Top 7 Credit Card Mistakes to Avoid

#1: Trading too many credit card applications for retail discounts.

Many credit scoring formulas interpret a flurry of new credit cards and risky and impulsive, even if your history indicates that you pay off promotional purchases promptly. Meanwhile, your credit score can suffer when you close unused accounts, making it hard to get the kind of credit cards you really need.

#2: Hitting your credit limit.

You can measure your credit utilization ratio as the percentage of credit you’ve got left on a given card. Take any of your cards too far above 50% utilization, and many credit scoring formulas penalize you. Avoid balance transfers that use up your new credit lines, unless you want to pay higher interest rates and insurance premiums.

#3: Missing a credit card payment.

Even with lighter penalties promised by new credit card regulations, forgetting to send your check in on time can hurt your long term credit score. Some banks report a late payment for as long as two years.

#4: Ignoring your budget and buying on a whim.

Malls don’t always mix well with shiny, new credit cards. Impulse buying can kill your budget, robbing you of the cash flow you need to meet your long term savings goals.

#5: Co-signing on credit cards.

Unpaid debt can ruin relationships between family members or friends. It may sound like tough love, but emotional support does more for the people in your life than cash ever can.

#6: Missing the fine print on special offers.

Teaser rates may convince you to make that special purchase, while bonus rewards can help you switch credit cards. Either way, failing to adhere to the strict terms of a promotional offer can cost you dearly. Miss a payment or a payoff deadline and you could face a lengthy list of fees.

#7: Avoiding credit card collectors.

Everyone has bad weeks, or even months. Communicate with your lenders when you’re over your head. Negotiating with the original creditor can keep you from facing harsh professional collectors.

You can prevent any of these seven mistakes by getting serious about managing your credit cards more effectively. Use a calendar or a software tool to track your spending throughout the month. You can still splurge from time to time, but keep thinking about how good you can feel when you’re debt free.

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Lenders have always found a way to create revenue. While Congress’ legislative efforts in regulating “usury”, lenders leapt on an end-around tactic to boost balance transfer fees and most likely will drop easy offers to consumers with less than excellent credit scores.

Regulations, Australia, and the Credit Card Industry

What may have caused an unbalance in the economy by quick and reckless lending may end up stabbing consumers in the back. You’ll find fees coming home to roost when you attempt to transfer balances to new credit cards. You can kiss seven to ten percent rates farewell!

If what happened in Australia six years ago is any indication how lenders react, merchants and consumers may be in for tough times. Down-under merchants complained about unfair interchange fees. Consequently the fees were sliced, but lenders battled back by eliminating rewards programs, increasing annual fees on Gold Cards, and reducing grace periods for applying interest on purchases. Ouch!

Caps may go a long way in slowing down profit-takers among the lenders, but when have you ever seen the balance shift in favor of debtors? If merchants inherit higher fees, won’t consumers pay in the end? In return, hard-hit consumers reeling from the economic downturn are cutting spending. It can snowball.

In the short term, caps may have made for a great beginning in reigning in gluttonous lenders, but somehow you can bet your borrowed dollar that we’re going to face the music.

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According to an article that I just ran across, all you have to do is call them up and ask for an “over-the-limit block.” This block will work for all Chase cards except their Signature cards, which have no preset spending limit, and thus aren’t subject to these sorts of fees.

Something to watch out for is that these blocks don’t work on all purchases. For example, if a gas pump initially authorizes your card for a certain dollar amount and then you wind up purchasing more, you might end up exceeding your limit.

Check it out. While you might appreciate the courtesy of being allowed to exceed your limit, it comes at a price. If you want to protect yourself against these sorts of fees, all you need to do is call the number on the back of your card and ask.

If you’re aware any other issuers that do the same, please let me know.

Via: CreditMattersBlog.com

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Here’s the Deal

Simply apply for a 0% credit card and then use it to buy up as much cash as you can from the Mint. When your cash arrives, use it to pay off other debts. Voíla! A homemade 0% balance transfer with no fees. And you might even earn some credit card rewards while you’re at it!

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Here’s the Deal

Just hop on over to the US Mint and order $250 or $500 worth of coins. They come boxes of 250, with a limit of two boxes. You can pay with a credit card and, as noted above, shipping is free. Also note that there’s no explicit limit on the number of orders that an individual can place, so you should be able to do this over and over.

If you have (for example) an Amex Blue Cash rewards card, this strategy will generate $7.50 in rewards for every two boxes purchased (1.5% rewards on $500 in purchases). If you don’t want the coins, you can always spend them or just deposit them at the bank.

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But wait… It gets better… If you open your account over the phone, you can make an initial deposit of up to $1k with your credit card. In other words, you can earn a nice little dollop of credit card rewards on top of the bonus.

Via: Money Tipper

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1. Make copies of everything in your wallet, front and back. This is actually a proactive step that you should do right now, before you run into trouble. That way you’ll have a record of what was lost and how to contact the issuers. Just be sure to keep these copies in a safe place.
2. Call your card issuers and report the loss. In order to minimize your liability, you should make these calls as soon as you realize that there’s a problem. Can’t remember what was in your wallet? No problem. Just look at your photocopies (Step 1). You might also consider following up with a written account of what’s happened, when you reported it, etc. They should be able to shut down your old accounts, and also issue new cards.
3. Place a fraud alert on all three of your credit reports. I’ve posted detailed instructions for placing a fraud alert on your credit record in the past. The good news is that the three agencies should share this information, so you really only have to contact one of them. If you detect fraudulent activity, you might want to extend this to a seven-year victim statement.
4. If your Social Security card is missing, report it. Call the Social Security Administration at 1-800-269-0271. Better yet, remove your Social Security card from your wallet right now. No sense in carrying it around with you. Same goes for your driver’s license — if you lose it, call your local DMV. Pronto.
5. File a police report. Last but not least, report the loss/theft to your local law enforcement agency (or the police in the area where it occurred).

That’s it. Hopefully you won’t run into any problems, but if you do, this list of tips should help you steer clear of any major problems.

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• What’s the introductory rate?
• How long does the introductory rate last?
• Are there any balance transfer fees?
• Does the card have an annual fee?
• What happens to the APR after the intro rate expires?
• Does the intro rate cover both purchases and balance transfers?

Ideally, you should be looking for a 0% balance transfer credit card whose intro rate runs for at least 12 months. On top of that, you should try to avoid paying balance transfer fees. Unfortunately, it’s getting increasingly difficult to find these two things together.

Virtually all of the no fee 0% balance transfer offers that are out there today run for six months. If you want a 12-15 month 0% period, you’ll likely have to pay a fee. In this case, be aware that a 3% fee is standard, but that some issuers cap their fees at $75 or $90, whereas others do not.

While we’re on the topic of fees, you may have noticed that I didn’t mention late fees. The reason for this is that virtually every credit card issuer will sock you with exorbitant late fees if you don’t pay on time. While there might be minor differences in the magnitude of the fees, it’s pretty much the same everywhere you go. Automate your payments so you won’t have to worry about it.

One fee that you should definitely try to avoid, however, is the annual fee. There are a ton of options out there that don’t charge an annual fee, so don’t throw your money away.

The issue of what happens to the APR after the intro rate expires is important, it’s not a top priority. If the APR will jump dramatically after the introductory period (and almost all of them do), you can simply transfer your balance to a new card before the promo period expires.

Finally, while it would be great to find a card that offers 0% on purchases as well as balance transfers, this shouldn’t be viewed as a deal-breaker. If your card of choice offers 0% on purchases, great. If not, just execute the balance transfer and then put the card away until you pay it off.

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Here’s a quick bit of math: Start by applying for the Discover More card. Once you have it, go to one of the malls participating in their holiday promo and spend $500. At that point, you’ll qualify for the $50 signup bonus. You can then take your receipts to mall customer service and trade them in for $40 worth of gift cards. That works out to $90 in rewards on $500 in spending, or 18% cash back.

If you really want to make the most of this deal, spending an extra $100 will qualify you for another $20 gift card. That works out to $110 in rewards on $600 in spending, or 18.3% cash back. Not too shabby.

Hat Tip: Blueprint for Financial Prosperity

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Credit Card Issuers Reducing Limits

As I noted previously, card issuers have started reducing their customers’ limits as credit has become tighter. Here’s how to protect yourself:

• Keep a close eye on your mail for any notifications of a change in your limit.
• Login and check your account regularly. While issuers are supposed to provide you with prior notice of any changes, you can never be too careful.
• Save room under your limits for true emergencies. Better yet, build up an emergency fund so you don’t have to rely on credit in a pinch.

Credit Card Issuers Increasing Rates

As credit has dried up, issuers have also started charging more for it. Here’s what you can do to avoid overpaying:

• Keep a close eye on your mail for any notifications of rate changes.
• Pay down your balances, preferentially targeting the balance with the highest interest rate first.
• Move your balances to a lower rate card — ideally one with a 0% balance transfer offer.

Credit Card Issuers Tightening Standards

Given all of the recent problems with people failing to make good on their debt obligations, credit card issuers have also tightened their approval standards. Here’s what you can do to make sure you’re in a good position to get credit when you need it:

• First and foremost, stay current on all of your payments.
• Keep a close eye on your credit report.
• Dispute any inaccuracies to get them removed from your record.
• Do whatever else you can to improve your credit score.

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