Top 5 Responsible Credit Card Practices

Practice these five simple credit card rules and you are guaranteed to manage your account properly and increase your credit score.

1) Keep in mind, that your credit card is not a license to spend money. Many people take for granted that a credit card is like using actual money. People tend to spend differently with credit cards than with cash. You are more likely to spend less and keep track of your money if you have cash in your wallet. Your wallet can always be opened on a regular basis and you are able to physically count and feel how much money you have. On the other hand, with credit cards, people tend to forget how much they have spent. Keep track of your receipts and log online to view your bill on a regular basis. MOst importantly, do not spend on what you can afford to pay for in full.

2) Use your credit card for emergencies only. Do not get into the habit of using your credit cards for frivolous purchases. Spend what you can afford. Make yourself a monthly budget. Decide how much you can afford to spend with your credit card. If you can avoid it, do not use your credit cards at restaurants. Always pay your bills in cash when you go out to eat. Be careful when purchasing expensive items as well. You need to ask yourself if you are acting on needs or wants. If your purchase is based on a “want”, then you need to decide if you can really afford it. If you can, then go ahead and make your purchase. Do not buy what you can not afford. However, if your purchase is based on a particular need than your credit card can ease the gravity of your expenses.

3) Do not max out your credit cards. Often times, credit card issuers issue cards with large credit lines. It is very easy to over spend and max out your credit card. You will be fine if you can afford to pay the balance in full at the end of the month. However, if you can’t, you will quickly fall into a viscous interest paying cycle. Try to only spend between 10 to 20 percent of your credit cards limit. This will allow you to manage the debt easily and keep from getting in a debt trap. Your credit score will also go up if you are not always at the top your limit. Creditors will perceive irresponsible spending practices or financial difficulties. This can affect your interest rate or even cause you to be denied credit.

4) Leave your credit cards at home. There is a common saying that has a lot of truth to it. “Out of sight, out mind”. You will forget what you can not see. Keep your credit card at home and you will forget that you can use it. This is especially true, if you plan to have a night out on the town. It is very easy to go out, have a few drinks, and rack up a big bill. If you are armed with your credit card, chances are you will end up spending more than you had anticipated. If you leave your credit card at home and use cash, you will limit your chances of spending money you might regret later.

5) Do not ever give out the CVV code, or 3 digit code on the back of your credit card. Online retailers and payment gateways will always ask you for the code on the back of your card. If anyone finds out the information listed on both sides of the card, they will be able to use it almost anywhere online or over the phone. Identity theft is on the rise and these thieves are very creative. Be sure to always shred receipts with account numbers as well.

There are countless more ways to be a responsible credit card holder. Always keep in mind what you have just read and you will avoid debt and bad credit. However, most importantly, always use your common sense when using your credit cards.

Labels: Business Credit Card, business credit cards, credit card, credit cards, low interest credit card, low interest credit cards

In the evenings, when I work on this blog, I usually watch some of the financial shows that come out on CNBC like the Carmen Ulrich show. On more than one occasion I herd viewers calling in with a very intriguing question. Several people called in with the greatest credit card offer in the world (at least it sounded like to me). Anyway, these people were being offered large cash advance sums like $25,000 to $50,000 with no interest for a year. The callers, wanted to know if they should take out that money and put it in a CD with a bank and earn some interest on it. I soon came to find out that the answer was absolutely not.

Credit card companies will entice cardholders with these great offers that have many strings attached. If for any reason you are late on any one of your payments, they will hit you with fines and raise your interest rate on that cash advance from 0% to 20%. Furthermore, once you lock money into a bank CD, you are always penalized for early withdrawals. If for some reason you suddenly need that money, you will loose money in penalties.

In my opinion, unless you have plenty of money for emergencies and pay your bill a few days before the due date online, you might want to give it a try. However, if you do have money, there are better ways of investing your money. There is too much risk for that introductory offer to change for whatever reason. I would definitely agree with Carmen and avoid making that kind of financial move.

Labels: apply for a credit card, business credit cards, Carmen Wong Ulrich, credit cards, low interest credit card

In the evenings, when I work on this blog, I usually watch some of the financial shows that come out on CNBC like the Carmen Ulrich show. On more than one occasion I herd viewers calling in with a very intriguing question. Several people called in with the greatest credit card offer in the world (at least it sounded like to me). Anyway, these people were being offered large cash advance sums like $25,000 to $50,000 with no interest for a year. The callers, wanted to know if they should take out that money and put it in a CD with a bank and earn some interest on it. I soon came to find out that the answer was absolutely not.

Credit card companies will entice cardholders with these great offers that have many strings attached. If for any reason you are late on any one of your payments, they will hit you with fines and raise your interest rate on that cash advance from 0% to 20%. Furthermore, once you lock money into a bank CD, you are always penalized for early withdrawals. If for some reason you suddenly need that money, you will loose money in penalties.

In my opinion, unless you have plenty of money for emergencies and pay your bill a few days before the due date online, you might want to give it a try. However, if you do have money, there are better ways of investing your money. There is too much risk for that introductory offer to change for whatever reason. I would definitely agree with Carmen and avoid making that kind of financial move.

Labels: apply for a credit card, business credit cards, Carmen Wong Ulrich, credit cards, low interest credit card, student credit card

Thanks to improvements in a technology called near-field communications is now making it possible to integrate your cell phone and your credit/debit cards. This new technology is currently being tested in the United States, Germany, the Netherlands and few other countries. Essentially your cell phone will be affiliated with a carrier as well as a bank or credit card issuer.

The advantage of this new technology is that it enables devices to communicate back and forth with each other in a secure environment. This technology uses something called inductive coupling which acts uses the principles as electromagnetism. Two devices that have the NFC chips built into them will be able to communicate. For example, when you make a payment using your NFC enabled cell phone at the Wendy’s drive through several transactions must occur. First, your NFC cell phone will send the NFC enabled cashier system your credit card information like card number and expiration date. The cashier then processes your card information. Next you will have to authorize your transaction using your credit card pin. However, instead entering into the cashiers pin keypad, you will just enter into your cell phone and the phone will communicate with the cashier allowing you to approve the transaction. Then, just like if you were at the keypad, you will receive a message to your NFC enabled cell phone letting you know whether or not you were approved. If you are approved it will be able to keep track of your receipts which you could then upload to a computer or printer.

At the 2007 Consumer Electronics Show, Nokia unveiled its Nokia 6131 NFC enabled cell phone. This phone looks like any other unassuming flip phone; you might buy for $39. The only difference is that this phone comes equipped with NFC technology that will allow you to do things like pay with your credit card or even open your front door. Even some hotels are now using near-field communication technology to grant guests access to their rooms. If you have this capability they will be able to send your phone the access code you need to get in to your room. Once you arrive at your room, you will be able to open the locked door simply by entering a code into your NFC enabled cell phone.

For those worried about security, Nokia, allow you to disable the payment option via customer service. The payment button feature that is integrated with your credit card company can also be turned on and off. If you have the option on, you have the ability to enable a password for protection. You also have the option to disable the password so that you can “express pay”.

Bank of America has announced a test run that will be conducted by its employees. 500 of its workers will be given an NFC enabled phone that they can use at vending machines in the company cafeteria and break areas.

Today there are also credit cards available from Bank of America and Chase offer “express pay” credit cards that are enabled with RFID chips that don’t require you to enter a signature or password. This offers convenience for those who are willing to run around with a “loaded credit card” in their wallet. However, most of us do not like this idea very much. An NFC enabled cell phone will allow people to make safe quick payments. This will increase the amount of people who use a credit or debit card since almost everyone carries a cell phone.

Labels: apply for a credit card, Bank of America, Business Credit Card, credit cards, low interest credit card, NFC enabled cell phone, Nokia 6131, Nokia 6131 NFC