Using Your Debit Card May Not Be the Best Idea

Sometimes the Debit Card Just Isn't the Answer

One of the biggest misconceptions floating around in personal finance land is that a debit card is always better than a credit card. The problem with this thinking is that it just isn't true. In some cases, using a credit card is actually a better idea. Especially when you think of the ways in which a debit card is woefully lacking.

Debit card issuers cash in on overdraft fees
Remember when you could count on your debit card to be rejected in the case of insufficient funds? Not anymore. Debit card issuers are now cashing in on overdraft fees. If you forget to keep track of every little thing (and this is very possible when you are using the convenience of plastic to buy your morning coffee and donut), then you might find that you are over the limit. And banks are finding if they just let you go over, they can charge you $28 to $38 per transaction. You might have three or four transactions before you even realize that you are over the limit. That can be as much as $152 out of your pocket!

Less protection
Last time I went on vacation, I left the debit card home. Why? A debit card offers less protection against loss or identity fraud. Plus, it is much harder to dispute purchases with a debit card than it is with a credit card. With a debit card, you are liable for what happens before you get it canceled in cases of theft or loss. With a credit card, as long as you report the problem within 48 hours, your liability is limited to $50. Also, a credit card protects you to a certain degree against "blocking." Many hotels and car rental companies do this. They block out more than the amount you owe to cover incidentals. The final transaction is correct, but until you check out, or return the car (and sometimes two or three days after that), the amount shown as "reserved" in your account is higher. On a debit card, this lead to an overdraft...that may not really be an overdraft.

Fewer rewards
Despite the attempts by some debit card issuers to offer credit card style rewards programs, they really aren't that good. Most debit card rewards programs aren't even close to what is offered by credit cards. For the most part, debit card rewards come encumbered so much that they are literally not worth the trouble. Credit cards, the old hands at the rewards game, are much better.

The main caveat is that you need to use responsibility when using a credit card. Make sure you pay it off every month, and you can reap the rewards without paying the interest.

Source: Associated Content

5 Tips To Prevent Credit Card Late Fees

Have you ever received your credit card statement and been shocked to discover that you were charged $30.00 for the previous month's late payment? You were sure that you'd sent your payment on time, but obviously the credit card company disagrees. Credit card late payments can become a financial disaster, especially if that extra few dollars puts you above your credit limit. Following are five tips to prevent credit card late fees.

Prevent Credit Card Late Fees: Read the Fine Print
Most people are too busy or too negligent to read the little pamphlet that arrives with every credit card. Read it! These are the issuer's guidelines and must be followed if you want to prevent credit card late fees. The pamphlet will explain grace periods and other policies which might affect how and when you pay your bill. For example, it might contain information as to how quickly the financial institution processes your payment. If they guarantee same-day processing, then you have a little bit more leeway. If not, however, then you'll have to be sure to get the payment in the mail as quickly as possible.

Prevent Credit Card Late Fees: Packaging the Payment
Many Americans pay all of their bills online or over the phone, so this tip doesn't apply to you if that is how you handle your finances. However, if you still write checks and send payments by mail, then you need to pay attention to how you package your payment. To avoid misdirection of your payment, always use the envelope provided by your credit card issuer. This identifies the mail as a payment, and will ensure that it gets to the receiving department. Secondly, make sure that the check is properly filled out and that you have written legibly. Print your credit card number under your personal information at the top of the check and include your telephone number if it isn't pre-printed.

Prevent Credit Card Late Fees: Adjust Your Due Date
Although you were probably assigned a due date for payments when you first opened your account, you can usually change it. Call your credit card issuer and ask that your due date be changed to the day after payday. You might also want to try and make sure all your bills arrive at the same time; that way, you can get it all done and not worry about any bills you might have forgotten. The most common reason for credit card late payments is simply forgetting to write the check.

Prevent Credit Card Late Fees: Automatic Deductions
If your credit card issuer provides this service, you might want to take advantage of it. An automatic deduction means that the credit card company takes a specified amount out of your checking account when the payment is due. You can set it to pay the bill in its entirety or just the minimum payment, whichever is convenient. That way, you know that your bill has been paid even though you didn't place the phone call or write the check.

Prevent Credit Card Late Fees: Set a Reminder
Think about the place in which you normally pay bills. At the desk in your home office? The kitchen table? Your favorite arm chair while you watch television? Wherever it is, write a note and place it in a visible location so that you remember to pay your credit card bill. Next time you sit down to pay the light and phone bills, you'll have a reminder that the credit card bill is also due.

Source: Associated Content

The Dangers of Credit Card Debt

Do you own one or more credit cards? If you do, how well do you use them? Unfortunately, a fairly large number of Americans are using their credit cards the wrong way. This often, in turn, leads to credit card debt. If you are on the verge of credit card debt, you are urged to alter your spending habits immediately. If you don't, you may end up suffering the wrath of credit card debt.

One of the many dangers of credit card debt is that you owe money, essentially, that is what the debt is. Emotionally, credit card debt is a lot to handle. Letters and calls from debt collectors are often more than what most people can deal with. Also, it is not uncommon for those indebt to regularly worry about the debt that they cannot repay. In fact, a large number of individuals literally lose sleep, worrying about their current credit card debt.

In addition to just losing sleep or being worried all the time, you will find that there are a number of other consequences to having credit card debt. When you are unable to pay your credit card bills, your information will likely be turned over the one of the many credit bureaus. If this is the case, your debt will remain on your credit report, often until you can pay it off. Your credit report has a significant impact on you being able to obtain financing for a number of things, including a car or a home. In the event that you need to take out a loan, for an emergency, your credit card debt may prevent you from getting the needed money.

Your credit card debt can not only have a negative impact on your ability to obtain financing for a new home or a new car, but also with finding a job. A large number of employers are now beginning to request background checks on all of their applicants. In many cases, these background checks include a credit report. If you have a poor credit score, which is most commonly seen with credit card debt, you may be eliminated as a potential new hire. Not all employers will take your credit report into consideration, but a large number of them do.

As you can easily see, there are a number of different credit card debt dangers. In fact, these are just a few of the many dangers. To prevent yourself from having to go through sleepless nights, you are advised to eliminate your credit card debt, if you have any. If you currently do not have any credit card debt, you are urged to try and keep it that way.

Source: Associated Content

Low-rate Credit Card Offers

Those with good credit typically find several credit card offers in their mailbox every week, and people who want to protect their good credit have the chore of destroying these unwanted credit card offers. Unwanted credit card offers can fill up a shredder bin in nothing flat, and for many, these offers are nothing but an annoyance.

Once in a while a credit card offer grabs the attention of a recipient. Big bold numbers boast fantastic low rates and offers that for many are too good to pass up. Low-rate credit card offers should be accepted with extreme caution. These credit card offers are lures to bring those with good credit into a trap they will have a hard time getting out of. People often try to manage their credit to the best of their ability by accepting exceptionally low-rate credit card offers and transferring higher rate balances, but these offers can actually ruin good credit.

Low-Rate Credit Card Offers
The bait is almost too good to pass up. You have just received a low-rate credit card offer from a reputable credit card company. This well-known company is offering to transfer your higher rate balances to 0% until your balance is paid in full. Wow! What a great offer! You decide to accept that fantastic credit card offer. It’s too good to pass up, and an offer like this is a good way to manage debt. Your credit is already good, and you’re going to make it even better with this wonderful offer. You’ve just taken the bait, and the credit card company has lured in another unfortunate sap.

Credit Card Companies are Waiting for a Mistake
Credit card companies aren’t doing anything wrong when they present these fantastic interest rates and offers, but you must stop and contemplate how credit card companies make their money. If everyone accepted the wonderful low-rate offers made by credit card companies, how would these upstanding credit card companies survive? Credit card companies are in business to make money. Credit card companies aren’t in business to reward those with excellent credit. Credit card companies don’t care if your credit remains excellent or even good for that matter.

Low-rate credit card offers are often great offers, but these offers aren’t a privilege. Low-rate credit card offers in reality are nothing more than legal bait and switch methods. The credit card companies are counting on you making a mistake, and they can’t wait for that unfortunate mistake. When you make an honest mistake and the credit card company unfortunately, receives your payment after the due date, you will pay dearly.

Credit card companies are unforgiving corporations that are banking on mistakes, and they most definitely want you to make mistakes. Everyone makes mistakes, and sooner or later you are bound to screw up, and your credit card payment will eventually be late. It may not be your fault, but the credit card company will be ready to pounce. Your attempt to manage your excellent credit will more than likely backfire. No matter how hard you try, you will probably make an eventual mistake. When you make an honest mistake in paying your credit card bill, get ready to be financially gouged, and maybe even financially ruined.

Your once low-rate credit card interest rate could very easily go from 0% to 23% or more in the blink of an eye. Just one honest mistake and you could owe hundreds or even thousands of dollars in interest on a high balance credit card. Read the fine print on the back of the next credit card offer you receive. These are not offers worth risking. It’s best to never put yourself in a risky position such as this. Run away from low-rate credit card offers and any credit card offer for that matter, and don’t look back. There are better ways to obtain the credit you need, and these ways don’t involve risk.

What to do if You Make a Mistake That Raises Your Credit Card Interest Rate
If you made a mistake that shot your credit card interest rate up, don’t count on your credit card company to be forgiving and lower the new ridiculously high percentage. The credit card company has been waiting for you to make a mistake, and they are not likely to give you a second chance. When you agreed to the terms and accepted the credit card offer, you agreed to accept the consequences if you should happen to default on those terms. You are more than likely stuck, but not forever if you take a smart step to obtain a fair rate.

If your credit card has a high balance, your best bet is to obtain a fixed-rate loan to pay off the credit card. Find the best loan to remedy the problem, and cancel the credit card account immediately. Send the credit card through the shredder along with any and all new offers. Don’t give another credit card company a chance to legally take advantage of your good credit and human vulnerability for error.

Returning the Favor
If you are tired of receiving credit card offers send them back as soon as you get them. Cross out the area where credit card companies request your personal information, and send a note telling them to remove your name from their list. Tell them in no uncertain terms not to send any further offers. Use their postage-paid envelope to send back the junk. If everyone receiving unwanted credit card offers would do this, credit card companies might rethink their unscrupulous marketing strategies.

Source: Associated Content