6 Ways to Use Credit Cards to Improve Your Personal Finance
With credit card usage on the rise it’s critical for consumers to use their credit wisely in order to maintain a worthy credit profile. 1. Rather than making purchases on credit cards as a monthly habit, use your debit card. It can be beneficial to keep a small balance on your credit cards but it’s usually not wise to spend to the limit before paying it off. Instead, use your debit card for daily purchases. 2. It surely goes without saying but we would be remiss by not mentioning it. Get the lowest rate that you can on your credit cards! If this means moving a balance to a new card with a lower rate then that can often be beneficial. It’s also worth the time to call your current lender and see if they will lower your rate instead of moving to a new card. 3. When using credit cards as tools in your personal finances it’s crucial to be mindful of the due date of your payment. Getting your payment credited prior to the due date will ensure that you don’t have any late payments. Additionally, be sure to keep an eye on your account frequently. It’s not [...]
Should the Government Limit Credit Card Interest Rates?
The question in the headline is one of principle beliefs. Some believe that when the government gets their hands into private business it can destabilize a truly free market system. Others may see some benefit to the government forcing a cap on the interest rate that credit card companies can charge. Government regulation always has been and always will be debated. While it may be tough to argue against the short-term benefit of such caps the long-term outcome is unlikely to be good. The recent economic situation, dating from 2007 through today, has been extremely difficult on consumers yet consumers will always control the market. As we all learned in Economics 101 the laws of supply and demand will always balance the market. Here are two interesting facts to back that statement up: The average interest rate on credit cards has increased over 2.6% since mid-2009. Consumer debt as a percentage of disposable income has decreased about 5.5% since late 2007. So lenders have increased their rates and in response consumers have greatly decreased the demand on borrowing. Many, perhaps, have even stopped borrowing. What makes this whole supply and demand issue a bit more intriguing is that consumer spending [...]
Explaining discrepances in consumer credit card balance reports
A few recent articles at HuffingtonPost.com and CreditCards.com bring to light an interesting situation with consumers and their perceived debt. They report that a new study by the Federal Reserve Bank of New York indicates that consumers believe they have less credit card debt than the credit card companies have on the books that the consumer owes. What could be some reasons for the discrepancy? Embarassed – Who likes to admit that they have over $7K (the national average) in credit card debt? Delay in reporting on outstanding balances – This is just a guess but the lenders have real-time data while consumers maybe don’t count current purchases as debt until they receive their statement. Monthly pay-in-full consumers – There is a percentage of credit card users who treat their cards more like charge cards and pay them off each month. Perhaps those consumers don’t consider outstanding monthly balances as debt. Left hand, right hand – Individuals report their debt more accurately than households do. It’s possible that one spouse does not keep good records of the other spouse’s spending. Whatever the reason there seems to be no arguing the fact that the average consumer reports a total credit card [...]