Conveying a lot of high-intrigue obligation slices into your capacity to spare to address different issues. On the other side, holding obligation under control and guaranteeing that your credit score assessment stays strong makes numerous things simpler, including landing a position, an advance or even protection.
Numerous American grown-ups battle with obligation. NerdWallet reports that of families that convey obligation, the normal sum owed on charge cards tops $16,000, while the normal home loan obligation remains at about $155,000-in addition to. In the meantime, late reports on retirement status have sounded the alert that obligation levels for more established Americans are expanding, putting these individuals’ retirements at danger.
# Improving credit
Keeping your credit in good shape doesn’t take a lot of effort, but it does require continuous maintenance. Here are the best steps to take to keep your credit score high:
~ Check your credit report annually. You can request your credit report — that’s a record of all your credit activity — for free once a year to make sure it’s accurate. Visit Annualcreditreport.com. Since three primary credit-reporting agencies provide reports through the website, you can actually get a free update every four months by requesting one at a time. Look for debts or charges you don’t recognize or that show incorrect information. In addition to checking your report, periodically check your actual credit score. Many credit card companies and some websites now offer credit score monitoring for free and will give you tips on how to improve it.
~ Pay bills on time. Late and missed payments show up on your credit report and can seriously harm your credit score. Automate your payments to ensure you never miss any.
~ Cut bad credit habits. If you have multiple credit cards, stop using most of them and rely on the one or two that have the best terms. You can consider closing accounts that carry an annual fee, but keep in mind that the older a credit line is, the more it strengthens your credit score. Don’t open new cards, as each card you open will negatively affect your credit. Never max out the cards you use and always pay them off in full; to make sure you use and pay off your bill each month, put a recurring expense like your Netflix or Hulu subscription on your credit card. The amount you owe on revolving credit (credit cards) counts for 30% of your credit score. Use these cards sparingly to build your credit history. When you do use them, pay them off immediately
# Don’t let debt get out of hand
Debt hurts your financial security in two ways. It’s obvious that it slows down your accumulation of wealth for retirement. But what may not be as easy to see is that by building up debt, you get used to an inflated lifestyle — and that makes it even harder to change your behavior when you commit to paying it off and living within your means.
Here are some steps to help you get your debt under control:
~ Aim to pay off debt using incoming cash flow, not savings. It may feel like a struggle, but if you pull money out of savings to pay off things like your credit card you run a high risk of simply running the credit card balances up again. This will put you even farther behind on your savings goals.
~ Make all minimum payments on time. Paying your bills on time is one of the most important things you can do to improve your credit. Late payments appear on your credit report and hurt your score more than anything else.
~ Pay down debts with the highest interest rate first. Make extra payments on the debt with the highest interest rate because that’s the debt that’s costing you the most money. Often, that’s credit card debt, especially if you took out your mortgage while rates were very low.
~ Evaluate paying off low-interest debt versus saving more. As you pay off your highest-interest debt, you will want to start evaluating the best place to put your money next. Think about it: Every percentage point you pay in interest toward your debt offsets each percentage point in returns you earn with your investments. For example, if your mortgage interest rate is only 5% but your investment portfolio earns an average of 8%, you may choose to prioritize maximizing your 401(k) contributions over prepaying your mortgage.
~ Save money by paying off your credit card each month. If you pay your credit card balance in full every month, you’ll never pay interest. But if you owe even one penny on a credit card, then every time you use that credit card you’ll be charged interest on that charge from the very first day of your purchase. If you must carry a balance on a credit card, use another credit card with a zero balance to make your regular purchases, and pay it off at the end of the month.
You realize that every day latte is a propensity that won’t not appear to be costly until you figure it out and find that $3 a day means more than $1,000 a year. In any case, your cafe propensity likely isn’t the main conduct that appears to be irrelevant, yet compares to boatloads of money after some time.
Indeed, you may do a few things all the time that are depleting your financial balance. Here are 11 normal propensities you have to stop on the off chance that you need to spare cash.
# Making Impulse Purchases
Most of us are guilty of buying things from time to time without thinking it through. In fact, a CreditCards.com survey published last year found that three out of four Americans have made impulse purchases. Some can be quite expensive: 16 percent said they spent $500 or more, and 10 percent said they spent $1,000 or more on impulse buys.
If this is a habit for you, figure out what’s triggering it. Men are more likely to make impulse purchases when intoxicated, and women tend to do it when they’re sad, according to the survey.
Another strategy is to give yourself a cooling off period before making a purchase, said Elle Kaplan, CEO and founder of wealth management firm LexION Capital. When her clients are tempted to make reckless purchases, “I tell them to put their credit card in the freezer. That way, they can’t go purchase a product until the card is thawed,” she said.
# Paying Full Price for Online Purchases
A recent study by marketing firm Cartera Commerce found that 35 percent of consumers never pay full price for items online. However, it suggests that plenty of us still aren’t taking advantage of deal and coupon sites to get a bargain.
Before you make any purchase online, take the time to compare prices using sites such as PriceGrabber.com or browser add-ons from FreePriceAlerts.com to be alerted when a product you’re viewing online is cheaper at another site. Then, check for coupon codes from sites such as RetailMeNot.com and Rather-Be-Shopping.com to get a discount at checkout. Also, look online for discounted gift cards that you can use to score additional savings when you make purchases.
# Wasting Food
If you regularly toss your leftovers or dump food because it went bad in the refrigerator before you could eat it, you’re throwing away money. The average American tosses $28 to $43 worth a food each month, according to the National Resource Defense Council. That’s $336 to $516 a year.
Money-saving experts advocate meal planning as a way to make sure you actually use all the food you buy. Free apps such as Pepperplate can help. Also, evaluate those bulk food purchases that seem like a deal but might be going to waste because you can’t eat all the food before it goes bad.
# Exercising at the Gym
Physical activity can help you control your weight, combat chronic health conditions, make you feel happier, relieve stress and give you more energy. Plus, it can lead to higher wages because it can boost productivity, according to a study published in the Journal of Labor Research.
Working out at the gym can be pricey, though. The average cost of a membership is $58 a month, according to the Statistic Brain Research Institute. Instead, take advantage of running trails or fitness DVDs from the public library to exercise for free. Or, your city’s parks and recreation department might offer a fitness facility membership that’s a fraction of what you’re paying for a gym.
# Having Several Nightly Drinks
You’ve probably heard that a little alcohol can actually be good for your heart. At least, that’s what various studies have found. But if you’re tossing back several drinks a night, you could be hurting your health and your budget. Consumers spent an average of $445 on alcoholic beverages in 2013, according to Bureau of Labor Statistics. Those earning $70,000 or more spent nearly $800.
Ideally, women of all ages and men older than 65 should limit themselves to one drink a day, and men 65 and younger should have no more than two, according to the Mayo Clinic. Drinking more than that will put you at an increased risk for high blood pressure, liver damage, certain types of cancer and other problems. So limiting – or eliminating – alcohol consumption could improve your well-being and your bottom line.
# Leaving the Lights On
Remember what your mom used to say every time you left a room? Turn the lights off! If you’re not heeding that advice, you’re probably spending a lot more than you realize on wasted electricity.
According to The Energy Collective, leaving an LED light bulb on costs just 1 cent over an eight-hour period; old-school incandescent lights cost about 6 cents. “Pennies,” you say. But if you leave, say, five incandescent lights on for eight hours daily, you’ll end up paying about $110 a year.
# Driving When You Can Walk
Raise your hand if you’ve hopped in your car to run a quick errand a mile down the road. The cost of driving those short distances — rather than walking — can add up quickly.
According to a 2015 report from AAA, drivers can expect to spend 58 cents per mile when all the fixed and variable costs of owning a car are factored in. That’s nearly $725 per month. Take this money-saving tip to heart: Walk instead of drive when you can.
# Buying Only Weekly Needs at the Grocery
If you’re in the habit of running into the supermarket to buy only what you need for the next few days, you’re spending much more than necessary on groceries. “When shoppers buy only their weekly needs, they are forced to pay full price for 50 percent to 80 percent of what goes in their cart,” said Teri Gault, CEO of grocery savings website TheGroceryGame.com.
However, if you spend a little time checking your store’s weekly sales online or in its paper circular (typically by the entrance), you can stock up on nonperishable items or items that can be frozen when they’re marked down. Then, plan your meals around your stockpile and perishable items that are on sale each week, Gault said. Members of TheGroceryGame.com who use this shopping strategy report average savings of $523 a month for a family of four, she said.
# Exceeding Your Wireless Plan’s Data Limit
You thought you were doing your wallet a favor by signing up for the wireless plan with the least amount of data. But you might be wiping out all the savings you thought you were getting if you’re regularly exceeding your data limit. For example, Verizon’s “More Everything” plan charges a minimum of $15 for exceeding data limits. The more you exceed your limit, the more you’ll be charged.
To avoid data overage fees, you can use the free My Data Manager app to track your data use and alert you before you go over your limit. It also identifies which other apps on your phone are consuming the most data. You also can visit MyRatePlan.com to find the right mobile plan for you based on the data you use.
# Eating Out for Lunch
That daily fast food meal or sandwich you grab at a nearby café for lunch might not seem like it costs much. But Forbes reported in 2013 that Americans spend $936 each year on lunch. One of the best money-saving tips to spend less on lunch is to bring your own from home. To make it easy, just bring leftovers. Or at the very least, only eat at places that are offering impressive happy hour and lunch specials.
You’ve heard it a million times: Smoking is bad for you. But if the warnings that smoking can lead to lung disease and cancer haven’t convinced you to quit, maybe the high cost of your habit will.
The average price of a pack of cigarettes is $6.25, according to the Campaign for Tobacco Free Kids. So if you have a pack-a-day habit, you’re spending nearly $2,300 a year on cigarettes. Plus, smokers pay $35 for related health costs per pack, according to the American Cancer Society, which adds up to almost $13,000 a year if you smoke a pack a day. Just think what you could do with $13,000 a year.
People are customized for self-conservation. Unexpectedly, that doesn’t mean we’re instinctually disposed toward riches safeguarding.
Without a doubt, a few people are deep rooted savers – delighting in their capacity to disregard consumerism and sock away 30% of their gross salary. However, then there are whatever remains of us, who figure out how to sock away only 4% of our pay, as indicated by late funds rate figures.
We all know better. We might even think, right as we open our wallets, “I really should max out my IRA before I buy this dress/tool/Clapper, but… I… can’t… stop….”
If consumption control is a problem for you, or you just haven’t developed the habit of saving, here are some tricks you can use to increase your net worth.
# Hide it before you can spend it
Out of sight is out of mind. When it comes to money, out of sight means in the bank — and in sight eventually means out of the wallet.
So, put your money out of reach before you can spend it. This can easily be accomplished by signing up for your retirement plan at work. The money is deducted from your paycheck and sent straight to your 401(k), 403(b), or 457, before income taxes are taken out. So, not only are you increasing your savings, but you’re also reducing your taxes. If your boss matches contributions, then you’re really losing money by not participating.
There are many other ways to hide your money from your inner spendthrift. Sign up for an automatic investment program, and money can be electronically transferred from your checking account to your IRA, a savings account, a dividend reinvestment plan (Drip), or a mutual fund that invests in money markets, bonds, stocks, precious metals, or real estate investment trusts.
A few years back, economics professors Richard Thaler and Shlomo Benartzi came up with a twist on this “pay yourself first” strategy. Their “Save More Tomorrow” plan called for people to increase their savings rate with every raise. So, if you’re contributing 3% of your salary to your 401(k) this year, you’d then up your contribution to 6% when you receive your next raise. In a few years, you’ll contribute the maximum allowed.
# Pay medical and day-care expenses up front, and tax-free
Medical and dependent-care flexible spending accounts (FSAs) permit you to have a certain amount of money taken out of your paycheck — before Uncle Sam can take his cut — for qualified expenses. The tax savings can be huge, especially for families who spend thousands every year on day care.
Just as with a 401(k), people in the 25% tax bracket will cut their tax bills by $250 for every $1,000 contributed to an FSA. But unlike retirement accounts, FSAs are also exempt from Social Security taxes, which results in an additional $76.50 in tax savings per $1,000 contributed.
You do have to use all the money in your FSA by the end of the year, or you lose the money forever. So, be conservative when determining the contribution amount. But this is an easy way to save hundreds on taxes by paying for services and items that you would’ve had to pay for anyway.
And here’s where the real savings trickery comes in. When you get that reimbursement check in the mail, don’t go running off to Mohair Sofas ‘R’ Us. Deposit it in one of your many savings vehicles.
# Limit your spending power
Automated teller machines (ATMs) make getting cash very easy — which is very bad for your bottom line. Just take a look at your bank statements. See all those $40, $60, and $100 ATM withdrawals listed? Can you account for that cash? Probably not.
So, institute this rule: Decide on a minimum amount of cash you need for a week. Withdraw that amount on Monday, and do not make another withdrawal until the following week. If something important comes up, use your credit card. But knowing that you have a limited amount to spend over the course of the week will make you think twice before buying some random item that will temporarily sate your desire to consume. And anything that discourages spending is a boon to saving.
# Paper the piggy bank
You’ve probably heard of the old “save your change” strategy: Pay for everything with paper money, and put the change in a big jar. Once the jar is full, rent The Sound of Music, plant yourself in front of the TV, roll all your coins, and deposit them in your savings account.
This is a fine plan, but why not supersize it? At the end of the day, deposit all your change and your dollar bills. Maybe even throw in a fiver every once in a while. For years, you’ve been grabbing lattes and happy meals, not thinking twice about dropping a few bucks for something that’ll add little more to your life than a rounder torso. “Hey, it’s only three or four dollars,” we say to ourselves.
Why not turn it around and say the same thing every day, as we empty our pockets? “It’s only a few dollars,” you’d say as you deposit $3-$5 every day in your piggy bank, which will accumulate to well over $1,000 if you keep it up for a year.
If your preferred savings account isn’t with your local bank, immediately write a check for the same amount of all your loose change, and send it to your retirement/college/emergency account after you’ve rolled the coins, counted the bills, and deposited the money at the bank.
# Pay debts forever — but become the payee
Many of us have some kind of monthly loan payment, whether it be a school loan, a car loan, credit card debt, a mortgage, or all of the above. The day will come when you send in your final payment. But unless that debt has been debilitating, you’ve been doing fine while making those monthly payments.
So, keep it up. Except, instead of sending a check to the lender, send the check to a savings, brokerage, or mutual fund account. You’ve increased your net worth by paying off the debt; now keep up the good work by building up your assets.
# Break windfall
Every once in a while, a chunk of change falls in our laps. It can come from all kinds of places: a bonus, a tax refund, yard-sale proceeds, savings from mortgage refinancing, successful lawsuits against movie studios for making so many mediocre movies despite its wealth of resources.
Oh, the excitement of found money! All the possibilities! We’re not suggesting that you deny yourself a little indulgence — a financial plan based solely on self-denial is doomed to fail. But here’s a way to satisfy both the spender and saver in you: From now on, break up every windfall into chunks. Use some for long-term goals, some for short-term goals, and some for immediate mad money.
# Satisfy your spending lust
Many of the reasons we choose to spend instead of save are based on emotion. We’re bored, depressed, or upset that it’s still five months until football season. When you feel the urge to spend your way to happiness, do things that will satisfy your desire for the new, the novel, the untasted, and the not-yet worn. Come up with a list of inexpensive things you can do instead of seeking mall therapy.
You know what they are: video, book, CD, and clothes exchanges with friends; dinner in a pillow fort in your living room; trips to the museum; camping; picnics — whatever you enjoy. Stick the list in your wallet and pull it out every time you have the urge to spend money that you’d be better off saving.
Few people dream of one day filing for bankruptcy. However, it can be the best option for those at the end of their financial ropes — as long as they understand what they’re getting into.
“People are generally poorly informed about what bankruptcy can and cannot accomplish for them,” says Paul Staley, a bankruptcy lawyer and author of “The
Bankruptcy Lifeline: What Your Creditors Hope You Don’t Know.” Before you seek to eliminate your debts, check out these myths and make sure you can distinguish fact from fiction.
# You automatically become debt-free. Of the six types of bankruptcy under the U.S. Bankruptcy Code, the two most common among consumers are Chapter 7 and Chapter 13. If you file for Chapter 13 bankruptcy, your debts are restructured in a way where you enter into a repayment plan for three to five years. A bankruptcy trustee distributes the payments among your creditors. Your repayment period may or may not satisfy all your debts, but once it’s over, any remaining unsecured debt is discharged. With Chapter 7 bankruptcy, most debts can be eliminated, but there are exceptions , such as student loans, child support, alimony and some taxes.
Credit card bills and other debts acquired within 90 days of filing for bankruptcy may also not be eliminated if the court determines that you made purchases that you never intended to pay. “I have met with people who have incurred large amounts of debt in weeks running up to the date when they intended to file bankruptcy, some of them knowing all along that they were in deep financial trouble,” Staley says.
# Your credit report will no longer show delinquent accounts post-bankruptcy. If you have a history of late payments on an account, those late payments that were reported before the bankruptcy will continue to be listed on your credit report until they fall off, typically in seven years, says Rod Griffin, director of public information for Experian. “The credit report is a credit history, so it’s going to show the history of that account from its beginning to its end.”
However, the current status of your accounts should change after you’ve filed for bankruptcy. Discharged accounts should be marked as “included in bankruptcy” or similar language, says Ken Chaplin, senior vice president at TransUnion. If you get your credit report and find that an account that was discharged in your bankruptcy is currently showing up as “past due” or “unpaid,” contact your creditor to let them know the information is not up to date, Chaplin adds.
# Your credit will be destroyed for the next seven years. In general, Chapter 7 bankruptcies remain on a credit report for up to 10 years and completed Chapter 13 bankruptcies remain for up to seven years, says Christina Goethe, a spokeswoman for FICO.
However, the delinquent accounts that are included in the bankruptcy may disappear off the credit report before the bankruptcy itself. As the individual accounts age and reach the seven-year limit, they’ll be deleted from the credit report, says Norm Magnuson, a spokesman for the Consumer Data Industry Association.
Don’t assume your credit score will skyrocket once the bankruptcy drops off your credit report. If you avoided using credit and simply resorted to cash after your bankruptcy, you could end up with no credit history, says Griffin.
That could be just as bad as having a bankruptcy on your credit report since lenders have no way to assess your creditworthiness. To avoid having this happen, keep an account open or apply for a secure credit card and maintain a positive payment history, Griffin says.
# After bankruptcy you can’t get credit. Some people believe that you can’t get approved for credit after filing for bankruptcy, but many people do, in fact, get approved for credit cards, car loans and even mortgages. However, all that glitters is not gold. “I often hear from people who say, ‘I have friends who declared bankruptcy and three months later they got credit or bought a house,'” says Griffin. “You may get offers right away, but typically they have very high fees and very high interest rates — they’re not the kinds of credit you should want.”
# Debt collectors can’t take your stuff. “The minute you file bankruptcy, something called the automatic stay applies to your case,” says Seymour Wasserstrum, a bankruptcy lawyer in Vineland, New Jersey. “That means creditors automatically must stop any contact with you whatsoever.” Once a debt is included in a bankruptcy, the debt collector cannot try to collect the debt.
However, that doesn’t mean they can’t come after certain belongings. According to the federal Consumer Financial Protection Bureau, lenders may in some cases have the right to repossess collateral that wasn’t paid for, such as a car, after bankruptcy.
# Your bankruptcy will stop all attempts to collect. If a debt is discharged in bankruptcy, you no longer have a legal obligation to pay it, but that doesn’t mean a creditor won’t try to get you to pay up. Sometimes creditors sell debts to debt buyers who don’t know that the debts have been discharged. In other cases, a creditor may simply continue to try to recoup the money. Whatever the reason, not only are you not obligated to pay, but you can hire a bankruptcy attorney or file a motion with the bankruptcy court to address the matter, says Wasserstrum.
# Bankruptcy affects everyone’s credit the same way. The impact of a bankruptcy on an individual’s credit score depends on that person’s entire credit profile, says FICO’s Goethe. “For example, someone who had spotless credit and a very high FICO score could expect a huge drop in their score. On the other hand, someone with many negative items already listed on their credit report might only see a modest drop in their score.” The number of accounts included in the bankruptcy could also affect the score, Goethe adds. “The more accounts included in the bankruptcy filing, the more of an impact on the score.”
# You’ll lose the shirt off your back. Some people think filing for bankruptcy means they’ll lose everything, but each state has its own bankruptcy exemption law that designates which possessions a debtor can keep. These can include anything from a home to clothing to retirement accounts.
While not the best move for everybody, bankruptcy could give you the opportunity to catch your financial breath. Just make sure you are armed with the truth, rather than myths.
Postponing shopping until the last moment could arrive you in an occasion obligation cycle where you spend past your financial plan, depend on your charge cards to compensate for any shortfall and pay off the equalizations amid the vast majority of the next year.
“Individuals in America are compelled to spend more than they can manage,” says Beverly Ladley, official VP at SunTrust Bank, “and a major part of that is holding up until the latest possible time.”
To get started on your own holiday game plan and start off 2016 free of holiday card debt, here are some expert strategies to try this fall.
# Cash in card rewards for gift cards. When is the last time you checked your accrued card rewards balances? Leslie H. Tayne, an attorney specializing in debt management and debt resolution and author of “Life & Debt,” says doing so could jump-start your holiday shopping list. “While you should not be charging just to rack up rewards, if you have a decent amount of rewards already accrued, consider using these to your advantage,” she says.
Try this: Many issuers will allow you to redeem points for retailer gift cards, which always make for easy gift giving. Consider ordering these soon, however, as they could take some time to ship.
# DIY while there’s still time. “Some of the most meaningful gifts I’ve gotten have been scrapbooks with photos from a certain period of time,” says Ladley. “They’re not expensive, but they do take time.” Especially if you have a talent or hobby, such as knitting or graphic design, you could create gifts for at least a few of your recipients, saving you a few bucks, but also showing how much you care.
Try this: Go on Pinterest for some DIY gift idea inspiration. If you’re into giving handmade crafts or homemade goods, hit up your local dollar or craft store and keep an eye on clearance racks to stock up on supplies.
# Don’t fall into the “biggest sale of the season” trap. Before you know it, fliers and emails will come rolling in with promises of huge future sales, but that’s no reason to put off shopping now. “Know the going rate for certain things you want,” says Ladley. This will help you avoid what she calls the “markup to mark down” factor, which describes the retail practice of making something that’s regular priced appear to be a bargain. She recommends using apps, such as SlickDeals Price Tracker, Camelcamelcamel (which watches Amazon prices) and PriceZombie, that monitor fluctuating prices and allow you to comparison shop so you don’t fall for a false “lowest price” claim.
Along those lines, you also have to resist the urge to splurge if you do stumble onto a big sale, says Michele Boyer, wealth strategist at Off the Grid Investments in Parker, Colorado. “Waiting until Black Friday often ends up being a budget black widow because we justify overspending when we get a great deal.” Plus, she says, if you use credit and spend the next year paying off the debt, you’ll negate all of those great deals pretty quickly.
Try this: Stores offering an interest-free layaway program can be a great way to shop early and manage your budget since they allow for you to pay a little over time toward a big-ticket item for a modest fee, says Tayne. And by all means, if you see something in your travels that would make for a great gift, there’s no reason why you shouldn’t snag it early. Spreading out your purchases will help your cash flow, plus you’ll be able to make progress by crossing someone off your shopping list. Keep those receipts, too, since some retailers honor price adjustments should the price end up dropping after you buy.
# Create a holiday-specific budget. “On average, people spend $800 during the holiday season. At 100 days out, that would mean saving $8 a day in order to have cash on hand to manage your expenses,” says Ladley. Finding wiggle room in your budget is probably easier than you realize if you’re willing to make some small sacrifices, but some hands-on calculating is required.
Try this: To figure out your holiday budget, determine how much you can afford to spend out of pocket, and compare that total to a list of everything you anticipate buying during the holiday season, says Kevin Gallegos, vice president of Phoenix operations for Freedom Financial Network. Don’t forget to factor in oft-forgotten expenses such as cards and postage (hint: consider free e-cards if your budget is tight), travel, special holiday outfits, year-end tips for service people and gifts for teachers, coaches, etc.
# Only give what you can afford. It sounds simple, but how many of us actually follow this rule? “Do not give what others think they deserve, a gift equal to what someone gave you last year, enough presents to make a ski slope-sized pile under the tree or whatever unrealistic measure might be luring you toward overspending,” says Gallegos. Sure, we want to show our love and generosity through gift giving, but think about this: Would your loved ones really want you to suffer financially so they can receive a bigger gift? Doubtful.
Try this: Instead of buying everyone in your large, extended family a present, draw names instead. That plan has worked well for Boyer, who along with her two siblings, have three children each. The adults don’t exchange, and each child now buys a gift for just one of his or her cousins. This decision means each family buys just three gifts instead of 12. “It gets to be a lot of fun because it engages the kids to really think about what that one person will love. And when we get together, it’s more about the experience of getting together than the gifts.”
Another idea is to consider shopping on local Facebook group buy/sell pages or at garage and yard sales (while those are still in season). Especially with younger kids who might want a bicycle or a scooter, you can get high-quality, barely used items for a fraction of the cost, and they won’t know the difference, says Boyer.
Although you probably won’t get all of your shopping done before Halloween, taking these steps now will help you avoid the crazed holiday crunch that often leads to foolish impulse buys in December. Even better, smart planning for the holidays can keep you off the spending “naughty list” indefinitely, says Ladley. “Once you get on a savings plan for the holiday, keep it up to build a safety net and nest egg throughout the entire year.”
It’s astounding to perceive how investment funds can include. With month to month commitments of $500 gaining only 1% yearly intrigue, you would have more than $63,000 following 10 years. An assortment of online mini-computers can help you decide how much cash you have to spare over a given timeframe to achieve your objectives.
In any case, in case you’re baffled by the moderate advancement you’re making toward those objectives, it’s an ideal opportunity to reset the ways of managing money that are keeping you and your family down. What’s more, discovering approaches to spare doesn’t need to be troublesome.
Start by reviewing — and, when possible, trimming – big-ticket categories. This will give you momentum early on in the process. Here are some ideas to reduce the major expenses in your budget:
Make dinner at home rather than go out to eat. Eating out usually costs more and should therefore be considered a treat rather than a staple in terms of getting meals.
Just do the math. One takeout pizza serving four can easily cost $22 with all of the goodies, and of course you need the salad, too, adding another $4 to $6. You could instead make or buy the dough, throw on some toppings, wait the same 30 minutes for it to cook, and save at least $10 to $12.
If you don’t like pizza, think about barbecue. Throw some meat on the grill when you get home, prepare a quick salad and, voilà, dinner is served. Takeout barbecue with sides at one national chain in my area costs $35-$40 for four people; a grill-ready chicken costs less than $8. You can add the marinade.
I usually don’t advise my clients to focus on going without coffee or lattes, as these are small pleasures and may possibly help them get through an otherwise long workday. Bringing lunches now and then is a good idea, but it is a homemade dinner that gives you the biggest savings. Over the course of the month, you could shave around $300 off your total food tab.
Also consider buying in bulk. Larger families may already do this, but buying 25-pound sacks of staple items and then using them in rotation before they go bad is a smart and cost-effective way to make sure you have food around the house to cook. You can also join with friends and neighbors to buy larger quantities that you can split among yourselves.
For many households, transportation-related expenses follow housing and food as the biggest monthly outlay. Cutting in this category may require going from multiple cars to one, or substituting bicycles or public transportation for some trips.
Factors to consider in this analysis include not just the monthly payment on a car loan, but also the cost of insurance, gas, depreciation and maintenance costs such as oil changes and gas. Insurance costs alone can exceed $1,200 a year here in California for a new four-door passenger vehicle.
If you convert a vehicle from personal use to partial commercial use — hauling stuff on the weekends, for instance — you or a family member could generate hundreds in additional income. You’d also reduce the cost of owning the vehicle by getting to deduct the depreciation. In order to reach your goals, all ideas should be on the table.
And changing your transportation habits may not just be good for your wallet. Vehicle use enlarges your carbon footprint. Switching to bicycles or walking for some of your trips can reduce the amount of energy you consume overall, aiding the environment — to say nothing of your health.
Insurance costs can add up to a large monthly outlays when you add together premiums for life, homeowners, auto and health coverage. Just as with other expenses, shop carefully and compare quotes. You could save hundreds each month just in this category.
One innovation in car insurance is the ability to pay by the mile rather than as a flat monthly or annual fee. If you drive less than 12,000 miles a year, this method may work for you.
And don’t forget life insurance. If you are married and one of you is much older or has health issues, think about buying a cash value life insurance policy that covers both of your lives. That way the cost for the policy is less than if the older or less healthy partner is covered alone. Cash value life insurance can also give you a source of emergency savings to tap, in lieu of zeroing out accounts or resorting to credit cards.
But don’t go without insurance. It covers the worst-case scenarios that can otherwise wipe out any savings you may have carefully set aside.
# Miscellaneous spending
Before spending money to replace anything, ask yourself if the item is necessary or simply “nice to have.” If it’s the latter, can you do without it? If not, look for a less expensive option.
And before deciding that you’re going to buy everything online because it’s cheaper, consider the hidden costs — such as shipping charges and the increased temptation, when using a credit card, to add extras. You might do better to shop closer to home and use more cash, and less plastic.
If you need to use credit cards for work or travel, be sure to expense what you can. And shop for the best credit card rates, if you are using personal cards for carrying balances.
To get everyone involved and working to reach your family’s goals, make spending a family discussion (or even a game) at least once a month. Set aside time to have the conversation and ask everyone in the family to identify one new way to spend less.
Finding ways to save more doesn’t necessarily mean you have to give up everything, but it does mean you’ll need to get creative. It doesn’t mean going without couch cushions, for example, but it may mean pinning fabric around the old ones to pretty them up, rather than spending $25-$35 for new ones. Or it may mean going to a ski swap rather than investing in new equipment.
Ultimately, to save more, you’ll need to examine your current needs and priorities and their relative costs. You can chuck whatever is not essential to reach your defined goals. Whether you’re hoping to take a dream vacation, send a child to college, or retire at 62 instead of 65, take stock and see where you can recalibrate some of your spending.
In case you’re battling under a heap of charge card obligation, you might have the capacity to pay it off speedier on the off chance that you can arrange better terms. Be that as it may, while approaching your card guarantor for a lower loan cost or a fractional settlement can challenge for anybody, it can appear like an outlandish mountain to climb in the event that you are a thoughtful person.
“The vast majority maintain a strategic distance from struggle, however I’ve found
research that thoughtful people maintain a strategic distance from it more,” says Jennifer Kahnweiler, creator of “The Genius of Opposites: How Introverts and Extroverts Achieve Extraordinary Results Together.”
In any case, contemplative people can be awesome arbitrators when they “quit attempting to resemble outgoing people and depend on their innate qualities,” Kahnweiler says. On the off chance that you’d preferably visit the dental practitioner than deal over cash, here’s the manner by which contemplation can be utilized further bolstering your good fortune.
# Understand your value. “One thing that would help introverts is to be aware that the company they’re calling wants their business,” says Laurie Helgoe, author of “Introvert Power: Why Your Inner Life is Your Hidden Strength.” Not only do they want to keep you as a customer, but they want you to pay your debt. Let the issuer know that a lower rate or better terms will help you to fulfill those obligations so everybody wins.
# Give yourself a reality check. While you might imagine your card issuer laughing in your face or slamming down the phone, that’s unlikely to happen. In fact, if you’re getting better offers from other credit cards, you should expect to get a better deal. “If I have another credit card company that’s offering me a much lower rate, it’s reasonable for me to expect my card company will match that to keep me as a customer,” Helgoe says.
# Separate the problem from the people. If an introvert is speaking with a fast-talking extrovert, it can be easy to lose focus on the goal, which is to get better credit card terms. However, by firmly stating your objective, whether it’s to reduce your interest rate or come up with a workout arrangement, you’re less likely to be distracted (and drained) by the other party’s communication style, Weber says.
# Play a role. “There are a lot of actors and comedians who are introverts. The role gives them permission to let loose,” Helgoe says. Take a page from them and take on a different persona when you’re making the phone call. While you don’t want to give a false name or false identifying information, “pretend you’re somebody who is very bold,” Helgoe says.
# Use silence to your advantage. Since Patricia Weber is an introvert and her husband is an extrovert, it seemed natural that he would do most of the couple’s negotiating — until his openness with a car salesman about their immediate need for a car cost them a better deal. As a result of that experience, Weber now does all of the family bargaining. Stating what you want and then being silent may leave an extrovert uncomfortable, which could lead to a better offer. Negotiation is all about power, says Weber, author of “Communication Toolkit for Introverts.” “If you can use that silent pause, you gain the power back.”
# Pick the right time. One of the key traits of introverts is that they need alone time to recharge. “We are like a battery and stimulation will drain that battery,” says Helgoe. The worst time to call your card issuer is when you’re tired or drained from other interactions. Instead, spend some time alone until you’re feeling good. Then pick up the phone when you’re bolstered and ready to talk.
# Practice makes perfect. Not only can you rehearse how the interaction might go in your mind, but you can record yourself asking for a lower rate to hear how you come across. “I find it very helpful to say the words aloud,” Kahnweiler says. You can also practice with a friend or relative you trust. To give you more confidence when making the call, write out talking points or a script you can refer to when you’re on the phone.
# Take a pause. When your credit card issuer tells you what they can do for you, you don’t have to immediately respond. Thank them for working with you and ask if you can call back tomorrow after you’ve thought about it, suggests Kahnweiler. That gives you time to regroup and process the information, and it might give your issuer time to come up with a better offer.
# Get it in writing . Whether you’re an introvert or extrovert, make sure you get the new terms in writing, says Mary Riley, a certified financial professional from Consumer Credit Counseling Service of West Georgia/East Alabama. That advice goes whether you’re agreeing to a lower interest rate or a debt settlement for less than what you owe. “You don’t want to pay money on an account only to find out a couple of months later you still owe the debt,” Riley says.
We as a whole need the best for our kids, and for a significant number of us, that implies giving them a decent instruction. Tragically, with some four-year degrees now costing more than $250,000, generally couple of families have a satisfactory arrangement set up to handle the steadily increasing expenses of school.
When this subject comes up, most families are told by a budgetary counselor, companion or online source to open a 529 record. This is solid counsel in numerous regards. In spite of the fact that various duty agreeable vehicles can be utilized to put something aside for training —, for example, Roth IRAs and Coverdell accounts — as a rule, few match the adaptability and advantages of a 529 arrangement.
I firmly believe in the value of 529 plans for saving for a child’s education — but a 529 plan is only one part of a robust college plan. Families who stop after opening a 529 account are failing to plan adequately for this significant life event.
Numerous issues must be addressed in planning for education costs. Here are some of the questions advisors should be asking as part of a consultative approach to college planning:
- What if your 529 account is not enough to cover the costs?
- What will schools expect you to contribute toward the cost of education?
- Is a public university or a private college a better fit for your child?
- Are there any tax strategies that might help with the expense?
Every family can benefit from a comprehensive strategy to pay for college. A strategy that makes the most of your family’s resources, incorporates the college selection process and includes an analysis of financial aid and tax benefits will be far more valuable in the long run.
A great starting point is to talk with an admissions consultant or “college coach,” who can help figure out what type of school best suits your child. After you have narrowed your search to a select few schools, work with an advisor who can help determine where your child is likely to be accepted.
The next step is to assess how much and what type of financial aid your child will be eligible to receive at each school. Eligibility for financial aid at Duke, for example, might be substantially different from that down the road at North Carolina State.
A comprehensive plan will also dig deep into your finances to determine your eligibility for tax aid through credits and deductions, gifting or shifting assets to children. Finally, you will want to explore how to best use your personal resources to pay for any funding shortfall.
As you can see, there’s a lot to review when putting your plan together. Since each family’s circumstances are different, every plan will be, too. What successful plans have in common, though, is that they don’t simply start and end with a 529.
Getting an auto advance without having a financial assessment regularly isn’t fast or simple.
Notwithstanding when you’re forthright about your extraordinary conditions, a few banks may offer affirmations, then run the numbers the same way they generally do.
What’s more, after they confirm your no-score circumstance, you’re frequently either demonstrated the entryway or tested on whether you can deliver a reliable co-endorser.
The reason: Many loan specialists don’t generally perform manual (think “eyes-on-paper”) guaranteeing. Rather, they sustain the data into a PC, and the system breaks down the loan specialist’s danger. Frequently, that first electronic channel is a FICO assessment inside a set extent.
Don’t have a score at all? Buh-bye.
If this is you, you have plenty of company. An estimated 53 million people in the U.S. (about 1 in 6), don’t have a credit score, says David Shellenberger, senior director with FICO, the company that pioneered credit scoring.
Some, such as college students and new grads, don’t have scores because they’ve never had credit. Others, including working families or retirees, may not have used credit in a while, so they don’t enough recent activity to generate a score. “People should know if they absolutely have to get a car and have some money, they probably can” get financing, says Philip Reed, senior consumer advice editor for Edmunds.com.
Here are six things to keep in mind.
# Be patient, ask questions; don’t act out of desperation
“The key thing is when you start the process, don’t assume you won’t qualify,” says Jeff Bartlett, deputy automotive editor for Consumer Reports.
Reed agrees. Don’t make decisions out of desperation, he says. “If you do find financing, don’t automatically assume you have to take it. You may be able to do better.”
Be strategic. Start by making a list of potential lenders. Include institutions where you have accounts and some smaller community banks and credit unions, says Mike Schenk, vice president of economics and statistics at the Credit Union National Association.
Before you apply, ask questions to screen your prospects. Do they do any manual underwriting for auto loans? Can they? Can they make loans to someone with no score? If so, how does that process work?
Anytime someone answers “yes,” press for details. What will they do for you that differs from their normal lending process? And will you need to do?
Be ready to demonstrate that you’re a good risk. Some factors that work in your favor: a record of bills paid on time, a steady income, a healthy down payment and sufficient disposable income to repay your new loan.
“You’ve got to be prepared to tell your story and support your argument,” says Schenk. “Ultimately what all lenders want is to be paid back, preferably on time.”
# You may be able to revive your score
If you’ve had credit but haven’t used it in a while, you might be able to resuscitate that score before you apply.
A credit score requires a past credit history and evidence you’ve used credit fairly recently, says Shellenberger. If you lack either, the formula might not be able to generate a score for you.
One possible solution: If you have a working credit card, use it for something small, and pay it off immediately. As soon as the issuer reports to the credit bureaus (usually once a month), you should have a credit score.
Don’t have a history to reactivate? If you’re new to credit and you can wait six months to a year for a car, consider getting a credit card first. For credit newbies, a secured credit card card with a small credit line may be easier to obtain than a car loan, says Schenk.
After six months, you’ll have enough of a credit history to generate a FICO score, says Ethan Dornhelm, senior principal scientist at FICO, the company that pioneered credit scores.
To make it a good score: Use the card for small amounts, keep the monthly balance to 20 percent or less of your credit line, and pay the entire balance on time each month, he advises.
# Shop with your future score in mind
Every time you apply for a loan, a hard inquiry goes on your credit history, and your credit score can take a hit. The damage is greater when there’s little positive credit history to balance it out.
The workaround: While some scoring models allow as much as 45 days to shop for a loan without excessive inquiries hurting your score, stay on the safe side by keeping all your auto-loan applications within a 14-day period and the scoring formula (no matter which one is used) will treat the entire group as one application, limiting potential score damage.
So what does that mean for someone without a score? While you’re applying it won’t have any affect at all.
But once you have a credit score (months after you get the loan), those inquiries on your credit history will be a factor. And your score will feel the effects until the inquiries are a year old, according to FICO. After that, they no longer count.
# You can shop dealerships, too
“The dealership is going to have access to multiple lenders,” says Bartlett. In addition, some brands offer programs for new grads “understanding their unique circumstances,” he says. Others may relax standards if they have excess inventory, he adds.
If you’ve already been rejected for financing, “it’s really easy” to take the first offer a dealer makes, says Schenk. But you should still haggle.
This is a two-step dance. First, negotiate the price of the car, he says. After you reach an agreement on price, then you can ask about financing.
If the salesperson tries to blend the two, say you already have financing elsewhere, Schenk says. “Otherwise you don’t know what you’re paying.”
Once you lock in the purchase price, mention that you’re also curious about any financing deals they have, he adds.
One place you can save money: Refuse any “credit repair” products and make sure none are included in your loan, says Chris Kukla, senior vice president at the Center for Responsible Lending, a consumer advocacy group focused on fair lending practices.
“They’re useless, and they’re often sold to people with ‘thin’ credit files,” he says.
In June, three New York state auto dealers have agreed to return $13.5 million to consumers after bundling credit repair and identity-theft protection products into auto contracts, according to a written statement from the New York attorney general’s office. In some cases, these products added as much as $2,000 to the car’s price.
What you need to know: If you get the loan, you’ll have a score soon enough.
# You may pay more
No credit score? The lenders willing to work with you will likely offer higher interest rates, or ask for larger down payments, or both.
Interest rates will vary with your situation and lender, but you’ll likely see something in the 10 to 20 percent range, Bartlett says.
And rates from 15 to 30 percent aren’t unheard of either, says Kukla.
Lenders may also ask for more money down. And Bartlett recommends that score-free borrowers put at least 20 percent down.
Not prepared with that lump sum? This is another factor that you can negotiate, says Schenk. “Don’t let that scare you off.”
Are higher interest rates and larger down payments shredding your proposed budget? Instead of stretching out the loan over a longer time frame, consider scaling back to a more basic car, says Bartlett.
A five- or six-year commitment at higher-than-expected rates “is digging yourself into a big money pit,” he adds.
Not to mention “You want to be very careful how long you’re financing beyond the warranty,” Bartlett says. “After that point you’re creating new financial risks.”
And be wary of a subprime lender who “charges an extraordinarily high interest rate and promises you can refinance later,” says Kukla. “Don’t fall for that one. In many cases, the way the deals are structured, you won’t be able to refinance any time soon.”
# Leasing could be an option
Today’s lending standards could make leasing an option for potential buyers who don’t have a score, Bartlett says.
An added benefit? Like a car loan, a lease is reported to your credit history, which builds your credit, he says. So even with no previous credit history at all, you’ll have a FICO credit score after six months of reported payments.
And with a lease, “you’re not stuck with the car forever,” says Bartlett. “In two or three years, you can trade up.”
His tip for getting the best deal: “Leasing is a form of financing,” he says. You don’t have to take the deal as offered. You can negotiate.
But, unlike buying, there can be extra costs based on mileage restrictions and wear and tear, Bartlett says.
When you glance back at the historical backdrop of Mastercards, they began basic and standard: Each backer created one card with one arrangement of components. Today, charge cards come in different levels with extending loan fees, expenses and reward programs, so before you round out an application, it’s vital to know which will best suit your money related circumstance and way of life.
The accompanying is a brief portrayal of the most widely recognized sorts of charge cards accessible.
# Standard credit cards
These credit cards are the most common and are readily available from most banks and financial groups. They are unsecured, which means you do not have to put down a security deposit to prove the money can be repaid. The way the annual percentage rate is offered or calculated for these cards can vary. Here are two examples:
- Balance transfer credit cards
Balance transfer credit cards allow consumers to transfer a high interest credit card balance onto a credit card with a low interest rate. Typical in the market today are balance transfer credit cards with an introductory annual percentage rate (APR) of 0 percent, with that introductory or “teaser” rate lasting several months up to a year. The terms of balance transfer credit cards varies between offers, so be sure to thoroughly read the terms and conditions for each card.
- Low interest credit cards
Low interest credit cards offer either a low introductory APR that jumps to a higher rate after a certain period, or a single low fixed-rate APR. Low interest cards can be very useful when consumers need make a large purchase because it allows several months to a year to pay it off with very low or no interest. Before using a low interest card, read all the terms and conditions of the introductory rate so you will not be surprised by fees or accumulated interest.View low interest credit cards.
# Credit cards with rewards programs
Reward credit cards allow users to earn incentives for making purchases with their credit card. Points accumulate for each dollar charged on the card, and cardholders can redeem these points for various rewards. Reward cards usually require better-than-average credit for approval. There are seven major types (not including airline miles / frequent flier cards, which we’ll discuss a bit later).
- Cash back credit cards
This type of credit card allows you to earn cash rewards for making purchases. The more the card is used, the more cash rewards you receive. Most cash back cards earn users around 1 percent of total purchases, excluding interest and finance charges. Some cards offer a higher cash back percentage with increased usage; others offer a higher cash back percentage at select merchants or for particular types of purchases. Since cash back programs are costly to credit card companies, some of these cards have an annual fee that can vary from $50 to $100. This type of card is best for people who are faithful about paying off their balances each month. If used appropriately, a cash back credit card can earn the cardholder a significant amount of money over time.
- General reward points credit cards
Reward credit cards are similar to cash back cards in that cardholders can accumulate points toward a reward structure, which is based on how much the card is used over time. General reward cards offer cardholders a variety of items to cash points in for: gift cards, electronics, hotel stays, plane tickets, jewelry, pet supplies and more. Some rewards can be attained for 1,500 points; others cost 200,000 points. Reward programs and promotional offers often change; thoroughly review a card’s terms and conditions before applying.
Some general reward credit cards come with an annual fee ranging from $50 to $100, although most have no annual fee. Reward cards are best for people who regularly pay off their balances each month. By minimizing their finance charges, individuals will reap greater benefits from the associated rewards credit card.
- This is a genre of credit cards specific to hotels and travel. Some cards are co-branded with hotels, such as the Marriott Rewards Visa card, or the Hilton HHonors American Express card. These credit cards allow you to earn points for all purchases, in addition to bonus points for dollars spent on stays at the respective hotel chain. You can redeem your points for free nights and upgrades at the hotel chain your card is co-branded with.
Then there are broader hotel and travel cards such as the Bank of America’sMilesEdge Visa, with which points can be redeemed for travel, theme park admission, stays at major hotel chains and more. Blue Sky from American Express is similar — points can be applied toward plane tickets, hotel stays, rental car use or cruises.
Because these reward programs can be costly for credit card companies, many of these cards come with an annual fee. If you are not a frequent traveler, the annual fee may negate the benefit of the rewards earned.
- Retail rewards credit cards
These credit cards are co-branded with a major retailer, such as Disney, Amazon.com or Best Buy. Points are accumulated by making everyday purchases, though cardholders are awarded with double or triple points for making purchases from the co-branded retailer. Reward points must be redeemed for products or services from that specific retailer. With the Best Buy MasterCard, for example, you earn up to 2 percent back from any purchase with the card, and 4 percent back from Best Buy purchases. Cardholders receive the reward money in the form of reward certificates that can be used only at Best Buy. With the Disney Visa card, points accumulate for every purchase, and they can be redeemed for Disney products or vacations.
- Gas cards with points or rebates
Gas cards come in two species: general and brand-specific. General cards treat all gas companies equally, while brand-specific cards favor one gas company. The Discover Open Road card, a general gas rebate card, gives you 1 percent cash back for general purchases but rewards you with 5 percent back for buying gas or having auto maintenance done at any company. The BP Visa, in contrast, will give you a 1 or 2 percent rebate for regular purchases, but you will earn 5 percent rebate only when buying gas at BP stations.
If you tend to be loyal to a certain gas company, a brand-specific card may benefit you, but if you tend to just stop at whichever station is closest, you may be best with a general gas rebate card. Additionally, it’s important to remember that a gas company may be very popular in one state, but uncommon or nonexistent in other states, making brand-specific credit cards less than ideal for long road trips. For example, BP is a very common gas station in Florida, but there are few of them in Texas. Sinclair gas stations are in 21 states, but if you have a Sinclair MasterCard and are driving through California, you’re out of luck.
- Automobile manufacturer rewards cards
Auto rewards cards allow consumers to earn points that can be redeemed toward the purchase of a new or used car, auto-related expenses or merchandise. With the GM Flexible Earnings MasterCard, for example, cardholders can opt for cash back rewards, or apply their earnings toward the purchase of a new GM vehicle. This card is most beneficial to those looking to purchase a vehicle in the near future.
- Home improvement rewards credit cards
These credit cards allow consumers to earn reward points for all purchases, while earning extra points for home-related expenditures. For example, with the Citi Home Rebate MasterCard, you earn 1 percent back on regular purchases, but 6 percent back on purchases involving utilities, cable/satellite TV, Internet connection and telecom for the first year.
Rebates earned are automatically applied to your mortgage principal. Bank of America’s Home Advantage World MasterCard works the same way, though points can be redeemed for cash back, travel, gift cards, merchandise if you decide not to apply them to your mortgage.
# Airline mile / frequent flier credit cards
While certain general reward credit cards allow points to be redeemed for plane tickets among other things, there is a subset of reward cards specifically for air travel. This type of card allows consumers to earn airline mile credits whenever they make purchases. Some cards are co-branded with a specific airline, while some are generic and can be redeemed for tickets with a variety of airlines. Points can be redeemed for airline travel, much like frequent flier miles.
- Airline-specific credit cards
These cards are associated with one airline. Typically, the cardholder accumulates points from both making purchases with the card and by flying on the specified airline. For example, with Chase’s Continental MasterCard, cardholders accumulate Continental frequent flier miles (called OnePass miles) both from spending with the card and from flying with Continental. These cards come with other perks — for example, some allow you to earn double points when you use the card to purchase plane tickets with that airline.
- Generic airline miles cards
Credit cards such as Miles by Discover allow you to redeem your reward points for air travel through any airline, travel agent or online travel site. This is a great option for people who aren’t involved in a frequent flier program and aren’t loyal to any particular airline. It allows you the flexibility of redeeming your miles for whichever airline best suits the needs of your trip. With a generic airline card, you gain points for every dollar spent on the card, but because it is not associated with a particular airline, you can’t gain additional points by flying.
Each airline credit card is a bit different, so be sure to read the card’s terms and conditions to find out how many miles you gain for every dollar spent. Other things to look for are how many miles you need before you qualify for a free plane ticket, if there is a cap on points that can be earned annually and whether or not unused airline miles expire. Some expire in five years while others do not expire at all. Airline mile reward programs can be costly for credit card companies, so many of these cards come with an annual fee. This type of reward program is beneficial for frequent travelers or those who want to use their card to plan vacations, but the associated fee might make them impractical for other cardholders.
# Bad credit and/or credit repair cards
Credit can easily go from good to bad due to poor budgeting or simply by an overlap between jobs. If your credit score is less than satisfactory, it does not mean you cannot qualify for a credit card. There are several options available to those who have had bad credit in the past and for those who are currently trying to repair their credit.
Depending on your specific situation, debt consolidation or use of introductory APRs on balance transfers may be wise choices. If you still need credit or want to start repairing your credit by proof of action, there are several credit cards designed to help rebuild poor credit histories.
- Secured credit cards
Secured credit cards require collateral for approval. A security deposit of a predetermined amount is needed in order to secure the credit card, and the security deposit generally needs to be of equal or greater value than the credit amount. Collateral can come in the form of a car, boat, jewelry, stocks or anything else of monetary value. Secured credit cards are for people with either no credit or poor credit who are trying to build or rebuild their credit history.
Cards that help rebuild credit often come with low credit lines (such as $250) and additional fees, such as an application fee, may apply. Be sure to read over any terms and conditions for these add-on services before applying. If you use the card responsibly and pay all your bills on time, you can ask for a credit line increase down the road. The extra fees and low credit lines will be worth it if a secured credit card helps you get your overall credit back on track.
- Prepaid credit cards
Prepaid cards are not credit cards at all, but are used and accepted just like them. The advantages of prepaid cards is that there are no finance charges and they help you avoid debt since all purchases are paid for beforehand. With these cards you determine the credit line by transferring however much money you’d like to have available to spend to the card. This eliminates the risk of running up credit card debt and makes the budgeting process much easier.
Although most prepaid cards do not charge finance fees, other fees may apply, including monthly fees, startup or application fees, over-limit fees, ATM fees, reload fees and more. Be sure to thoroughly look over the terms and conditions for each specific card before applying.
# Specialty credit cards
These types of cards are for consumers with unique needs for their credit use, such as business professionals and students. These credit card programs are designed specifically to meet the needs of those individuals.
- Business credit cards
These cards are available for business owners and executives and have many of the same features as traditional credit cards: low introductory rates, cash back programs and airline rewards. The difference is these cards come with many additional benefits and perks exclusively for those in the business world.
Some of these bonuses include: Business expenses kept separate from personal expenses; special business rewards and savings; expense management reports; additional cards for employees; and higher credit limits.
Every credit card is a bit different and promotional offers often change, so be sure to thoroughly look over the terms and conditions for each specific card before applying.
- Student credit cards
Many college students need a credit card, but they generally have little or no credit history, which makes it difficult to get approved for a traditional card. Student credit cards are specifically designed for those enrolled in accredited four-year colleges and universities to help them build a credit history from the ground up.
Compared to consumer credit cards, student credit cards are often scaled back somewhat in terms of rewards, features and other benefits, but they can still be a valuable commodity. If used wisely, a student can take the first step towards building a solid credit history with this type of credit card. Once they’ve proven financial responsibility, it will be much easier to qualify for reward cards and higher credit lines.