How a Credit Card Can Be Your Friend
We have all heard countless stories of people over their
heads with credit card debt-maxing out every card they own,
then only being able to afford the minimum monthly payment.
High interest payments shackle people to their debt for
years, not to mention the significant income drain the
finance charges have on their families.
It is unfortunate that many Americans must live with this
reality, since with some financial discipline, this delimma
is avoidable. When a spending plan is developed and
followed, a credit card becomes no more dangerous than any
other form of payment.
When credit card bills are paid in full each month, credit
card fees and finance charges do not accumulate. With a
little extra bookkeeping from a spending plan, a credit card
is transformed from being a burden to a very rewarding
financial partner-since it provides the following advantages
over other forms of payment:
· Rewards Programs.
Many credit card companies offer
loyalty programs to reward those customers who use their
cards more. Rewards usually come in the form of points or
cash. Depending on the company, the points can be redeemed
for things like restaurant gift certificates, hotel stays,
airfare, vacation packages and more. Cash cards typically
pay a 1% rebate on your purchases, which makes for an extra
$180 a year on monthly spending of $1,500. This level of
spending is easily achieved by putting all your purchases on
a credit card (including utility bill payments). There are
even cards that pay more than 1% for particular types of
purchases like groceries or gas, such as Citi's Dividend
Platinum Select card.
· Perpetual 0% Loan.
When you use a credit card, you are
using the bank's money to pay the store instead of yours-for
free. While you're waiting for your statement to arrive,
your money can continue to work for you in an interest-
bearing account, such as ING Direct's Orange Savings.
Unlike a debit card that continually reduces your account
balance, using a credit card preserves your entire bank
account balance for earning interest until your statement's
due date. That's an extra $35.25 a year based on a $1,500
balance at today's rate of 2.35%*.
· Fraud Protection.
If your credit card number is used
fraudulently, by law your maximum liability is $50. This is
not true of a debit card. A perpetrator can easily use
your debit card as "credit" transaction in retail stores or
online. This type of transaction does not require a PIN
number to be entered, and is especially dangerous since a
thief can clean out your entire bank account in short order.
· Loss Protection.
Unlike cash which is gone for good if
lost, a credit card can be replaced within days of reporting
it to the issuing bank. In the meantime, you're protected
against unauthorized use by anyone who finds the lost card.
· Warranty Coverage.
Many MasterCard credit cards warrant
your purchases above and beyond that offered by the
product's manufacturer. Your purchases made with one of
these cards get an extra level of protection for free. See
MasterCard's website (http://www.mastercard.com) for the
full scoop on their coverage terms.
· Purchase Protection.
Another benefit MasterCard offers on
most of their cards. With their Purchase Assurance plan,
your purchases are automatically insured against damage or
theft for the first 90 days, also at no additional cost to
you.
With all of these benefits over other forms of payment,
credit cards can easily become your favorite way to pay.
Instead of dreading your credit card bill each month, it can
become a pleasant reminder of your money mastery.
Copyright 2005, Jim Hood
Jim Hood is senior contributing editor at the Discount
Shopping Service Guide. He frequently writes credit card offer reviews and articles on money-saving strategies for shopping online.
* Rate quoted from ING Direct on January 4, 2005.
MORE RESOURCES:
|
|
|
RELATED ARTICLES
10 Simple Steps to Manage Your Credit
By far the greatest invention the banks have ever come up with came out in the 20th century. Also the new field of Credit Management was born with the invention of the credit card.
What You Didnt Know About Your Credit Card Numbers
Have you ever really looked at your credit card and tried to figure out what that huge string of numbers really means? Do these card issuers have so many customers that your account number has to be 16 digits long?You may be surprised to know that all those numbers you see actually do stand for something, and it's not just who you are. Let's take a look.
All You Wanted to Know of Bad Credit
Martin Henderson is in a fix these days. Because of his failure to repay a loan he had taken a few years back, he has been adjudged as a bad credit case.
Credit Repair Scam - How To Avoid Being A Statistic?
A good credit history is critically important for the consumer. A bad credit will prevent you from getting a business loan, owning a home, or even a job.
Debit Card vs. Credit Card, What Are The Differences ?
Ah, the "good old days". If you are a baby boomer, like me, then you probably remember how important it was to rush to the bank on payday.
Which Credit Bureau Should I Use To Check My Credit Report?
There are three main credit bureaus in the United States; Equifax, Experian and Trans Union. Each bureau collects your personal and financial information which is then sold to lenders such as banks, credit unions, credit card companies, mortgage and auto loan lenders.
Looking for that Low interest Credit Card?
If you have been shopping around for a Low Interest Credit Card you will notice that the UK market is awash with Credit Card companies offering low rates to entice you to apply for their Cards.There has never been a better time to consolidate your credit cards and get a far better interest rate.
Tips for Credit Card Surfers
Moving money from credit card to credit card to take advantage of interest free
balance transfers and effectively borrowing money for free. It's even possible to make
money by borrowing money, transferring the debt to an interest free card and
investing the cash in a high interest savings account until the interest free period
expires.
New Law Provides Free Annual Credit Report
As of Thursday, December 1, 2004, one-third of Americans will be able to access their credit reports from all three main agencies for free. Passed in late 2003, the Fair & Accurate Credit Transactions Act creates a central source consumers can use to obtain a free annual credit report.
Identity Theft - How Can You Prevent It Happening to You?
The nightmare of identity theft strikes an estimated 750,000 people every year. How can you keep from being one of them? While there is no guarantee that you won't become a victim, there are some steps you can take to decrease the risk and protect yourself.
Stop Credit Card Offers
You can stop receiving credit card offers in the mail! It's really easy to do - just phone 1-888-567-8688 and follow the prompts and provide the requested information including Social Security number, date of birth, etc.Do this for every adult member of your household, including college students.
Credit Cards or Store Cards - Which Is Better?
Introduction
In this article, a presentation is made of the differences between major credit cards and credit cards offered by specific stores to their customers. The purpose of this article is to provide a general overview of major credit cards and store cards to aid consumers in making decisions regarding which lines of credit lines would be the best for them in a given set of circumstances.
Credit Repair Kit Sound To Good To Be True? It Is.
A lot of people have bad credit. It is unfortunate that good people with good intentions are sometimes lured into credit card offers with outrageous interest rates or convinced to buy a new, overpriced car that they cannot afford.
How a Credit Card Can Be Your Friend
We have all heard countless stories of people over their
heads with credit card debt-maxing out every card they own,
then only being able to afford the minimum monthly payment.
High interest payments shackle people to their debt for
years, not to mention the significant income drain the
finance charges have on their families.
The Hitchhiker's Guide To Insanity
A new sickness is plaguing the UK called Denial. Denial has resulted in a national personal debt of almost £1.
Bank Robbery Growing In U.S.
Bank robbery has grown to become a huge problem in the United States but I am not talking about people robbing banks. I am talking about banks robbing people.
How To Eliminate Credit Card Debt
There is almost nothing more troublesome than having too much debt to pay each month. Consumers incur debt for many different reasons.
A No-Brainer Way Of Getting Credit And Credit Cards
What Is Your Credit Rating Now?If you have any charge accounts now, or have ever borrowed from the bank to buy a car, or if you ar paying on a mortgage, there is credit information on you.Up until a few years ago, you could only guess at what your credit rating was, because the credit bureaus who keep track of borrowers wouldn't tell the borrowers anything! But that's been changed through several laws, and now the bureaus have to send you your credit file when you request it.
Credit Repair Companies and Credit Counseling
Let's be crystal clear, right up front. Paying someone to "fix" your credit is a waste of your time and money, since the negative issues that are temporarily removed from your file will only reappear again in a couple of months.
Give Yourself Credit
The Beginning of the Credit Card EraIn 1951, Diners Club issued the first credit card to 200 customers who could use it at 27 restaurants in New York City. From that modest beginning, credit cards have become an indispensable part of modern life.
|