A Guide to Finding the Best Student Credit Cards
Student credit cards annually bombard freshman as they enter college. It has become a fall ritual. Parents should be vigilant in discussing the importance and responsibilities that go along with having a credit card before the students ever leave...
Bad Credit Student Loan - What To Do If You Need One
Are you concerned that bad credit will prevent you from going to
college? While it is true that finding student loans with
excellent interest rates is easier if you have a sterling
credit rating, bad credit student loan aid is possible....
Credit card counseling
Credit card counseling can help you get out of debt fast. If you are in credit card debt, then you might want to try going to credit card counseling in order to find out what you need to do in order to get out of debt. Generally, it's possible to...
Credit Card is adding the silver lining to your pocket
In the new millennium plastic money or credit cards has rendered a new zing factor to your pocket. This has not only made you economically more flexible but subsequently added glamour to your financial image as well. No more bulging out hip pockets...
The Credit Repair Business
Despite the massive efforts of the credit reporting agencies to convince you otherwise, there are many credit repair companies that are no different than most other services. Like all industries, less-than-honest companies do exist and are damaging...
Choosing and Using Credit Cards
Credit cards are convenient, but they're also dangerous. A lot
of people ruin their financial lives by turning the phrase
"charge it" into a reflex. It's a real problem, but this article
explains how to make good use of credit cards and how to choose
a good credit card. This information, by the way, applies both
to using a credit card for personal expenses and to using a
credit card for business expenses.
Selecting the Right Credit Card
Selecting a credit card is easy. If you don't carry charges
forward from month to month, choose the card with the lowest
annual fee. It doesn't matter to you if the credit card company
charges a painfully high interest rate, since you pay only the
annual fee if you pay your monthly credit card bill on time.
If you do carry a balance, it makes sense to choose the card
with the lowest interest rate. Some credit card issuers play
interest rate calculation tricks that make it very difficult to
make apples-to-apples comparisons of credit cards. But if you
choose the credit card rate with the lowest annual percentage
rate, you're doing about as well as you can.
The Right Way to Use a Credit Card
You shouldn't use a credit card as a way to borrow money. That
means always repaying the charges within the grace period. You
want to be what the bank calls "a revolver," which is a person
who always pays his or her credit card bills on time.
After investments in a profitable business, a 401(k), and a
deductible IRA, the next best investment you can make is to pay
off credit cards that charge a high interest rate. Earning a
tax-free interest rate of, say, 14 percent, which more than what
a 401(k) and deductible IRA pay (and probably only slightly less
than investments in your business should pay) is too good to
pass up.
NOTE While credit card interest on personal charges would not be
deductible for income tax purposes, credit card interest on
business charges should be deductible as business interest
expense. Therefore, the worst kind of credit card debt is
personal credit card debt. Business debt isn't quite as bad.
Do Affinity Cards Make Sense?
An affinity card is a credit card that's issued by someone other
than a bank--such as a car manufacturer, an airline, a
professional group, and so forth. Affinity cards typically
combine the usual features of a credit card with some extra
benefit connected to the issuer. In the case of a General Motors
card, for example, you accumulate dollars in a rebate account by
virtue of what you spend with the affinity card.
In
general, an affinity card--especially one that doesn't charge
a fee--is a good deal as long as the interest rate is
competitive. For example, I have a General Motors credit card
that includes a 5 percent rebate account. In other words, five
cents of every dollar I charge on the card goes into a rebate
account that I can use toward purchasing a new General Motors
car. How big your rebate gets depends on the type of affinity
card you have. For example, as of this writing the regular
General Motors credit card lets you accumulate up to $500 a year
to a maximum of $3,500. The General Motors gold credit card lets
you accumulate up to $1,000 a year to a maximum of $7,000.
There are many different affinity cards. Ford has one. Most of
the major airlines have them too. Airline affinity cards let you
accumulate frequent flier miles based on the credit card
charges. In the plans I've seen, you usually get a mile a dollar.
The one sticky part of using affinity cards, however, is that
getting even a 5 percent rebate isn't worth it if having the
card makes you spend more money. Some studies show that you
spend 23 percent more when you use a credit card. The same is
very likely true of affinity cards.
If you're one of those people who spends more when you have a
card in hand, you won't save any money by using an affinity
card. Even if you get a new General Motors car for free or a
handful of free airline tickets to Europe, you pay indirectly
for your new car or airline tickets with all the extra charging
you do. If you don't make use of the rebate, the situation is
even worse. You've charged more, perhaps paid hefty annual fees,
and you've received nothing in return.
NOTE One other point to consider argues in favor of using
affinity cards for business charges. In many businesses, you
will have large business credit card charges--much larger than
an individual making personal charges will have. In this case,
assuming you don't overcharge and don't overspend, you may find
that an affinity charge card produces big benefits. In my case,
because many of my business expenses can be charged on my
frequent flier credit card, I probably get two free airline
tickets a year.
About the author:
Seattle certified public
accountant & Stephen L. Nelson CPA has written more than 150
books. His bestselling book is Qu Determining How Much Life
Insurance You Needicken for Dummies, which sold more than
1,000,000 copies. His books have sold more than 4,000,000 copies
in English and have been translated into more than a dozen other
languages.