Credit cards are an important part of our financial health. By using credit cards responsibly, you are able to show lending companies that you are a low risk, trustworthy, worthwhile investment. Doing so raises your credit score, and that credit score allows you to receive loans with a lower APR, saving you thousands of dollars over the course of these loans.
One type of credit card is a store credit card. Many companies, like Macy’s and Best Buy, use store credit cards as a way of enticing shoppers to make a purchase. Stores will offer either no APR or a discount on their purchase in order to persuade shoppers to sign up for a store credit card, hoping that the credit card will encourage these shoppers to come back.
Yet despite these perks, store credit cards may actually be doing more harm than good to your finances – and may even cost you significantly more than you save in the long run.
Problems with Store Credit Cards
Your credit score is based on a number of different factors. However, one of the most important factors to a credit bureau is how many credit cards you have, and how often you apply for a new one.
Credit card companies are doing whatever it takes to both encourage credit card use and keep their customer satisfied. Simply using a credit card at any retail outlet allows credit companies to profit, so card companies do their best to reward spenders with their own cash back programs – allowing cardholders to save money on all of their purchases.
Cash back credit cards have received a lot of attention over the last decade, as credit card companies fight it out over who can offer the greatest rewards. The question is: Are they worth it?
History of Cash Back Programs
When cash back programs first introduced, many banks were concerned that cash back programs would greatly reduce their profits. Reluctantly they tried out the experiment and found that cardholders and banks both benefit from these programs. Banks benefit through increased spending, and cardholders receive a nice bonus for their purchases. Both parties were satisfied by the outcome, and so cash back reward programs now account for more than 50% of all household credit cards.
How Cash Back Programs Work
Each cash back credit card program works differently. Some offer cash back directly. Others offer points that can be exchanged for cash back or goods.
ID theft has become a growing problem all around the world. With considerable reliance on computer technology, the ability to steal someone’s personal information and use it to purchase items or even establish a new identity is a serious risk, and the amount of ID theft that occurs in today’s society is staggering.
Protecting yourself against ID theft should be one of your most important financial goals. There are simply too many ways for scammers and thieves to steal your information, and unless you take precaution against ID theft, you will be constantly putting yourself at risk.
5 Ways to Reduce the Risk of ID Theft
1. Protect Yourself Online
Perhaps the most important way to protect yourself is to take caution with how you manage your finances online. All of your financial information should be well protected. Never provide your social security number or any personal information to a site you do not trust. When you receive an email that asks for personal information, ignore it. If you believe it may be legitimate from a website you use regularly, visit the site directly rather than click the link in the email.
Protect all of your passwords and make sure they are impossible to guess.
It has become far too easy for scammers to steal your credit card information when you use it online. From phishing to viruses to spam, the Internet has become a dangerous place when it comes to using your credit card safely.
Yet many credit cards are at risk because of user error, rather than falling victim to the result of hackers or broken websites. In other words, credit card holders are making risky mistakes when it comes to how they use their credit cards online. By avoiding these mistakes, you can improve the likelihood of avoiding identity theft considerably. Before you continue to use your credit card online, ask yourself the following questions:
Do you click on links in your email?
Email is the easiest way for a company to scam your credit card. The most common way is through a process called “phishing.” Phishing is when a website is designed to look identical to another website in order to encourage you to provide your passwords and/or credit card information, just like you would on the safe site.
Rather than click links, you should always visit a site directly. If a link must be pressed, make sure you do not hand out any personal information and never, ever send an email back with your credit card number or password.
Airline mileage cards are some of the most popular reward based credit cards available. Airline miles credit cards are somewhat confusing, but they have a number of benefits that make them a preferred choice for most potential cardholders.
Airline miles are used to purchase domestic tickets on any airline they are associated with. They can also be used for upgrading your seat to first class and various other airline benefits.
Types of Cards
Airline miles credit cards are act like normal credit cards. They tend to come in two separate styles:
Airline credit cards – These credit cards are associated with a specific airline. Miles are earned solely for that airline. They are especially useful for frequent flyers, although some have nice benefits for those that don’t mind sticking to a single airline.
Bank credit cards – Banks offer credit cards that have similar reward programs, but can be used on any available airline. Banks are under more limitations that other airlines, unfortunately, so there may be more fine print, but the trusted programs still offer great rewards.
For many, a credit card is seen as a backup tool that is used only when the individual runs out of cash. However, there are benefits to using a credit card as your primary tool for purchases, and it may even be preferable to keep only a credit card on hand and leave your cash at home or in the bank.
Chance of Theft
Thieves and muggers are looking for an indication that you have something that they can steal. When you keep a large wad of cash in your pocket, it is like an open invitation for thieves to target you in their next attack. On the other hand, credit cards are less visibly apparent and much harder to use, making them less likely to encourage theft.
Counting Errors
Every dollar you spend is valuable. Yet most people are terrible at counting their money accurately. When you deal with cash, you improve the chances of counting errors that could cause you to be accidentally overcharged. Credit cards deal with exact calculations, so there is no risk of accidentally handing the cashier too much money, and not receiving the correct change back.
Lost Money
If you drop a credit card, you can cancel it immediately and receive a new one in the mail without losing a dollar. If you drop a $20 bill, it is likely gone forever.
At a young age many cardholders are tempted to abuse their credit cards because the repercussions seem unimportant. After all, credit scores are an imaginary concept, but the “money” they have with the credit card in their hands is tangible. Skipping a payment or two seems so easy, and the temptation to avoid credit responsibility is often too great for cardholders to avoid. Yet maintaining an excellent credit score is important, because:
Good credit saves you money on interest rates.
Good credit helps you find an apartment.
Good credit helps you get loans to purchase a home or a car.
Good credit allows you to receive more credit.
Good credit is helpful if you need to get any type of loan or credit in the future.
Your credit score shows your ability to manage money, and that can have a drastic effect on your life goals. In fact, some jobs can even be effected by your credit score, as financial companies often look at credit score during their background checks.
How to Build Good Credit
You need to make sure you have a high credit score in order to get the best rates and loans both now and in the future. Good credit simply has too many uses for you to take it for granted. The following steps will help you build a great credit history.
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Maintaining a healthy credit score is important. Without it, you will not be able to get an affordable home loan or low interest credit card in the future. Good credit has a lot of very important uses, and abusing your credit is one of the primary reasons for financial trouble later in life.
The problem is that your credit card payment is easy to forget. You may the payment every month, and over time making the payments starts to blend together, until you no longer remember whether the last payment you made was for this month or last month. It is also not uncommon to run into financial trouble when you fail to budget for your monthly bill. Here are five tips for ensuring you remember to make your credit card payment.
How to Make Your Payments On Time
Choosing Two Days of the Month
Your first step should be choosing one day of the month to make your payment. For example, the 15th of every month. Doing so will give you a specific date to help you remember if you made your payment. Paying at random on all different days makes it harder to remember if a payment was made. Similarly, if you have online banking, choosing as second day near the end of the month to review all transactions can help you also find out if you made your payment.
Excellent credit is an important goal to achieve. Though we often take credit for granted, a good credit score can save you tens of thousands of dollars on things like home loans and car loans when compared to those with bad credit.
Your average annual salary does play a role in your ability to improve your credit score. However it is the use of credit cards that has the greatest potential to earn you excellent credit. Here are three different ways using a credit card wisely can help you reach an acceptable credit score.
How to Improve Your Credit
• Establishing Credit
First, using your credit card often and wisely is the best way to establish credit. Frequent use of your credit card shows lenders that you are active with your finances. Lenders may not be fond of those with considerable amounts of debt, but the usage of a credit card is a sign that you both understand your credit’s value and use that value to your own advantage.
Similarly, paying off your credit card allows you to showcase your responsibility. Financial responsibility is a difficult thing to gauge. Someone that spends money wisely may still be irresponsible when it comes to their accountability to others.
Credit cards are a great way to pay for purchases when you don’t have cash on hand. Plus, using credit cards wisely and paying them on time helps build your credit. However, some people use them for everyday expenses or large purchases they cannot afford. That is when credit card debt starts piling up, making it harder to pay off, especially in these difficult economic times. Fortunately, there are ways to prevent credit card debt.
A credit card should only be used when you have the money to pay for the purchase and for emergencies. It should not be used as a way to live beyond your means. Accumulating thousands of dollars in credit card loans can become very pricey to pay back if you cannot afford to pay the balance in full every month. You will end up paying credit card interest for many years. Bottom line: use your credit card as a substitute for cash, not as a loan.
Credit card debt accumulates when you pay only the minimum payment each month. If you can’t pay off the balance every month, or at least a large part of it, then you need to adjust your lifestyle because you are living beyond your means. If you don’t have enough money to cover the purchase, save up until you can afford it.
