AuthorMarsha Hayes

Truth About Reward and Store Credit Cards

On the surface, reward cards are a great way to make a few extra dollars or grab some air miles without increasing your spending or your debt. If you spend a lot of money at a particular shop, store cards will seem like an equally beneficial prospect. But these cards exist for a reason—they’re there to make more money for the providers and the retailers, not you.

Sure, reward/store cards have other benefits if you use them properly, but there are a host of disadvantages and hidden terms that you need to be aware of before signing on the dotted line. 

What are Store Cards?

Store cards are tied to specific stores and offered by chains of retailers. These cards work just like traditional cards and are often branded by networks like Visa and MasterCard. The difference is that they can only be used in the issuing stores and their rewards are tied to those stores.

In essence, they are store loyalty cards that come with a lien of credit attached. 

What are Reward Cards?

Reward cards are also tied to credit card networks, including American Express and Discover, as well as Visa and MasterCard. They award points every time they’re used for qualifying purchases and these points can then be swapped for air travel and other benefits. 

Some reward schemes award a specific amount of cash back, often fixed to 1% or 2% of purchases made on specific items, such as groceries or utility bills.

How Can Providers Offer These Rewards?

If a provider offers you cash back every time you spend money on your credit card, someone has to foot the bill. Many consumers assume that the credit card network covers the cost, and to an extent, they do. But it’s not quite as simple as that.

Every time you use your credit card to make a purchase, the retailer is charged a fee, often between 1% and 3% of the purchase. This is the network’s charge. With reward cards, this fee increases, and the extra money is used to fund the rewards program.

As a result, retailers are not exactly happy with these programs as they drive their costs up and reduce their profits. The only way around this, is to increase the cost of the product or, more likely, to reward customers who pay with cash/debit. Retailers are not allowed to add a surcharge for credit card use, but there’s nothing stopping them from choosing which cards they do and don’t accept.

Your local Mom & Pop enterprise isn’t being antiquated and old-fashioned by refusing credit cards. They just can’t cover the costs. 5% may not sound like a big deal, but for retailers with minimal buying power and the massive overheads of running a brick-and-mortar store, 5% can be a deal breaker.

Smaller retailers are fighting back against reward cards while bigger ones are embracing them by adopting their own store cards. With a store card, they have more say, more control, and they know that those small losses will be offset by the increased purchases.

Issues with Store Credit Cards

Store cards carry a big risk and have far few benefits than reward cards. The advantages of these cards are obvious: If you shop a lot in a particular place, you can save money via the cash back schemes. 

They can also help with emergency purchases, providing you clear the balance in full. But, while the benefits are obvious, the same can’t be said about the disadvantages.

Con 1: They Have High Interest Rates

The average credit card interest rate in the United States is around 16%. The average rate for store cards is over 20%. That 4% may not seem like much, but if you don’t repay your balance every month that interest will compound, grow, and cost you a small fortune. 

At 16% with a $10,000 balance and a 60-month repayment term, you’ll pay $243 a month and over $4,000 in total interest.

Increase that rate to 20% and your monthly payment grows by $20 while your total interest increases by nearly $1,500. The longer you leave it and the smaller your monthly payments are, the greater that difference will be.

For example, if you repay just $200 a month on that balance, the difference between 16% and 20% is 26 extra months and close to $5,000. Of course, store cards rarely offer such high limits, but this is just as example to show you how much of a difference even the slightest percentage increase can cause.

It’s worth keeping this in mind if you ever apply for a traditional rewards card. Getting rewards in return for a higher APR is great if you repay your balance in full every month and terrible if you don’t.

Con 2: They Have High Penalty Rates

If you miss a payment on your store credit card you could be hit with a penalty APR as high as 29.99%, as well as a late payment fee of $39. The rates are high to begin with, but these penalty rates are astronomical and will make a bad situation worse.

That’s not all, as some providers are known to be very unforgiven when it comes to missed and late payments. In some cases, your account will default even if you underpay just once and just by a few dollars. 

Con 3: They Have Low Credit Limits

Retailers are not lenders. They don’t have the time, funds or patience to chase debts and deal with collection agencies. As a result, they don’t offer high credit limits and generally you’ll get a fraction of what an unsecured credit card might provide you with.

This might not seem like much of an issue. After all, a smaller credit limit means you’re less likely to accumulate large amounts of debts. However, this has a massively negative impact on your credit score that few borrowers consider.

30% of your credit score is based on something known as a credit utilization ratio. This looks at the total available credit and compares it to the debt that you have accumulated. If you have several cards with a combined credit limit of $10,000 and a balance of $5,000, then your ratio is 50%, which is considered to be quite high.

If a store card is your only account and you spend $450 on a $500 limit, then you have a credit utilization ratio of 90%, which will reduce your score. Your credit report is also negatively affected by maxed-out credit cards, a feat that’s much easier to achieve when you have a low credit limit.

Con 4: There Are Better Options

It’s better to have one good reward card than multiple store cards. The former will provide you with far better interest rates and terms, while the latter will hit your credit report with several hard inquiries and new accounts. 

A rewards card will still benefit you when shopping at those stores and will also provide you with a wealth of other benefits.

Con 5: You May Spend More

Store cards are not designed to make your life easier and give you a few freebies. Regardless of what the store tells you, they’re not made to reward loyalty, they’re made to encourage spending. 

This doesn’t always work, and research suggests that many individuals use reward cards just like they would normal cards. But for a small minority, the idea of acquiring points is enough to convince them to spend more than they usually would.

Some good can be good debt, such as when it’s used to acquire an asset or something that won’t depreciate. But very rarely do we use credit cards for this purpose and generally, if you’re spending more on a store card it means you’re wasting more money on things you don’t need.

Con 6: You Can’t Use Them Anywhere Else

A store card can only be used in that particular store. This renders it redundant as an emergency card and also means you’re encouraged to shop in that one place. You don’t have a chance to shop around and find the cheapest price; you may spend more just to use your card and get the benefits, with those benefits rarely covering the additional money you spend.

What About Reward Cards?

Some reward cards have very high rates as these rates are used to offset the rewards program. However, this isn’t always the case, because, as discussed above, networks often charge retailers more to offset these purchases and therefore don’t always need to cover the costs themselves.

Some credit cards, such as the Discover It, offer solid reward schemes and would also be included on any list of the best non-reward credit cards. It’s a solid all-rounder and it’s not alone. However, many reward cards charge high annual fees and penalty rates, just like you’ll find with a store card.

It’s important to study the small print and make sure the card is viable. If you’re going to clear the balance every month, a slightly higher interest rate won’t hurt, especially if it comes with some generous rewards. But if there is any doubt and even the slightest chance that you won’t clear the balance, it’s always best to focus on a low-interest rate first.

Even the most generous 5% cash back reward card will not offset the losses occurred by paying a few more percentage points of interest.

Will Reward/Store Cards Affect my Credit Score?

Credit cards trigger hard inquiries, which can reduce your credit score by up to 5 points. This is true for every credit card that you apply for. Rate shopping can combine multiple inquiries into one if they are for the same type of credit, but this doesn’t apply to credit cards.

A new account will also impact your score. This impact is often minimal and if you keep up with your repayments then it will vanish in time. However, if you miss a payment, max-out your card or increase your credit utilization score, it could have a detrimental effect on your score and your finances.

Keep store cards to a minimum and only sign up if you’re 100% sure you’re getting a good deal that will benefit you in the short-term and the long-term.

Truth About Reward and Store Credit Cards is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

5 Personal Finance Products To Be Thankful For This Thanksgiving (Especially During COVID-19)

This Thanksgiving take a minute to think about what you’re thankful for. To make things easy for you, we’ve compiled a list of personal finance products and services to be thankful for this year. Nine months into a pandemic, it’s hard to feel grateful. But here are some personal finance products I’m certainly glad exist, since they save me major time and money – especially in these trying times.

The post 5 Personal Finance Products To Be Thankful For This Thanksgiving (Especially During COVID-19) appeared first on Money Under 30.

Source: moneyunder30.com

Real Time Rewards Coming To U.S. Bank Cash+, $25 Bonus Ending

U.S. Bank has sent out an e-mail to Cash+ cardholders letting them know about some changes to redeeming rewards. These changes will go into effect on February 15, 2021.

  • Real time rewards. This has been available on other cards for some time, but after you make a purchase of $10 you receive a test message and you can reply to this with ‘REDEEM’ and it’ll use your points against this purchase.
  • Paypal pay with rewards. You’ll be able to use rewards to pay via PayPal
  • Rewards will expire 3 years after earning them.
  • Automatic monthly cash rewards redemptions are ending.
  • No bonus $25 when redeeming $100 in cash rewards.

As far as I know you can only do the $25 bonus once now anyway, so not a huge loss for those who have already done it. The real time rewards and paypal changes are nice as you no longer need $20 in rewards to redeem but only $10. Other cards offer a bonus when using real time rewards on certain purchases (e.g travel), doesn’t look like that’s the case for Cash+ but we might see a bonus for first time use in the future (my speculation).

Hat tip to Travel With Grant

Source: doctorofcredit.com

Which United Airlines credit card should you choose?

If you regularly fly with United Airlines or you live in or near Chicago, Denver, Houston, Los Angeles, Newark or San Francisco – the airline’s hubs – picking up an United Airlines credit card could make a ton of sense.

Not only can a United credit card help you earn MileagePlus miles faster, but you might also get a few handy perks, including free checked bags.

At the moment, United Airlines offers a handful of co-branded United credit cards for individuals or small business owners. But, how do you know which United Airlines credit cards are best?

Our guide aims to help you compare options so you wind up with the right airline credit card for your needs and your travel goals.

See related: United MileagePlus Dining Guide

Here’s the roundup:
United Gateway Card

  • Best card for big United spenders: Chase United Club Infinite Card
  • Best card for frequent flyers: Chase United Explorer Card
  • Best card for small business owners: United Business Card
  • Best card for frequent business travelers: United Club Business Card
  • Guide to United Airlines credit cards

    Compare fees, rewards, perks and extras:  

    United Explorer Card

    Annual fee
    • $95, waived the first year
    Sign-up bonus
    • 70,000 miles if you spend $2,000 in first 3 months
    In-flight discount
    • 25%
    No foreign transaction fees
    • Yes
    Extra bonus on certain categories
    • 2 miles per dollar spent on United Airlines, hotel and restaurant purchases, including delivery services like Caviar, DoorDash, Grubhub and Seamless
    • 1 mile per dollar spent everywhere else
    Limit on miles earned
    • No
    First checked bag free
    • Yes, for you and a companion on the same reservation
    Priority boarding
    • Yes, for you and companions on the same reservation
    Reduced mileage awards
    • No
    Redeem miles rebate
    • No
    Benefits
    • 2 United Club one-time passes
    • Tickets bought using miles eligible for free upgrades
    • Trip delay, baggage and auto rental insurance
    • Concierge service
    • Chase’s Luxury Hotel & Resort Collection perks, including breakfast for 2, free Wi-Fi and meal/spa credits
    Global Entry/TSA Precheck credit
    • Yes, up to $100 every four years
    Card network
    • Visa

    Chase United Club Infinite Card

    Anual fee
    • $525, waived first year
    Sign-up bonus
    • None
    In-flight discount
    • 25%
    No foreign transaction fees
    • Yes
    Extra bonus on certain categories
    • 4 miles per dollar spent on United purchases
    • 2 miles per dollar spent on dining
    • 2 miles per dollar spent on all other travel (including other airlines)
    • 1 mile per dollar on all other purchases
    Limit on miles earned
    • No
    First checked bag free
    • Yes, 2 bags for you and 2 for a companion on the same reservation
    Priority boarding
    • Yes, for you and companions on the same reservation
    Reduced mileage awards
    • No
    Redeem miles rebate
    • No
    Benefits
    • United Club and Star Alliance lounge membership
    • Priority check-in and screening
    • Waived fees on last-minute tickets bought with miles
    • Miles tickets eligible for free upgrades
    • Trip delay, baggage and auto rental insurance
    • Concierge service
    • Chase’s Luxury Hotel & Resort Collection perks, including free breakfast for 2, free Wi-Fi and meal/spa credits
    Global Entry/TSA Precheck credit
    • Yes, up to $100 every four years
    Card network
    • Visa

    Chase United Business Card

    Annual fee
    • $99, waived the first year
    Sign-up bonus
    • 60,000 miles after spending $3,000 in first 3 months
    In-flight discount
    • 25%
    No foreign transaction fees
    • Yes
    Extra bonus on certain categories
    • 2 miles per dollar spent on United Airlines, restaurant, gas and office supplies purchases
    • 2 miles per dollar spent on transit and commute purchases, including taxis, tolls and rideshares
    • 1 mile per dollar spent on everything else
    Limit on miles earned
    • No
    First checked bag free
    • Yes, for you and a companion on the same reservation
    Priority boarding
    • Yes, for you and companions on the same reservation
    Reduced mileage awards
    • No
    Redeem miles rebate
    • No
    Benefits
    • 2 United Club one-time passes
    • 5,000 bonus miles on your account anniversary if you have both a United Business Card and personal United card
    • $100 annual United travel credit after 7 United flight purchases of $100 or more
    • Trip, baggage and car rental insurance
    Global Entry/TSA Precheck credit
    • No
    Card network
    • Visa

    Chase United Club Business Card

    Annual fee
    • $450
    Sign-up bonus
    • 50,000 miles after spending $3,000 in first 3 months
    In-flight discount
    • 25%
    No foreign transaction fees
    • Yes
    Extra bonus on certain categories
    • 2 miles per dollar spent on United Airlines purchases
    • 1.5 miles per dollar spent on everything else
    Limit on miles earned
    • No
    First checked bag free
    • Yes, 2 bags for you and 2 for a companion on the same reservation
    Priority boarding
    • Yes, for you and companions on the same reservation
    Reduced mileage awards
    • No
    Redeem miles rebate
    • No
    Benefits
    • United Club and Star Alliance membership
    • Priority check-in and screening
    • Concierge service
    • Trip, baggage and car rental insurance
    • Discoverist status in World of Hyatt loyalty program
    • President’s Circle Elite status in Hertz Gold Plus Rewards loyalty program
    • Chase’s Luxury Hotel & Resort Collection perks, including free breakfast, free Wi-Fi, dining/spa credits and upgrades
    Global Entry/TSA Precheck credit
    • No
    Card network
    • Visa

    Lifetime Globalist

    How to qualify
    • 1,000,000 base points over the course of your membership
    Base-point rate
    • 6.5 points/$1
    Benefits
    • Receive Globalist benefits indefinitely, with no requirement to qualify for status each year

     

    Best United Airlines credit card with no annual fee: United Gateway Card

    If you’re looking for a United rewards card with no annual fee, the United Gateway Card is the best (and only) option to consider. This card starts you off with 10,000 bonus miles when you spend $1,000 on purchases in the first three months your account is open. You also earn:

    • 2 miles per $1 on United flights, purchases made at gas stations and on transit and commuting
    • 1 miles per $1 on all other purchases

    As an added bonus, you’ll even rack up 3 miles per $1 on up to $1,500 in grocery store spending per month through Sept. 30, 2021. Aside from not charging an annual fee, other United Airlines credit card benefits include 25% off in-flight purchases and no foreign transaction fees. That means this card is rather limited in terms of perks, but that’s par for the course when it comes to credit cards with no annual fee.

    Best United Airlines credit card for frequent flyers: United Explorer Card

    Frequent flyers would be better off with a United credit card with more benefits, which they’ll find with the United Explorer Card. First off, you can earn 70,000 bonus miles – 60,000 when you spend $3,000 on purchases in the first three months your account is open and another 10,000 bonus miles when you spend $6,000 in total purchases in the first six months of account opening. In terms of daily spending, you can rack up:

    • 2 miles per $1 on United purchases, dining including delivery and takeout and hotels booked directly
    • 1 mile per $1 spent on other purchases

    United Airlines credit card benefits you’ll receive include two United Club passes, a first free checked bag, a $100 credit toward Global Entry or TSA Precheck membership, priority boarding, 25% off in-flight purchases and no foreign transaction fees. Not only are these perks ideal for frequent United flyers who want a convenient travel experience, but they can help cardholders save money, too. This card does charge a $95 annual fee, but it’s waived the first year.

    Best United Airlines credit card for big United spenders: United Club Infinite Card

    If you’re a big United spender and you fly with the airline all the time, you’ll probably want a card that lets you rack up a ton of miles while also affording you a comfortable travel experience. The United Club Infinite Card is perfect in either case. This card replaced an older version of the United Club Card, but it offers even better rewards and perks designed with luxury travelers in mind.

    As a cardholder, you’ll earn:

    • 4 miles per $1 spent with United Airlines
    • 2 miles per $1 spent on dining (including takeout and delivery) and travel
    • 1 mile per $1 spent on all other purchases

    In terms of perks, you won’t be disappointed. Not only does this card give you membership in the airline’s United Club lounges ($650 value), but if you travel internationally, you will be able to access lounges for any airlines that are part of the Star Alliance, including Aer Lingus, Singapore Airlines and Lufthansa. Meanwhile, you also get two free checked bags for yourself and a traveling companion on the same reservation, as well as priority check in, priority boarding, priority securing screening, 25% off in-flight purchases and no foreign transaction fees. You’ll also get a $100 credit toward Global Entry or TSA Precheck membership.

    There is one major downside to this card: It comes with a $525 annual fee and there is no sign-up bonus. On the bright side, the annual fee is waived for your first year.

    See related: When is a credit card annual fee worth it?

    Best United Airlines credit card for small business

    If you’re a small business owner, you may also want to apply for one of the two United Airlines credit cards for business. The United Business Card is a good option for small business owners who travel for work or for leisure a few times per month, and this is due to its cardholder benefits and low annual fee.

    You’ll start off by earning 60,000 miles when you spend $3,000 on purchases within the first three months of account opening. You’ll also earn:

    • 2 miles per $1 spent on United purchases, dining including takeout and delivery, gas stations, office supply stores, local transit and commuting
    • 1 mile per $1 spent on other purchases

    Like all good United Airlines credit card offers, the United Business Card also comes with a handful of perks which include 5,000 miles on your cardholder anniversary each year when you carry a business credit card and a personal credit card from United Airlines. You’ll also receive two one-time United Club passes, a first checked bag free, priority boarding, a $100 United travel credit when you make at least seven purchases of $100 or more with United each year, 25% off in-flight purchases and no foreign transaction fees. A $99 annual fee applies, but it’s waived the first year.

    Best United Airlines credit card for business travelers

    Finally, United Airlines offers a business credit card that is perfect for frequent business travelers who want to earn a ton of miles and score lounge access when they fly. The United Club Business Credit Card starts you off with 50,000 miles when you spend $3,000 on purchases within the first three months of account opening. You’ll also rack up:

    • 2 miles per $1 spent United purchases
    • 1.5 miles on everything else

    While this card does have a $450 annual fee, you’ll get plenty of value when it comes to the perks you receive. Not only will you get a United Club membership valued at $650, but you’ll get a first and second free checked bag, priority check-in, security screening and baggage handling, 25% off in-flight purchases and no foreign transaction fees.

    Who should get a United Airlines credit card?

    The best United Airlines credit card offers make it easy to rack up miles for each dollar you spend, and most offer a generous bonus when you meet a minimum spending requirement. With that being said, United Airlines credit cards are really best for people who are loyal to the airline, or those who live in a United hub and wind up flying with the airline often by default.

    If you aren’t loyal to United Airlines or you want more options when it comes to cashing in your points, you may also want to consider a Chase travel credit card that lets you transfer your points to United at a 1:1 ratio, or redeem for other types of travel.

    As an example, both the Chase Sapphire Reserve and Chase Sapphire Preferred Card* let you earn points you can transfer to United, as well as other airline and hotel partners like Southwest, British Airways, Emirates, World of Hyatt, Marriott Bonvoy and more. Chase credit cards also let you redeem points for travel through the Chase Ultimate Rewards portal, which gives you even more flexibility.

    See related: How to earn and use Chase Ultimate Rewards points

    How much are United miles worth?

    Based on our internal comparisons, United miles are worth approximately 1.5 cents each. This means that, generally speaking, 60,000 miles are worth approximately $900. However, keep in mind that you may get more value if you redeem miles for premium flights or international flights.

    Fortunately, there are plenty of ways to get significant value out of your United miles, whether you want to travel the world or enjoy a relaxing trip closer to home.

    *All information about the Chase Sapphire Preferred Card has been collected independently by CreditCards.com and has not been reviewed by the issuer. This offer is no longer available on our site.

    Source: creditcards.com

    Tips to Consolidate Credit Card Debt

    Tips to Consolidate Credit Card Debt

    Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the issuer.

    If left unchecked, extensive amounts of credit card debt can cripple your finances. The good news is there are many ways to handle debt, though each requires a dedicated effort on your part. But if you can manage to consolidate credit card debt, you will reduce your burden relatively quickly. In the process, you’ll avoid the exorbitant interest rates that accompany most credit cards. Below we take a look at some of the most effective techniques you can use to make this goal a reality.

    Find Out Your Credit Score

    Before you can work on improving your credit and minimizing your debt, you have to know where you currently stand.

    Many credit card issuers allow cardholders to see their FICO® credit score free of charge once a month, so check out if any of your cards include that free credit score. The three major credit bureaus – TransUnion, Experian and Equifax – also give out free annual credit reports. If that’s not enough, websites like Credit Karma™ and Credit Sesame provide a free look at your credit score and reports as well.

    It is vital to review your credit report with a fine-tooth comb to ensure the accuracy of the information. If you find errors be sure to let the credit bureau in question know so the issue can be eradicated as soon as possible.

    Zero Interest Balance Transfer Cards

    Although it might seem counterintuitive to apply for another credit card to lessen your debt, a zero interest balance transfer card could really help. These cards typically include an introductory 0% balance transfer Annual Percentage Rate (APR) for six months or more. This ultimately allows you to move debt from one account to another without incurring more interest. However, once the introductory offer concludes, any leftover balances will revert to your base APR.

    These offers aren’t totally free, though. Most cards also charge a balance transfer fee that’s usually between 3% and 5% of the transfer. Even with this initial payment, you will almost always still save money over leaving your debt where it stands currently.

    If you want to consolidate credit card debt, here are three different balance transfer credit cards you could apply for, with varying introductory interest rates and transfer fees:

    Balance Transfer Credit Cards Card Intro Balance Transfer APR Balance Transfer Fee Chase Slate 0% APR for first 15 months; then 16.49% to 25.24% Variable APR, depending on your creditworthiness No fee for first 60 days; then $5 or 5% of each transfer, whichever is greater Citi Double Cash Card 0% introductory APR for 18 months from date of first transfer when transfers are completed within 4 months from date of account opening; then 15.49% to 25.49% Variable APR, depending on your creditworthiness $5 or 3% of each transfer, whichever is greater BankAmericard® credit card 0% APR for first 15 billing cycles; then 14.49% to 24.49% Variable APR, depending on your creditworthiness No fee for first 60 days; then $10 or 3% of each transfer, whichever is greater Take Out a Personal Loan

    Tips to Consolidate Credit Card Debt

    The thought of taking out another loan probably doesn’t sound too appetizing to consolidate credit card debt. But a personal debt consolidation loan is one of the speediest ways to rid yourself of credit card debt. More specifically, you can use it to pay off most or all of your debt in one lump sum. That way, your payments are all merged into a single account with your lender.

    The APR and length of the offered loan and the minimum credit score needed for approval are the main factors that should go into your final decision on a lender. By concentrating on these three components of the loan, you can map out what your monthly payments will be. As a result, you can more easily implement them into your financial life.

    Applying for a personal consolidation loan can have a detrimental effect on your credit. Unfortunately, most institutions will run a hard credit check on you prior to approval. However, many online lenders don’t do this, which might ease your mind depending on the severity of your debt situation.

    These loans are available through a wide variety of financial institutions, including banks, online lenders and credit unions. Here are a few examples of some of the most common debt consolidation lenders:

    Common Debt Consolidation Lenders Banks Wells Fargo, U.S. Bank, Fifth Third Bank Online Lenders Lending Club, Prosper, Best Egg Credit Unions Navy Federal Credit Union, Unify Financial Credit Union, Affinity Federal Credit Union Auto or Home Equity Loan

    If you own assets like a home or car, you can take out a lump-sum loan based on the equity you hold in them to consolidate credit card debt. This is a great way to reuse money you paid toward an existing loan to take care of your debt. When paying back your auto or home equity loan, you’ll usually pay in fixed amounts at a relatively low interest rate. Even if this rate isn’t great, it’s likely much better than any offer you’d receive from a card issuer.

    Equity loans are technically a second mortgage or loan, meaning your house or car will become the loan’s collateral. That means you could lose your house or car if you cannot keep up with your equity loan payments.

    Create a Budget

    Tips to Consolidate Credit Card Debt

    To build a budget, you first need to figure out your approximate monthly net income. Don’t forget to take into account taxes when you’re doing this.

    You can then start subtracting your variable and fixed expenses that are expected for the upcoming month. This is where you will likely be able to identify where you’re overspending, whether it’s on food, entertainment or travel. Once you’ve completed this, you can begin cutting back where you need to. Then, use your surplus cash to pay off your debt one month at a time.

    It shouldn’t matter if you’re dealing with substantial credit card debt or not. A monthly spending budget should always be a part of how you manage your finances. While this is likely the slowest way to eliminate debt, it’s also the most financially sound. At its core, it attempts to fix the problem without taking funding from an outside source. This should leave very little financial strife in the aftermath of paying off your debt.

    Professional Debt Counseling

    Perhaps since you’ve found yourself in serious debt, you feel like you want professional help getting out of it. Well the National Foundation for Credit Counseling® (NFCC®) is available for just that reason. The NFCC® has member offices all around the U.S. that are certified in helping you consolidate credit card debt.

    These counselors won’t only address your current financial issues and debt. They’ll also work to create a plan that will help you avoid this situation again in the future.

    Agencies that are accredited by the NFCC® will have it clearly displayed on their website or at their offices. If you’re not sure where to look, the foundation created an agency locator that’ll help you find a counselor nearby.

    Borrow From Your Retirement

    Taking money early from your employer-sponsored retirement account obviously isn’t ideal. That’s means borrowing from your retirement is a last-ditch alternative. But if your credit card debt has become such a handicap that it’s affecting all other facets of your life, it is a viable option to consolidate credit card debt.

    Because you are technically loaning money to yourself, this will not show up on your credit report. Major tax and penalty charges await anyone who has trouble making payments on these loans though. To make matters worse, if you quit your job or are fired, you’re typically only given 60 days to finish paying it off to avoid incurring a penalty.

    Tips To Consolidate Credit Card Debt

    • If you take the time to come up with a budget, don’t let it go to waste. While you might find it tough to stick to, especially if you’re trying to cut back, it is the best way to manage your money correctly. Even if a budget becomes habit, stay vigilant with where your money is being spent.
    • Although a financial advisor will cost money, he or she might be able to help you keep your finances in check while ultimately helping you plan for the future as well. However, if this isn’t an option for you financially, stay on track with your NFCC® debt counselor’s plan.
    • There are so many ways to gain access to your credit score that there’s virtually no excuse for not knowing it. It doesn’t matter if you do it through one of the top three credit bureaus, FICO® or one of your card issuers. Just remember to pay attention to those ever-important three digits as often as possible.

    Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the issuer.

    Photo credit: ©iStock.com/Liderina, ©iStock.com/ferrantraite, Â©iStock.com/cnythzl

    The post Tips to Consolidate Credit Card Debt appeared first on SmartAsset Blog.

    Source: smartasset.com

    How to Protect Your Credit Score During COVID-19

    A young Black woman sits outside on her laptop, drinking a coffee and looking up how to protect her credit score from COVID.

    The COVID-19 coronavirus pandemic has affected everyone all around the world. Extended isolation and sudden job losses have everyone thinking about their futures. Lots of people are concerned about losing a reliable income source during this time of crisis. Some have even been forced to shut their businesses. The global pandemic has turned many people’s financial lives upside down.

    As you work on keeping your bills in good standing and your finances going strong, you should also pay attention to your credit score. Even if you’re delaying some major purchases like buying a car or a home or going on a trip, you still need to maintain good credit. You’ll eventually start spending again, and you’ll need a good credit score.

    But how can you protect your credit score during COVID-19? Keep in mind that your credit scores and reports play a crucial role in your future financial opportunities. The following steps will be your handy guide in managing and protecting your credit score during this global pandemic.

    Stay on Top of Your Credit
    Reports

    Even on good days, make sure you regularly review your credit reports from the three credit bureaus. You can get free annual credit reports at AnnualCreditReport.com. Through April 2021, Experian, Equifax, and TransUnion are allowing consumers to access their credit reports for free weekly. Take advantage of this offer to make sure that any accommodations you request from lenders are appropriately reported and that your identity is safe and secure.

    You can also sign up for the free Credit Report Card from Credit.com. With our report card, you’ll see your VantageScore 3.0 from Experian, as well as personalized information on what is affecting your credit score and how you can improve. If you want to dive deeper, sign up for ExtraCredit to see 28 of your FICO scores from all three credit bureaus.

    Get ExtraCredit

    Keep Up with Your Payments

    Late payments can affect your credit history and credit reports for up to seven years. Prioritize paying your bills on time when you can, even during financially difficult times. You can do this by setting up reminders to alert you of payment deadlines. Also, you should make it a habit to make at least the minimum payment each month. Doing so will help you in keeping a good payment history record and prevents you from paying late fees.

    Contact your lender whenever you can’t
    make payments on time. Lots of lenders have announced proactive measures to aid
    their borrowers affected by the global pandemic. Some are willing to provide
    loan extensions, interest rates reduction, forbearance, or repayment
    flexibilities. The best thing to do is to get in touch with your lender and
    explain your current situation. Don’t forget to ask for written confirmation if
    any agreements were made. 

    Be Aware of Your Protections

    The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) has protections to help your credit score remain unaffected during the pandemic. This Act puts special requirements on some agencies and companies reporting your payment information to the credit reporting companies. The requirements are applicable if you’re affected by the COVID-19 pandemic and specifically covered by the Act.

    If you request an accommodation under the CARES Act, your creditors will report your account to the credit reporting agencies based on the current standing of your credit when the agreement is made. The requirements set by the CARES Act are only applicable to agreements made between 31st of January 2020 and 120 days after the COVID-19 national emergency officially ends.

    Get to Know What Impacts Your
    Score

    If you’re currently unemployed and wondering if it will affect your credit score, the answer is no. Unemployment itself will not impact your score. Making late payments and missing payments are the things that most significantly affect your credit score. This is why we recommend getting in touch with your lender as soon as you suspect you may not be able to make a payment in full on time. Inform them of your current situation. This can also help you cope with your anxiety.

    Hard inquiries, account mix, and credit age also impact your credit score, but to a lesser degree. Your major concern should be keeping your credit utilization low and paying bills on time.

    Keep Yourself and Your
    identity Protected

    Securing your personal information and identity is also crucial in protecting your credit score. Identity theft and scams are rampant during this coronavirus pandemic. Your personal information can unlock different financial resources. Hackers and cybercriminals can utilize all your personal information to impersonate you and open credit card accounts, make purchases, transfer funds, and borrow money. If left undetected, this activity can significantly damage your credit score.

    Though the damage is reversible, the entire process will be costly. That’s precisely why prevention is always the best option. ExtraCredit from Credit.com, for example, offers $1 million in identity theft protection and dark web monitoring, among other features.

    Make Budgeting and Planning a Habit

    During this crisis, budgeting is essential for keeping your credit card debt low and your credit score high. Pay attention to how much money you make and the amount of money you spend. Identify expenses where you can cut the usual costs, at least temporarily.

    Reworking your budget is necessary, especially if you’re currently unemployed or earning less money. You can consider the following money-saving ideas to maximize your savings:

    • Put nonessential purchases such as online shopping and clothes on hold
    • Temporarily suspend nonessential services such as cleaning and lawn care
    • Cancel subscriptions on cable, music streaming, video streaming, etc.
    • Search for affordable meal planning solutions
    • Cancel fitness and gym memberships
    • Cut back child-related extracurriculars such as tutoring, lessons, and sports
    • Spend less on takeout

    Although reducing costs is not fun, the
    result will reduce your financial stress and will allow you to better protect
    your credit.

    You Can Protect Your Credit Score from COVID-19

    All the things mentioned above have one thing in common: All require taking a proactive approach to your finances and credit. Follow the six credit-protection strategies mentioned above to maintain and protect your good credit even if you are facing a financial crisis.

    About the Author

    Lidia S. Hovhan is a part of Content and Marketing team at OmnicoreAgency. She contributes articles about how to integrate digital marketing strategy with traditional marketing to help business owners to meet their online goals. You can find really professional insights in her writings.


    The post How to Protect Your Credit Score During COVID-19 appeared first on Credit.com.

    Source: credit.com

    13 Credit Cards Offering Free Fico Scores

    It’s easy to get your credit report for free; in fact, you can get all three copies from each major credit bureau for no charge every 12 months. Unfortunately, while your credit history contains all…

    The post 13 Credit Cards Offering Free FICO Scores appeared first on Crediful.

    The Repercussions Of A Temporary Income Drop And Ways To Minimize The Damage

    Many of us suffer from a temporary income drop at one point or another. What we don’t consider is how long it may take to bounce back from such a situation.

    The post The Repercussions Of A Temporary Income Drop And Ways To Minimize The Damage appeared first on Bible Money Matters and was written by Melissa. Copyright © Bible Money Matters – please visit biblemoneymatters.com for more great content.

    Source: biblemoneymatters.com

    National Get Smart About Credit Day

    Depending on the time period in which you were raised, many young children and adolescents had differing opinions (and ideals) about what credit was and how it should or shouldn’t be utilized. While some were privileged enough to understand the complexities and importance of credit, others had to learn at the expense of their own mistakes along the way. No matter where you were or where you are currently, luckily there are always actionable steps that can be taken to clean up, improve, and get smart about your credit – let’s explore. 

    Become familiar with what can impact your credit 

    There are five key components that are factored into your credit score. 

    Payment history 

    Your ability to make timely payments plays a huge role in your credit score. Lenders want to have the confidence that you as the borrower are capable of paying back any debts on time. If there is ever a situation that can impact your payment history, it’s best to notify your lender as soon as possible to avoid any negative remarks on your credit report.  

    Credit utilization 

    In order to determine your credit utilization rate, divide the amount of credit currently in use by the amount of credit you have available. For the best possible scores, keep this percentage under 30%. This shows creditors you have the ability to manage debt wisely. To optimize and improve your score, make it a goal to utilize less than 10% if possible.   

    Length of credit history  

    Lenders will take an account of all creditors and the length of time each account has been open. In order to improve this average, try your best not to close any accounts as this can have the potential to decrease your overall credit score.  

    Credit mix  

    Car, student loan debt, mortgage, and credit cards are all varying types of revolving and installment loans. Lenders view this as favorable when you’re able to manage different types of credit. A good rule of thumb for using a credit card is charging a small amount each month and paying it off in full to avoid any interest payments. Not only does this impact your score positively, but it also creates good habits that don’t require you to solely rely on credit cards for purchases.  

    New credit 

    Any time you apply for credit, you’re giving lenders the right to obtain copies of your credit report from a credit bureau. Soft inquiries do not have an impact on your score, such as pulling your own credit report or a potential employer pulling your report as a part of the screening process. Applying for a new credit card, requesting a credit limit increase, financing a car, or purchasing a home are all examples of hard inquiries. For processes such as auto purchases, student loans, or mortgages these are typically treated as a single inquiry if done within a short scope of time such as thirty days. Be mindful of the number of inquiries outside of these scenarios – this mainly relates to retail store credit cards. Inquiries have a greater impact if you have a short credit history or a limited amount of active credit accounts.   

    Review your credit reports and dispute errors if necessary 

    Carve out some time to obtain a free credit report from one of the three credit bureaus (Experian, TransUnion or Equifax) to review. Familiarize yourself with everything that is listed. In the instance something doesn’t appear correct, follow the proper protocols to dispute errors. Completing this exercise at least once a year after initially cleaning up any errors can help correct any mistakes, but also ensures accuracy. The credit reporting agency and the lender must be contacted in order to jumpstart the process of resolution. Even in the instance, there are no issues found, you’ll have peace of mind knowing the due diligence has been done.  

    Communicate and be honest with all creditors 

    If you are experiencing any type of financial hardships due to unforeseen circumstances, make it a priority to communicate upfront with all creditors. Explaining your personal situation while proposing reasonable solutions may work in your favor. Refrain from avoiding creditors due to emotional reasons or negative thoughts; your pride cannot overshadow your personal needs. When discussing finances, most of us don’t want to disclose any personal information – however, if this can result in bettering your personal finance journey and credit score simultaneously; there’s no way to lose. Make your requests known and be proactive so the best solutions can be provided.  

    Create a plan and remain completely committed 

    Commit to at least three goals that relate to improving your credit. This could simply start with paying all of your bills on time and regularly checking in with creditors to ensure good standing. If credit card spending is a challenge for you, commit to limiting your credit card usage while paying more than the minimum balance. Rally the assistance of your family and friends to serve as your accountability partners to make sure you achieve your goals. No matter the personal goals you decide to set, commit to staying the course. Often times our personal lack of patience leads us to believe that the hard work that’s being put forth is in vain. If nothing else, commit to improving your credit for you and your families’ wellbeing.  

    Protect your hard work (and your credit) 

    Once your new credit score emerges and is here to stay, the first order of business is to celebrate – congratulations! Your hard work and dedication have indeed paid off. In order to make sure your credit score stays in tip-top shape, don’t be too quick to take your foot off of the gas just yet! Be sure to stay informed about any tactics or strategies to keep your credit score in the best shape possible. We’re all on our phones throughout the day, so make it a regular occurrence to do a quick internet search on ways to improve your credit score. Continually staying educated about various credit improvement opportunities  

    The post National Get Smart About Credit Day appeared first on MintLife Blog.

    Source: mint.intuit.com

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