Following the implementation of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act on 22nd February 2010, there have been effects on the consumers and the cardholders. Whereas critics argue that the CARD Act may have cost the consumer a lot of money, in some way, there seems to be some relief to the same consumer. In regard to cost implication, there appears to be a notable increase in interest rates.
According to Cardratings.com study, there has been an increase in the annual percentage rates by averagely 2.1% from the end of 2008 to 2011 on new credit cards. Another cost element that has been witnessed is the ballooning of balance transfer fees. There is an increased trend in balance transfer as cardholders servicing credit card debts seek for lower APRs on their balance.
However, there seems to be an increase in the fees charged by card issuers on balance transfer. Card issuers have shifted from putting a cap on the maximum credit card balance transfer fee to charging a fee based on the balance being transferred. At the end of 2008, it was estimated that about 31% credit card offers were putting a cap on the card transfer fees but as at 2013, this percentage has significantly gone down and it is at 4 percent.
On the other hand, the percentages charged as fees on the amount being transferred has risen by 1.2 percent to settle at 3.3% compared to 2.1% in late 2008. What this means is that if you were transferring a credit card balance of 20,000 in 2008, it would have averagely cost you about $420. However, if you are transferring the same amount today, it would cost you a fee of about $660.
Despite these cost effects to the card holders, there are some benefits which these consumers are enjoying. One, there are fewer late fees and this is contributed to by the fact that the CARD Act made it a requirement by the card issuers to standardize billing cycles. Consumers are given not less than 21 days to settle their credit card bill.
From the effect of the standardization of billing cycles, the Consumer Financial Protection Bureau established out that there was a drop in monthly late fees by $474 million in the period between Jan and Nov 2010. What this means is that consumers could be paying less in late fees attached to their credit cards in the tune of $5 billion. This is certainly a big reduction in the amount of money that was being lost by the card holders in form of late fees.
Another benefit which has been noted is existence of lower over-the-limit-fees. Card issuers charge a fee when you clock and exceed the limit set for your credit card spending. Credit card issuers have made it an optional choice for you to exceed your set credit limit. This means that you willingly agree that you will be charged a certain amount of fee when you exceed the set credit limit.
Nonetheless, the fees have become quite competitive and are at lower levels compared to the period before the CARD Act was brought to the floor. According to observations made by Cardratings.com, the over-the-limit fees have now dropped to averagely about $14 compared to $33 in the period before the Act i.e. late 2008.
Last but not least, the CARD Act has led to fewer over-the-limit fees. Since the enactment and implementation of the CARD Act, many credit card companies stopped charging the over-the-limit fees because it was banned unless a cardholder willingly opts to such a program. This resulted to about 40% of credit cards with the opt-in program compared to about 95% of credit cards which were featuring the over-the-limit fees.
Monday, November 18, 2013
Missing Credit Card Payment may be the Worst Mistake You Make
Credit cards come with many benefits but all these gains can be overshadowed by a few missed payments. With your credit card, you can use it to make purchases and spend up to the credit limits you have been offered. Today, people are using these cards in areas like home improvements, travelling, purchases of groceries and other home stuffs as well as general shopping. But did you know that missing a few payments could plunge you into the most difficult financial problem you have ever encountered in your life?
There are numerous consequences of missing credit card balance payment and none of these penalties is either good. It is important that you pay credit card bills and balances in time. Even when you have money to pay your bills, you may accidentally fail to make the payment because you forget or you were too busy. This is never an excuse as to why you may make a late payment.
Paying your credit card bills must be a priority and not an option. Credit card bills can affect and taint your credit score for many years. When a person misses a payment, a late fee is placed on the account. This late payment fee becomes bad if it increases the balance of the card beyond the credit limit and this is because such as situation leads to additional fees.
Typically, the charges for late payments and over-the-balance charges will vary from one card issuer to another but generally they range between $25 and $35. If you miss payment, your interest rates could skyrocket to higher APRs. Card issuers will increase the APR due to a late payment and this can plunge you into difficulties. Whether it was caused by lack of funds or you forgot, you may end up paying 15 percent more on your initial APR.
If your APR was 16%, it means that with only one late payment, you may end up paying 31% on your credit balance. These charges continue to increase every time you make a late payment. Similarly, if you have a card with 0% APR intro rate, this privilege could be wiped out if you make a late payment. Your 0 percent APR could hike to 20.99% or higher because of that mistake.
Another impact you suffer when you make late payments is that they show up on your credit report. Usually a single late payment may not be a problem but a second or third late payment could raise a red flag. Late payments can make it more difficult for you to acquire loan facilities like mortgages, personal loans, and car loans. They also make it quite challenging to get new credit cards. Landlords also consider your credit report and may turn down your application because of the score.
If you do not make payment towards your credit card debt for several months, you risk your account being closed. This still damages your credit history and could have far reaching implications on your future borrowing ability. The more the payments you miss, the more you lower your FICO score and this means that you begin experiencing troubles with lending institutions. One of the reasons why people are going for the extremely high-interest rate payday loans is because they tainted their score with late payments and cannot now access loan facilities from banks or credit unions.
There are numerous consequences of missing credit card balance payment and none of these penalties is either good. It is important that you pay credit card bills and balances in time. Even when you have money to pay your bills, you may accidentally fail to make the payment because you forget or you were too busy. This is never an excuse as to why you may make a late payment.
Paying your credit card bills must be a priority and not an option. Credit card bills can affect and taint your credit score for many years. When a person misses a payment, a late fee is placed on the account. This late payment fee becomes bad if it increases the balance of the card beyond the credit limit and this is because such as situation leads to additional fees.
Typically, the charges for late payments and over-the-balance charges will vary from one card issuer to another but generally they range between $25 and $35. If you miss payment, your interest rates could skyrocket to higher APRs. Card issuers will increase the APR due to a late payment and this can plunge you into difficulties. Whether it was caused by lack of funds or you forgot, you may end up paying 15 percent more on your initial APR.
If your APR was 16%, it means that with only one late payment, you may end up paying 31% on your credit balance. These charges continue to increase every time you make a late payment. Similarly, if you have a card with 0% APR intro rate, this privilege could be wiped out if you make a late payment. Your 0 percent APR could hike to 20.99% or higher because of that mistake.
Another impact you suffer when you make late payments is that they show up on your credit report. Usually a single late payment may not be a problem but a second or third late payment could raise a red flag. Late payments can make it more difficult for you to acquire loan facilities like mortgages, personal loans, and car loans. They also make it quite challenging to get new credit cards. Landlords also consider your credit report and may turn down your application because of the score.
If you do not make payment towards your credit card debt for several months, you risk your account being closed. This still damages your credit history and could have far reaching implications on your future borrowing ability. The more the payments you miss, the more you lower your FICO score and this means that you begin experiencing troubles with lending institutions. One of the reasons why people are going for the extremely high-interest rate payday loans is because they tainted their score with late payments and cannot now access loan facilities from banks or credit unions.
Why you are not Really Safe with Minimum Credit Card Payments?
If you have a balance in your credit card, you would better settle it before you find yourself in the most difficult situation. In one case, a 62 year old Francine Bostick who is a custodial manager living in Manhattan, Kansas, was faced with a tormenting experience with credit card debt. Francine Bostick and her husband James aged 74, together found themselves in a more than $120,000 credit card debt.
It took them more than 5 years to come out of their indebtedness situation. Because of the cheap credit available through these cards, Francine did not make certain considerations in her spending habits. She did not think twice about aspects like buying home appliances or even helping her children who have now grown to adults to meet their expenses. However, one time, things changed so fast and from one sweet moment of life, it became the turning point to a life full of desperation, fear, and discontent.
Francine said that they thought as long as they paid the minimum amount on their credit, everything was fine. When her husband developed dementia, this is when things turned haywire. As she was dealing with this serious health condition of her husband, on the other side, the card lenders began raising the required minimum payment.
Ms. Bostick points out some of the things she did which she thought were okay but they were not. She reckons that one mistake she might have made is being too supportive to her children even in situations where it was not necessary. By showing love through giving materials things, she used her credit card to help her adult children and overcompensated them in financial needs.
She tells of one instance in which her daughter was in college and she did not have insurance to cover her medical bills. She went on to help her meet the medical insurance needs. Ms. Bostick also laments that she sometimes bought stuff for her kids even when they did not ask for them. Whereas there is nothing bad about helping your children, the main point is; did she have the resources to keep supporting them even at the adult age?
Certainly, she overinvested in her children something that led to draining off of her credit card money. According to Eleanor Blayney, a certified financial planner and a consumer advocate at CFP Board (a nonprofit organization advocating for professional planning) she articulated the situation Ms. Bostick was facing as a confluence of events in her life.
In an effort to help in educating their children, parents are adding their indebtedness in the more than $1 trillion student loan debt. In a report presented by the New York Federal Reserve in 2012, it established that out of the student loan borrowers, about 5.3 percent were persons aged about 60 and above. This means that parents were taking the responsibility to borrow for their children’s education thus putting themselves into risks of being accountable for those credit card loans in future.
It took them more than 5 years to come out of their indebtedness situation. Because of the cheap credit available through these cards, Francine did not make certain considerations in her spending habits. She did not think twice about aspects like buying home appliances or even helping her children who have now grown to adults to meet their expenses. However, one time, things changed so fast and from one sweet moment of life, it became the turning point to a life full of desperation, fear, and discontent.
Francine said that they thought as long as they paid the minimum amount on their credit, everything was fine. When her husband developed dementia, this is when things turned haywire. As she was dealing with this serious health condition of her husband, on the other side, the card lenders began raising the required minimum payment.
Ms. Bostick points out some of the things she did which she thought were okay but they were not. She reckons that one mistake she might have made is being too supportive to her children even in situations where it was not necessary. By showing love through giving materials things, she used her credit card to help her adult children and overcompensated them in financial needs.
She tells of one instance in which her daughter was in college and she did not have insurance to cover her medical bills. She went on to help her meet the medical insurance needs. Ms. Bostick also laments that she sometimes bought stuff for her kids even when they did not ask for them. Whereas there is nothing bad about helping your children, the main point is; did she have the resources to keep supporting them even at the adult age?
Certainly, she overinvested in her children something that led to draining off of her credit card money. According to Eleanor Blayney, a certified financial planner and a consumer advocate at CFP Board (a nonprofit organization advocating for professional planning) she articulated the situation Ms. Bostick was facing as a confluence of events in her life.
In an effort to help in educating their children, parents are adding their indebtedness in the more than $1 trillion student loan debt. In a report presented by the New York Federal Reserve in 2012, it established that out of the student loan borrowers, about 5.3 percent were persons aged about 60 and above. This means that parents were taking the responsibility to borrow for their children’s education thus putting themselves into risks of being accountable for those credit card loans in future.
Top 5 Home Improvement Credit Cards to Pay Attention
With the spending on home improvements expected to go up reaching $110 billion in 2013, this means that businesses in the construction and building industry will expect increased returns. Credit cards are not taking these market projections for granted and they have devised reward card programs aimed at helping the consumers save money and enjoy other perks. With the home improvement cards, cardholders can get discounts, airline miles, points, cashrebates and other perks whenever they make purchases on building and construction materials and supplies.
Credit cards are ideal for those homeowners or real estate owners who spend occasionally on home improvements and remodelling. If you have long term home renovation projects, you may need one or more of these cards. Some of the cards you get in the market include;
1. Sears Gold MasterCard
Sear is major supplier of home improvement materials. Consumers can get many of the materials and supplies they need from Sears store. In order to help its customers benefit from the purchases they make, the Store offers Sears Gold MasterCard. This is a reward credit card that enables the holders to earn points which can be redeemed for Sears gift cards.
2. Chase Home Improvement Rewards Credit Card
This card is designed for home renovations and for the first 6 months, the card offers 0% APR. This means that you can pay your balance at zero interest in the first six months. With this card, every dollar you spent on materials and supplies earns you 3 points. You can redeem your points for cashrebates or rewards. This means that you can get 3% cash back on all your purchases towards home improvement.
3. Home Depot Consumer Credit Card
This card offers no payment and interest within the first 6 months but this is subject to opening an account and spending at least $299. The card is ideal if you want to purchase all your materials and supplies from one store. After the intro period, the interest rates shoot to 17.99% and 26.99% depending on your credit score.
4. Home Advantage MasterCard
Issued by Bank of America, Home Advantage MasterCard has a unique way of assisting consumers who are doing their home improvements and renovations. The card helps you pay down your mortgage loan. With this card, for event dollar you spend, you earn one point. When you earn $5,000 points, you can redeem them for cash but this amount goes directly to repayment of your mortgage. This is a good card for those with mortgage loans and excellent credit score.
5. Discover More
You can save money on home renovations by using cashback cards. Discover More is a card designed to help homeowners and real estate owners to save money on home renovations. This card starts with a 0 percent interest rate. It also offers 5 percent cashrebate on spending towards home improvements, department stores, restaurants and gas stations. Other purchases will earn you 1 percent cashrebate.
Other cards you may consider are Home Projects Visa, Lowes Project Card, and the Menards Big Credit Card. Because of the increasing number of home improvement cards, you need to select wisely the right card for you. Check on the different perks offered by each card and your spending pattern. Do not be enticed to spend more in order to gain rewards.
Credit cards are ideal for those homeowners or real estate owners who spend occasionally on home improvements and remodelling. If you have long term home renovation projects, you may need one or more of these cards. Some of the cards you get in the market include;
1. Sears Gold MasterCard
Sear is major supplier of home improvement materials. Consumers can get many of the materials and supplies they need from Sears store. In order to help its customers benefit from the purchases they make, the Store offers Sears Gold MasterCard. This is a reward credit card that enables the holders to earn points which can be redeemed for Sears gift cards.
2. Chase Home Improvement Rewards Credit Card
This card is designed for home renovations and for the first 6 months, the card offers 0% APR. This means that you can pay your balance at zero interest in the first six months. With this card, every dollar you spent on materials and supplies earns you 3 points. You can redeem your points for cashrebates or rewards. This means that you can get 3% cash back on all your purchases towards home improvement.
3. Home Depot Consumer Credit Card
This card offers no payment and interest within the first 6 months but this is subject to opening an account and spending at least $299. The card is ideal if you want to purchase all your materials and supplies from one store. After the intro period, the interest rates shoot to 17.99% and 26.99% depending on your credit score.
4. Home Advantage MasterCard
Issued by Bank of America, Home Advantage MasterCard has a unique way of assisting consumers who are doing their home improvements and renovations. The card helps you pay down your mortgage loan. With this card, for event dollar you spend, you earn one point. When you earn $5,000 points, you can redeem them for cash but this amount goes directly to repayment of your mortgage. This is a good card for those with mortgage loans and excellent credit score.
5. Discover More
You can save money on home renovations by using cashback cards. Discover More is a card designed to help homeowners and real estate owners to save money on home renovations. This card starts with a 0 percent interest rate. It also offers 5 percent cashrebate on spending towards home improvements, department stores, restaurants and gas stations. Other purchases will earn you 1 percent cashrebate.
Other cards you may consider are Home Projects Visa, Lowes Project Card, and the Menards Big Credit Card. Because of the increasing number of home improvement cards, you need to select wisely the right card for you. Check on the different perks offered by each card and your spending pattern. Do not be enticed to spend more in order to gain rewards.
Why Homeowners Are Using Credit Cards To Finance Home Improvement?
There is a growing trend in financing home improvements with credit card funds. Credit cards are used to provide credit to users but the balances these cards carry can attract high interest rates. Credit card debt seems to be the most prevalent debt problems within consumers in U.S. surpassing the mortgage debts and student loan debts. However, with these credit card debt problems, there seems to one group of consumers that is determined to spend hundreds of thousands of dollars through their credit cards to carry out home improvements.
According to numbers released in a study by Harvard University Joint Center for Housing, it showed that homeowners spent more on home improvements in the year 2012 by 9 percent. Home improvement budget estimates are set to reach $110 billion in the year 2013 and this shows that there is a huge market for money to be spend out there.
Card issuers are targeting this market and they have come up with reward programs that help homeowners save money on their home improvement projects. Homeowners need to determine the right funding means to use to finance their home improvement projects. They may use cash, personal loans, equity line of credit (HELOC), FHA Title I remodeling loan, contractor refinancing, or credit cards.
Whether you are doing an occasional home repair or a long term home remodeling project, the home improvement credit cards may be an ideal choice to fund your project. These cards are essential for those people who have regular purchases in their home improvements and building materials. This means that purchases of products like hardware, lumber, paint, wallpapers, cements, plumbing fixtures, and the like will get cash rebates or other forms of perks.
Credit cards are a good option in these kinds of projects because they have no closing costs, loan fees, home appraisal, credit check, and no need to use your house as collateral for the credit. Depending on the card you are using, you could earn discounts on building and construction materials and supplies, cashback, points, and airline miles.
However, not all persons may need to use these cards. There are the negative aspects of using credit cards to finance home remodeling and they include the possibility of increasing your debt load, high APRs which are as twice the interest rates offered on mortgages and home equity. The interest on these cards is not tax deductable and this is another disadvantage. Another problem is that running the card could lead to low credit score especially when you begin to experience late payment of the credit card balances.
You may also risk being subjected to spending limit cuts. However, the home renovation credit cards provides you with a credit amount that you can comfortably pay off fast especially the small projects or ongoing projects that will need regular spending on materials and supplies.
Many people are most likely to underestimate how long they will take to carry a loan and this can result to problems when using credit cards. As a senior researcher with the Center for Responsible Lending, Josh Frank points out, most people underestimate how long they will take to settle their loans and when the worst happens and they miss a few payments, the penalties can plunge them into financial pitfalls. Credit card late payments can attract interest rates of up to 35 percent.
According to numbers released in a study by Harvard University Joint Center for Housing, it showed that homeowners spent more on home improvements in the year 2012 by 9 percent. Home improvement budget estimates are set to reach $110 billion in the year 2013 and this shows that there is a huge market for money to be spend out there.
Card issuers are targeting this market and they have come up with reward programs that help homeowners save money on their home improvement projects. Homeowners need to determine the right funding means to use to finance their home improvement projects. They may use cash, personal loans, equity line of credit (HELOC), FHA Title I remodeling loan, contractor refinancing, or credit cards.
Whether you are doing an occasional home repair or a long term home remodeling project, the home improvement credit cards may be an ideal choice to fund your project. These cards are essential for those people who have regular purchases in their home improvements and building materials. This means that purchases of products like hardware, lumber, paint, wallpapers, cements, plumbing fixtures, and the like will get cash rebates or other forms of perks.
Credit cards are a good option in these kinds of projects because they have no closing costs, loan fees, home appraisal, credit check, and no need to use your house as collateral for the credit. Depending on the card you are using, you could earn discounts on building and construction materials and supplies, cashback, points, and airline miles.
However, not all persons may need to use these cards. There are the negative aspects of using credit cards to finance home remodeling and they include the possibility of increasing your debt load, high APRs which are as twice the interest rates offered on mortgages and home equity. The interest on these cards is not tax deductable and this is another disadvantage. Another problem is that running the card could lead to low credit score especially when you begin to experience late payment of the credit card balances.
You may also risk being subjected to spending limit cuts. However, the home renovation credit cards provides you with a credit amount that you can comfortably pay off fast especially the small projects or ongoing projects that will need regular spending on materials and supplies.
Many people are most likely to underestimate how long they will take to carry a loan and this can result to problems when using credit cards. As a senior researcher with the Center for Responsible Lending, Josh Frank points out, most people underestimate how long they will take to settle their loans and when the worst happens and they miss a few payments, the penalties can plunge them into financial pitfalls. Credit card late payments can attract interest rates of up to 35 percent.
3 Best 0%Balance Transfer Credit Cards
If you have an existing credit card debt that attracts high interest rates, you can transfer that balance to another card with lower interest rate for easy repayment. Credit card debt can be quite difficult to manage especially when you miss payment and the interest rates have sky rocketed. High interest rates can increase the overall amount of payback meaning that you will have to struggle to repay. There are people who have spent years repaying their credit cards because of mistakes they made such as late payment.
Whereas a first late payment will not attract a penalty, if you experience a second and third late payment, things may turn haywire. The worse thing with credit cards is that the penalties or hiked interest rates are so large that they make a very big impact on your repayment. A single late repayment can attract a hike of up to 15 percent in interest and this means that if you were paying 14.9 percent APR, this rate shoots up to 29.9 percent.
A second late payment can make you experience the worse scenarios of credit card debt repayment because the amount accrued increases significantly. However, with the 0 percent balance transfer, you can manage to move your balance from one card to another without suffering a lot of costs. If you have existing credit card debt, you may consolidate it in one card with a 0 percent interest on the balance for a certain period of time. The below cars are some of the best 0 percent balance transfer cards;
Citi Simplicity MasterCard
This card offers 0 percent introductory APR on balance transfers, which runs for 18 months. This means that within those 18 months, your balance attracts no interest rates. After the intro period, the APR shoots to about 12.99 and 21.99 percent. When making the transfer, you pay only 3 percent of the amount you are transferring or a minimum of $5 depending on which situation best suits you.
This card has also 0 percent intro APR on purchase for the same period of 18 months. However, one of the cons with this card is that it does not have a reward program. Cardholder seeking for balance transfer should not emphasize much on the rewards than the ARP on balance transfer and the fee charged.
Discover It
This card offers 18 months balance transfer and this is a time limited offer, which may not last for long. When you sign up for the card, you can transfer your balance with a 0 percent intro APR for a period of 18 months. This means that during this time, you will be paying your existing card debt at zero interest. However, when the period is over, the rates hike to normal rates of between 10.99% – 20.99% depending on your credit score. There is also a 3 percent transfer fee based on your balance.
Citi Diamond Preferred card
This offers a 0 percent introductory APR on your balance and this rate runs for 18months. During that one and half years, you will be paying zero interest rate on your balance. You can capitalize on this zero intro rate period to repay your balance without any interest. When the intro APR period is over, the card attracts a rate of 11.99 to 21.99 APR depending on your credit score.
There is also a 3 percent balance transfer fee or a $5 minimum fee whichever is applicable. In addition to the balance transfer, the card offers other perks like retail purchase protection, private pass and price protection. However, this card does not have a reward program meaning that you will not get redeemable points for cashbacks or other perks.
Whereas a first late payment will not attract a penalty, if you experience a second and third late payment, things may turn haywire. The worse thing with credit cards is that the penalties or hiked interest rates are so large that they make a very big impact on your repayment. A single late repayment can attract a hike of up to 15 percent in interest and this means that if you were paying 14.9 percent APR, this rate shoots up to 29.9 percent.
A second late payment can make you experience the worse scenarios of credit card debt repayment because the amount accrued increases significantly. However, with the 0 percent balance transfer, you can manage to move your balance from one card to another without suffering a lot of costs. If you have existing credit card debt, you may consolidate it in one card with a 0 percent interest on the balance for a certain period of time. The below cars are some of the best 0 percent balance transfer cards;
Citi Simplicity MasterCard
This card offers 0 percent introductory APR on balance transfers, which runs for 18 months. This means that within those 18 months, your balance attracts no interest rates. After the intro period, the APR shoots to about 12.99 and 21.99 percent. When making the transfer, you pay only 3 percent of the amount you are transferring or a minimum of $5 depending on which situation best suits you.
This card has also 0 percent intro APR on purchase for the same period of 18 months. However, one of the cons with this card is that it does not have a reward program. Cardholder seeking for balance transfer should not emphasize much on the rewards than the ARP on balance transfer and the fee charged.
Discover It
This card offers 18 months balance transfer and this is a time limited offer, which may not last for long. When you sign up for the card, you can transfer your balance with a 0 percent intro APR for a period of 18 months. This means that during this time, you will be paying your existing card debt at zero interest. However, when the period is over, the rates hike to normal rates of between 10.99% – 20.99% depending on your credit score. There is also a 3 percent transfer fee based on your balance.
Citi Diamond Preferred card
This offers a 0 percent introductory APR on your balance and this rate runs for 18months. During that one and half years, you will be paying zero interest rate on your balance. You can capitalize on this zero intro rate period to repay your balance without any interest. When the intro APR period is over, the card attracts a rate of 11.99 to 21.99 APR depending on your credit score.
There is also a 3 percent balance transfer fee or a $5 minimum fee whichever is applicable. In addition to the balance transfer, the card offers other perks like retail purchase protection, private pass and price protection. However, this card does not have a reward program meaning that you will not get redeemable points for cashbacks or other perks.
Choose the Right Reward Credit Card and Save Money
With the wide range of credit cards in the market, you need to watch out for the card you choose. If you make the wrong choice, this could cost you a lot of money. With the average credit card debt standing at a distressing $7,122 as of march 2013, it is certain that people need to use their cards wisely. The average household credit card debt was recorded at $15,266 in the same period and this shows that the American debt profile could only be getting worse. Diving deep into the statistics, records show that American consumers owe $11.31 trillion in debt and of this $850.9 billion is a credit card debt.
Choosing the right reward credit card can help cardholders minimize the bottlenecks that come with use of these cards. If you need a general card and not a specific card like airline reward credit card, it is good that you forfeit the higher reward rates offered as this will provide ubiquity and flexibility. In the same way, if your card carries a balance, you need not go for a card which attracts high rewards because most often the APR will be high.
In most cases, low interest cards will save you more money. There are a number of considerations you should make when choosing a card and they include the reward redemption and time horizon. It is essential that you know exactly what you get from every dollar you spend through a reward card program. Although you will have the exchange rate for redeeming your points calculated for you, it is important to know how much you will spend and how long you will fly.
For example, if you have the Discover Miles card, you can only redeem 0.5 points for every 1 cent in cash. Many airline credit cards will offer you sign up bonus that may be able to amount to $800 but then again they will charge you an annual fee. It is important that you do your calculations properly.
You need to determine if you will get value out of the card. The more you hold the card, the more you will pay in annual fee and this means that your annual fees may outweigh the sign up bonus. You need to examine the time horizon in which you intend to hold and use the card for optimal perks. Otherwise, some of the perks you are offered may be taken up the annual fees.
For example, if you get a reward card with a $150 sign up bonus and the same card attracts an annual fee of $75, it means that in two years, the annual fee with surpass the bonus. If you intend to hold the card for three or four years, then it is better to consider another card.
There are limitations on certain cards, which you need to watch out for. Examining reward caps can help you in optimizing the perks. Some cards may limit the rewards to certain period for example, quarterly for the Chase Freedom card and year for the CitiForward. Another thing you need to check on is the bonus category. Many of the cards will not offer flat reward rates and this means that they will offer something extra. You may get extra rewards points for groceries and gas purchases.
Some of the cards may have rotating reward categories within certain period. They may be offering a bonus of a particular category like grocery for three months, and for other three months they offer rewards on gas category. You should check how such bonus can benefit you and if they will affect your spending pattern or not. Always ensure that you are not enticed to spend more in order to gain more redeemable points. You need to follow your normal spending pattern.
Choosing the right reward credit card can help cardholders minimize the bottlenecks that come with use of these cards. If you need a general card and not a specific card like airline reward credit card, it is good that you forfeit the higher reward rates offered as this will provide ubiquity and flexibility. In the same way, if your card carries a balance, you need not go for a card which attracts high rewards because most often the APR will be high.
In most cases, low interest cards will save you more money. There are a number of considerations you should make when choosing a card and they include the reward redemption and time horizon. It is essential that you know exactly what you get from every dollar you spend through a reward card program. Although you will have the exchange rate for redeeming your points calculated for you, it is important to know how much you will spend and how long you will fly.
For example, if you have the Discover Miles card, you can only redeem 0.5 points for every 1 cent in cash. Many airline credit cards will offer you sign up bonus that may be able to amount to $800 but then again they will charge you an annual fee. It is important that you do your calculations properly.
You need to determine if you will get value out of the card. The more you hold the card, the more you will pay in annual fee and this means that your annual fees may outweigh the sign up bonus. You need to examine the time horizon in which you intend to hold and use the card for optimal perks. Otherwise, some of the perks you are offered may be taken up the annual fees.
For example, if you get a reward card with a $150 sign up bonus and the same card attracts an annual fee of $75, it means that in two years, the annual fee with surpass the bonus. If you intend to hold the card for three or four years, then it is better to consider another card.
There are limitations on certain cards, which you need to watch out for. Examining reward caps can help you in optimizing the perks. Some cards may limit the rewards to certain period for example, quarterly for the Chase Freedom card and year for the CitiForward. Another thing you need to check on is the bonus category. Many of the cards will not offer flat reward rates and this means that they will offer something extra. You may get extra rewards points for groceries and gas purchases.
Some of the cards may have rotating reward categories within certain period. They may be offering a bonus of a particular category like grocery for three months, and for other three months they offer rewards on gas category. You should check how such bonus can benefit you and if they will affect your spending pattern or not. Always ensure that you are not enticed to spend more in order to gain more redeemable points. You need to follow your normal spending pattern.
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