may soon be if you accept the offer.

Watch Out for These 3 Problems if Cashier Offers You a Store Credit Card is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

With all the cashback and reward offers out there, you could make a good return on your spending by choosing the right credit cards. But if you aren’t careful, you could also become one of the many people dealing with credit card debt, and once you’re stuck with that, it can be tough to pay off.

To make credit cards work for you, here are a few helpful tips and tricks:

Maximize Your Signup Bonuses

The typical credit card rewards rate is 1 percent. That’s one percent cashback on every purchase, or 1 reward point/frequent flyer mile per dollar spent, which is generally considered to be worth about 1 cent.

Many cards have better rates, but even then, you’re probably looking at 2 to 3 percent. That’s a decent return, but it’s nothing huge.

The real way to get plenty of cashback or rewards is credit card signup bonuses, which can often be 50,000 points or more for spending a certain minimum amount within a specific timeframe after getting the card.

To maximize your credit card rewards, you need to apply for new cards periodically to get more of those big signup bonuses.

Pay Everything You Can with a Credit Card

Your credit card is most likely the only option you have to make a return on your spending, as you certainly don’t get that when you pay with cash or your debit card. So why not make the most of it? Put all the expenses you can on a credit card.

When you do this, you make sure you earn as many points as possible. This also helps you reach the minimum spending on any credit card signup bonuses you’re after. You can even combine your credit card with other types of financing to keep getting points. Let’s say you’ve gotten title loans in Tampa to pay pressing expenses. You can still pay those expenses using your credit card, and then pay your credit card bill with a title loan.

For the best results, see where your credit cards earn bonus points and match your spending accordingly. If you have a Chase Sapphire Reserve that earns 3 points per dollar spent on dining, put all your bar and restaurant tabs on that.

Never Pay a Cent of Interest

If you follow the two tips above, you’ll earn far more in cashback or rewards than most consumers. But to ensure that you’re actually making money from this, you need to avoid getting charged any interest.

Fortunately, there’s a simple way to avoid interest charges. You just need to pay whatever is listed on the statement balance every month. The current balance is also an option, but the statement balance is what’s important in terms of whether or not your card issuer charges you any interest.

None of the tricks above are that hard to implement. All you need to do is keep up with credit card news a bit to see what the best signup bonuses are. And, of course, stay disciplined financially to avoid interest charges. Don’t spend recklessly just because you have the credit for it. Make your credit card beneficial for you instead of for the card issuer.

Getting to Know the Credit Card Tips and Tricks is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Such businesses are difficult to find, so my iPhone is inside a small case that opens to hold only three cards: my driver’s license, a debit card and a credit card. No, it’s not a man purse. It’s the size of my phone, but about twice as thick. For me, it beats carrying around both a phone and a wallet.

But even with just one credit card on me, it’s tempting to leave it at home and only carry my phone with me.

When I go to a business with a mobile card reader, I’m looking for one that uses Bluetooth technology to connect my mobile phone to its credit card reader so that the credit card stored on my phone can be seamlessly and securely used.

I’m looking for Bluetooth for two reasons: So I don’t have to carry a physical credit card with me, and so I don’t have to use the chip in the card and spend an inordinate amount of time at the cashier.

There’s also a third reason, which I really did’t think about much until I went to Europe last summer for vacation: High merchant fees for using a credit card.

The mobile card reader from SumUp seems to solve all of these problems. Here’s how:

Low fees

Credit card fees usually aren’t passed directly to consumers, but any shopper knows that the fees merchants pay to accept credit cards are included in the cost of doing business and are ultimately included in the prices of its products and services.

I try not to use credit cards for small transactions, knowing that the business will pay a small fee for the convenience of letting me use a credit card there. It seems silly to use a credit card for a $5 purchase.

A low-cost swipe machine can cost a business from 3-4% per transaction. Some charge termination and paperwork fees. SumUp’s EMV card reader charges a 2.75% credit card processing fee on each transaction, and doesn’t have monthly costs or delivery fees.

While I don’t pay such fees directly as a consumer, they’re in the back of my mind when I visit a store, especially an independent one that may be a family’s sole income. This was especially apparent last summer when I went to Europe on vacation and found that I needed to use my credit card a lot more than I planned because getting cash from an ATM was more difficult than I thought it would be.

Whenever I’d pull out my credit card, especially at small businesses, I’d sometimes get a roll of the eyes from the business owner, who either didn’t accept credit cards or accepted them reluctantly. The credit card fees were a headache, I assumed. Instead, they preferred cash.

I want to earn credit card awards as much as the next guy, but inconveniencing small business owners shouldn’t be part of that computation.

No physical card needed

Whether on vacation or in my daily life, I like to travel light. A phone is almost a necessity throughout the day, but a wallet and credit cards aren’t because my phone can securely hold a digital version of my credit cards.

The mobile card readers from SumUp allows customers to swipe, use a chip or pay with their phone. Just tapping your phone to the SumUp card reader gets a transaction going.

Mobile payments are only increasing, so this seems like a natural fit for any business that wants to grow.

Security

The SumUp EMV card reader is also secure. It uses computer chip technology on Europay, Mastercard and Visa cards — called EMV cards for short — to protect against fraud.

Each card insertion generates a one-time code that’s then used to approve payment. U.S. merchants that use EMV card readers are in compliance with recent rules on credit card payment security, and aren’t subject to liability costs if they’re defrauded while using an EMV card reader.

Keep the line moving

This is a minor complaint, but many EMV card readers can clog up a line at the cashier. If you’ve used a chip in your credit card instead of swiping the card, then you’ve probably experienced this slowdown.

A good EMV terminal should be faster than using cash. SumUp’s EMV card reader is fast, and it’s also easy for a mobile business to use anywhere they can get a mobile phone signal. The reader fits into a pocket and is about half the size of a mobile phone.

A Mobile Card Reader That Makes Life Easier for Consumers is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

There are few quick shortcuts to improving a credit score, but there are some big moves that can raise it dramatically.

Here are some of the biggest moves you can make to improve your credit score:

Know your credit score

Start by checking your credit score at AnnualCreditReport.com for free. The three credit reporting companies must give you a free report once a year, so you can either get all three at once or spread them out by getting one every four months.

The score you receive represents your credit risk at a point and is meant to measure your future credit risk. Scores from the Fair Isaac Corporation, or FICO, are most widely used, with scores ranging from a low of 300 to a high of 850.

The higher the score you have, the more likely you are to be approved for credit and get the best loan rates for auto loans, home loan and credit cards, among other things.

Here’s a breakdown of what the scores generally mean:

• 781 and above: Excellent credit leading to lowest interest rates.
• 661-780: Very good with access to most lines of credit.
• 501-600: Fair with slightly higher interest rates.
• 500 or lower: Poor credit and difficulty getting credit.

Once you have your credit report in hand and know your credit score, you’ll know what you’re up against and can start working to improve it. Now comes the hard work.

Dispute errors

Your credit report is full of all kinds of useful information. It shows accounts you have open and closed, collections, tax liens, employer information, your name and address, among other things. It can also list a credit card account that doesn’t belong to you, meaning someone may have fraudulently taken out a credit card in your name.

You want to check the report for inaccuracies and then dispute them with the credit reporting companies so that the wrong information is removed from your credit file and your credit score is improved.

For example, a report may list a closed credit card with an unpaid balance, when you know you paid it off. A copy of your last credit card statement showing the card paid off and closed should solve this, and should be included with your dispute letter.

The Federal Trade Commission has a sample dispute letter for reporting errors on your credit report. The credit reporting companies have 30 days to investigate your query.

Pay bills on time to improve your credit score

Being on time, as your kindergarten teacher probably told you, is an important lesson that will serve you well in life. It’s important for a credit score.

Payment history accounts for 35 percent of FICO credit scores, and is the first thing any lender wants to know about you. If you’ve paid your credit accounts on time in the past, chances are you’ll continue to, the thinking goes.

A few late payments won’t kill your credit score, and having no late payments won’t lead to a perfect credit score.

But they’re the single biggest factor in a credit score, so not being late or missing a payment is important. A long history of making payments on time is also important.

FICO scores consider how late the payments were, how much was owed, how recently they occurred, and how many late payments there are.

Use your credit card less

This sounds like an obvious thing to do, and a difficult one, but paying off your credit cards each month and using less of the credit amount available to you is important. The amounts owed on accounts determines 30 percent of a credit score.

You’re not expected to have a zero balance on your credit cards, but should just use 10 percent of the credit amount you’re given to get the best credit score.

Using a high percentage of your available credit can indicate you’re overextended and are more likely to make late or missed payments.

This percentage is called a credit utilization ratio. It’s the percentage of your available credit you’re using on revolving accounts — meaning credit cards.

Here’s a simple example: If you have a credit card with a credit limit of $1,000 and you’ve charged $400 on it, you’re using 40 percent of your available credit and have a credit utilization ratio of 40 percent. To get down to 10 percent utilization, you’d need a balance of $100.

Even if you pay your credit card bills in full each month, you still may have a balance and a credit utilization ratio above 10 percent as you continue using a card.

The number of accounts you have is also a factor. Having a large number of accounts with amounts owed can indicate a higher risk of over-extension. If you do have a few credit cards, keep all of the balances low to help improve your credit score.

Open a credit card, or two

This sounds counterintuitive, but opening a new credit card account or two can help improve your credit utilization ratio. The ratio will drop by increasing your overall credit limit.

But doing this comes with a few caveats.

Your credit utilization ratio will only drop if you don’t use the credit cards or keep the balances below 10 percent of the limits.

If you already have a low credit score, getting approved for a new credit card may be difficult. And adding a new credit card to your wallet may not be a good idea if you have problems keeping a lid on spending or don’t pay your bills on time.

As detailed above, amounts owed equals about 30 percent of a credit score, so opening a new credit card can lower your utilization amount and make it look like you’re using less of your available credit. Just be sure to use it wisely.

New credit accounts for 10 percent of a credit score, so adding one new credit card to you credit profile won’t improve it much. But opening one or two new credit cards each year shouldn’t hurt it if used well.

Keep at it

Whatever steps you’re taking to improve your credit score, know that it’s a journey that can take years.

While the above steps can lead to relatively quick improvements in a credit score, they’re also things that should become habits if you want to keep your credit score high for years to come.

Checking for credit report errors, paying your bills on time and keeping balances low are some of the best ways to improve your credit score. They should help you gain access to better credit terms, eventually leading to lower interest rates and saving you money.

Biggest Moves to Make to Improve Your Credit Score is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

A recent study by the Urban Institute found that using cash when a purchase is under $20 left the consumer with $104 less in revolving debt, on average. That dropped their credit card balances 2 percent below their baseline average.

For young people, the $20 cash rule led to more savings. People under 40 who were reminded “Don’t swipe the small stuff” and to use cash on purchases for less than $20 had $173 less in revolving debt.

Credit keeps charging

The group also send reminders to credit union members that “credit keeps charging” and that using a credit card adds about 20 percent to the total cost of something.

People who received that reminder didn’t significantly change the amount of their credit card debt, the survey found, but younger people did charge less. People under 40 who received the reminder about the cost going up by 20 percent with a credit card had $160 less in credit card debt.

A swipe is easy

Swiping a credit card can seem a lot easier and cheaper than using cash because you’re not parting with anything tangible. Seeing a $20 bill leave your wallet can have more of a feeling of spending money than using a plastic card on the same thing.

A $6 cup drink doesn’t look to bad when compared to a $5,000 spending limit on your credit card.

Having cash on hand is less likely to leave you making small impulse purchases, which is what most impulse purchases are. But those small costs add up.

If you don’t believe it, try seeing how many small purchases you make in a week with $20 in your pocket and how often you need to go to the bank to withdraw $20 more. Then only use a credit card the next week for small purchases.

If you’re noticing that you spend less with a tempting $20 bill on you, then you could be slowly solving a revolving debt problem that you may not have realized you had.

Want Less Debt? Don’t Swipe the Small Stuff is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Not so fast. You’re credit score is being checked by a bank before it allows you to open even a simple savings account. The bank wants to make sure you manage your credit well and that you won’t cost them money as a customer. It doesn’t want new customers, or any customers, to abuse overdraft privileges, have an unpaid negative balance, or have fraudulent activity on previous accounts.

Without at least decent credit, you may be denied service or asked to add a spouse or other family member to your account who has good credit.

Or it may offer you an account and a credit card, but the interest rate on the credit card will be a lot higher than it would be if you had good credit.

But applying for a credit card is another issue entirely. Opening a savings or checking account has its own problems if you don’t look out for them. Here are three things to check on before and while opening a bank account:

Is the credit data accurate?

In a recent report on the most common types of bank account complaints, the Consumer Financial Protection Bureau found that consumers frequently complained about consumer and credit reporting data used in screening for new accounts.

“Consumers complained that they learned for the first time of negative reporting information when they attempted to open a new deposit account,” the CFPB said in a press release.

Consumers also complained about having problems fixing errors on their reports that may have prevented them from opening an account.

Before going to a bank, check your credit score for free at one of the three major credit reporting agencies: Equifax, Experian and TransUnion. Or go to AnnualCreditReport.com for a free report every four months from each agency.

If you see any errors, fix them by writing the credit agencies. And if there aren’t any errors but your credit is still bad, start working on improving your credit score.

How much are overdraft fees on bank account?

Confusion about when money from a deposit is available was another big complaint to the consumer agency.

When a bank holds a check for a long time — even a few days — that can be frustrating when you need the money. It can be especially frustrating if you’re charged an overdraft fee because the check wasn’t credited to your account before a check you wrote based on the expected balance cleared.

What to do? Ask how much these fees are before you open an account, and exactly how much time is required for a deposit to be credited to your account. Are there steps you can take to avoid a fee, such as opening a linked checking account or making automatic deposits from your paycheck?

Once you open an account, keep a keen eye out for overdraft fees or other charges on your monthly statement and dispute them if you think they’re incorrect.

How are bank account errors resolved?

Checking for bank errors is one thing. Disputing them may be a lot more difficult.

The CFPB found that consumers frequently complained about the error resolution process for their deposit accounts. If an unauthorized transaction occurred or they believed they were a victim of fraud, then a bank’s response time was long.

Also, a provisional credit — where a temporary credit is applied to your account while a transaction is disputed — sometimes wasn’t provided, the CFPB found. That can leave you paying for the error or fraud until it’s fixed.

A bank account can be a smart place to deposit your paycheck, pay bills from and can help keep your financial life in order. But if you don’t do your homework before opening an account, you could face more problems than necessary in an effort to not be “unbanked” anymore.

3 Things to Question Before Opening a Bank Account is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Without a good credit score, we might have problems getting credit cards, get a decent deal on our auto loan and so on.

A good credit score enables us to get a decent mortgage so we can buy a house for ourselves and our families.

But, what if our credit score simply is not good enough to get a deal that is acceptable for our current financial situation?

Credit scores can mean the difference between a mortgage and down payment that we pay with ease, and one we’re going to struggle with.

Financial decisions are the cornerstone of our modern lives. Not handling our finances, the proper way, may cause our credit score (and thus our credit worthiness) to crumble.

This is a vicious circle and we should avoid bad financial decisions not only when considering to buy a house, but every time we use our credit card.

Because this is a very important topic for many of us, we want to break the whole credit score thing down to some basic elements in order to give you a glimpse at what it means to have a “good enough” credit score to buy a house.

Credit Scores and Lenders

Credit scores are a numeric value that determines the amount of your trustworthiness in paying back the amount the lender is willing to give you. You have a good credit score if you have a good payment history, debt payment on time, a decent and steady income etc. All of these factors are taken into account when your credit score is calculated. The standardized formula used by many banks and lenders is called the FICO score. It is an algorithm that determines your personal credit score based on all of the financial decision you’ve done in your life.

This may sound a bit scary at first, but once you get a bit more into it, you’ll see that this FICO score is rather handy not only to the lenders but also for you. If you know that you FICO credit score is simply not good enough to land you a good deal on a mortgage, you can attempt to improve it.

This improvement can be done by changing up some of the financial habits you’ve acquired over the years. Hopefully, there are no big debts and problems financial wise, so improving your credit score can be taken on with ease.

All you need is an assessment of your current credit score status. There are plenty of services online that can help you with credit score reports and analysis, so you can start improving your credit score from the comfort of your home. To check your free credit scores now visit Cafe Credit.

How do credit scores affect interest rates?

Lenders and banks are businesses. We have to get this into our heads. They’re not charities that want to help, they’re businesses that want to make money. When they grant you a mortgage, they’re expecting to make a profit over the years through interest rates you’re going to pay them. These interest rates are determined by your credit score. If you have a bad credit score, the lender might still give you a loan or mortgage, but he or she has to have a bit more security by doing this. That’s why they put a higher interest rate on your loan, because they’re engaging in a bigger risk by giving the loan to someone with a “bad credit reputation”. However, if you have an excellent credit score, the lenders think of you as someone who can pay back the loan with ease, and thus offer you a great deal so you do business with them.

What credit score do I need for buying a house?

You can get a mortgage with a credit score as low as 500 points. However, you should be prepared for some very high interest rates in this case. It is safe to say that, if you have a credit score between 500 and 600, you should reconsider getting a mortgage at all. Only if it is absolutely necessary and there’s no other way, a mortgage with this credit score would be even considered. And, if you decide to do that, be certain that you can handle the monthly payments so you don’t get sucked deeper into the vicious circle of bad credit scores.

With a credit score between 601 and 699 points, your mortgage will be affected with interest rates 4-10% higher than the lowest available rate for the mortgage you’re applying for. This means that, if the lowest mortgage rate possible is 10%, you might get a rate of 11%-14% with the credit score you have in this example.

A credit score of 700 and higher will land you in the golden zone of loans and mortgages. You’ll probably get the lowest rates possible and thus getting the best deal possible. However, if you’re lucky enough to land such a good deal, be aware of the potential risks it entails. There are many cases in which people with excellent credit scores get loans and mortgages, only to then fall behind on their payments and damage their credit scores for good.

Improve your credit score before applying for a mortgage

One of the best tips we can give you regarding your credit score, is trying to improve it with all means you have at your disposal. Every time you’re applying for a mortgage, it can affect your credit score, so don’t simply rush into applying for one before checking what you can do to improve your odds in getting a good deal.

While credit scores may be tedious when trying to buy a house, they’re there for a reason. Understanding that reason is one of the first steps towards finding an incentive to improve you own credit score. A rule of thumb should be not to consider applying for mortgages if your credit score is lower than 650, as you will definitely get a lousy deal out of it.

Best Credit Score for Buying a House is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Many credit card holders mistakenly think they’ll be OK making minimum monthly payments, only to one day realize they’re on the hook for thousands of dollars in interest. Instead of remaining stuck in the revolving door of credit debt, consider taking out an alternative loan to pay off those debts and get back on firm financial footing.

Here are the three most compelling reasons we know to drop your credit card debt as soon as possible.

1. Large balances hurt your credit

Using credit cards for small purchases each month and paying them off right away can boost your credit score because it proves you can manage debt, but large balances do the opposite.

Lenders use your debt-to-income ratio to determine whether you are financially stable enough to take on new loans or credit lines. If you’re using more than 30 percent of your available credit and paying only the minimum payments, you appear as a risky borrower and chances of approval drop significantly.

Taking a loan to pay off high credit card balances is one way to regain financial control and improve your score. By paying off your high interest debt with a low interest monthly payment loan, you will be back to building positive credit and saving hundreds of dollars in interest, which leads us to number 2…

2. You will likely save money

Interest rates on credit cards can vary greatly, ranging from anywhere around 11% and skyrocketing up to 79.9% APR. While interest rates don’t affect those who pay off the card balance in full each statement period, they matter to many of us who unfortunately keep an unwanted balance on our credit cards.

Interest will accrue on top of your remaining balance at the end of the month and your outstanding debt will increase. This may be a small amount for those with minimal balances, but could add on hundreds of dollars each month for larger sums.

3. Credit card debt spirals quickly

Having one or two high-interest cards may seem manageable at first. But all it takes is one financial setback to become dependent on those cards and rack up serious debt.

It’s natural during significant moments in our lives to incur some amount of debt (emergencies, moving, pregnancy, etc.) But just as important as those moments are, it is equally important during those times not to spend frivolously.

“Paying off large credit card balances can really be a challenge, especially if you have multiple cards, payments, and interest rates with no end date in sight,” says Lisa Nestor, research manager at Payoff, an alternative lender that specializes in credit card debt.

Nestor recommends an “organize and optimize” approach to paying down cards, whether that’s using the snowball strategy to manage small debts and work up to the the larger ones, or the laddering method of tackling your highest interest accounts first.

Don’t be controlled by credit cards

Let’s face it, credit cards are a necessity in our lives but they don’t need to control us. Removing high interest debt will not only alleviate a major stressor in your life but can also save you money. It also increases your chances of being able to finance more important milestones — like starting a family, traveling , or buying your first house.

Alternative finance is a great option for those who have looming high interest credit card debt. By consolidating your cards into a potentially lower interest rate could save you money, help you save for the future, and build positive credit. However, this method may not be for everyone, it is important before taking out a loan to research the right course of action for your situation.   

If you’re interested in seeing what rates you would qualify for from these alternative lenders, check out this tool below and see your options:

3 Reasons to Pay Off Your Credit Cards Now is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

That said, a balance transfer isn’t a magic bullet. Transfers don’t eliminate your credit card debt; they just move it to another card. There are usually fees involved, and in some cases, they may be high enough to cancel out any savings you may incur from lower-interest rates. Plus, you should know that the lower interest rates on balance transfer cards don’t last forever. Once the introductory period has ended, you’ll have to pay interest at a rate similar to that of your old card.

Save Money on Credit Card Interest

If you’ve got credit card debt, chances are you’re paying a high rate of interest. Not only can high interest rates mean a longer repayment period, but they also mean you pay more out of pocket for the privilege of borrowing that money. For example, if you owe $10,000 at 18 percent interest and just make the minimum payment of $200, you’ll barely make a dent in your debt. After all only $50 of that was actual debt and the rest was interest, meaning that after a year, you’ll have only truly reduced your credit card debt by $600.

However, balance-transfer credit cards often offer zero percent interest for an introductory period, allowing you to save quite a bit of money on interest while paying down your balance at the same time. By the time your introductory period ends, you’ll be that much closer to paying off your credit card debt and will have a lower balance to accrue interest on.

Make the Most of Your Balance Transfer

Many people use balance transfers as an opportunity to get out from under high-interest rates so they can make a real dent in their credit card debt. In fact, one of the biggest benefits of a balance-transfer credit card is that it can be a great tool for helping you pay off your debt. If you’re able to consolidate multiple credit card balances onto a single card, doing so could free up some room in your budget, allowing you to pay down your credit card debt faster. Even if you’re only carrying a balance on one card, your whole monthly payment will go toward the principal, saving you money and shrinking your balance more quickly. Consolidating your credit card debt onto a single card can simplify your financial life, leaving you with just one account to worry about.

Balance-transfer cards often come with other perks, too. You might use the opportunity to apply for a card that offers cash back, travel rewards, discounts, or other perks. Just remember that you’ll probably have to pay interest on new purchases you make with the card.

Things You Should Know

While a credit card balance transfer can save you money and be a valuable financial tool, you should know that it’s not a solution to your credit card debt. You’ll still owe the money, and you’ll still have to pay it back, even if you do save on interest. Most balance-transfer cards charge a one-time fee for the privilege of transferring a balance, and that fee may range from 2 to 5 percent of the total balance being transferred. That means if you’re transferring a large balance, you could end up paying several hundred dollars in fees. Find out if it’s worth it by calculating the amount of interest you’ll save over the introductory period and comparing that number to the one-time fee.

Remember that the low-introductory interest rate won’t last forever, either. Introductory rates on balance-transfer cards may last for only a few months. However, there are plenty of deals that offer zero percent interest on balance transfers for 18 months or longer. The longer the interest rate lasts, the more money you’ll save, so look for a card with a long introductory rate period.

Balance-transfer credit cards can save you hundreds or even thousands of dollars in interest on your credit card balance. The money you pay during a zero-interest period goes directly to your principal, lowering your balance and saving you money in both the short and long-term. By the time your introductory period is over, you’ll be surprised at how much you’ve been able to pay off — and how much closer you are to your financial goals.

How Credit Card Balance Transfers Can Help You Eliminate High Interest is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

According to an October survey by CompareCards, most people aren’t using their credit cards responsibly.

That may not come as a shock to anyone who has used a credit card and considers themselves responsible with it. And definitions of “responsible use” of credit cards vary.

But if you think that not paying off your credit card balance in full each month is responsible, think again. You’ll be paying interest on purchases you couldn’t afford in the first place.

+50% think OK to carry credit card balance

The survey found that although many consumers have multiple credit cards and carry balances, the majority assert that they use their credit cards responsibly.

“Even though more than half of respondents don’t fully pay off their credit cards on a monthly basis, they believe they are using them responsibly,” said Chris Mettler, founder of CompareCards, in a statement. “This is concerning, as it reveals that many consumers may not be aware of just how much their spending habits impact their credit and long-term debt.”

Other survey findings include:

• Almost a third (31%) of those surveyed have four or more credit cards, and an equal amount also use their credit cards very often for purchases.
• A quarter of participants have less than a total debt of $100 across all of their credit cards, while on the opposite side of the spectrum, 21% have $5,000 or more in total debt.
• Consumers vary in how often they fully pay their monthly credit card bill. 35% always pay in full, 19% sometimes pay in full, and 17% never pay in full.
  
• Despite the varying behaviors of the participating consumers, a majority (71%) believe they use their credit card(s) responsibly.
• Cash back rewards and low interest rates were the top two reasons consumers open a new credit card.

Pay in full or don’t buy

We’ll repeat a mantra we often consider when pulling out a credit card: If you can’t afford to pay for the item in full when the bill arrives, walk away.

You’re only setting yourself up for more debt and delaying payment on something you can’t afford. It can be a financial mistake you’ll regret.

Eat your financial veggies by paying your credit card balance in full each month.

You’re Not Really Responsible With Your Credit Card is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.