Financial Editor Farnoosh Torabi shares tips for you to better understand and improve your credit score.
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Credit Cards
Boost Your Credit Score
Pay Down Credit Card Debts Before You Start Saving
The average credit card debt per household in the US is $7,194, the average mortgage debt is $149,782, and the average student loan debt is $34,703. That’s a lot of debt to be resting on your shoulders, however, as is often said, there is good debt and there is bad debt.
Once you have paid off a good debt you will usually be rewarded with a sellable asset, for example, when you pay off your mortgage, you will have a house at the end of it.
Bad debt is usually classed as high interest loans and credit card debts. With these, you will have to pay large amounts of interest, and when they are paid off, you can enjoy a feeling of relief, but no tangible asset.
Because bad debt usually comes with high interest, you should always consider getting rid of that debt first – pretty much before you do anything else.
If you have any kind of debt, then you should first look at what is being charged in interest on each debt. Your mortgage will usually attract the lowest amount of interest, personal loans will usually be slightly higher, and if you have credit card debt, you could be paying as much as 22% p.a. in interest.
An estimated 46.7% of American households carry a balance on their credit cards each month, which means the card companies are taking home a huge chunk in interest payments, while the average consumer just keeps revolving their debt without actually paying it off.
Paying off high interest credit card should be attempted whenever possible. If you are putting money aside in savings and you have high interest credit card debt, it’s worth thinking about what that means in the long term.
Your savings may be earning 5% interest, but if you are being charged 22% interest on your credit card debt, you may be losing out financially.
However, even if you have made the decision to pay off your credit cards, it’s not always an easy thing to do (otherwise no one would have credit card debt, right?). There are a few things that can help out though:
- Get a balance transfer credit card, transfer your current balance, and use the low interest introductory period to pay off as much of your debt as possible,
- Get a low interest credit card (some can be as low as 10% p.a.), and keep paying off the debt,
- If you have a rewards or Gold or Platinum card, think about whether you need all its features – sometimes these cards charge more in interest, and it can be cheaper to keep a no-features card,
- Make a budget, work out how much you can afford to pay off your credit card debt – and stick to it!
- Once your debt is paid off, try to pay off your entire credit card bill each month to avoid interest charges.
Bio: CreditCard.com.au brings together a huge range of credit cards, making it easy to compare each one side-by-side. You can check out interest rates, introductory offers, rewards programs, and features – all in one place. Too easy!
DiscoverCard 0% Promo APR until October 2013
DiscoverCard recently sent me an updated card and it comes with a 0% promo APR until November 1, 2013. This offer applies on all new purchases made between now and October 31, 2013. After the promo period ends, the standard APR will apply, which is currently 16.99%.
I plan to take advantage of this offer by charging all my purchases on this DiscoverCard and pay only the minimum amount every month until the end the 0% promo APR ends. This will allow me to increase my cashflow and pay off any debt that I have, such as my mortgage loan.
In addition to the 0% promo APR, DiscoverCard has a 5% Cashback Bonus on up to $1,500 in purchases at Department Stores and for Online Shopping from October through December 2012. This will be icing on the cake as many of my purchases qualify for this offer.
Citi Dividend Credit Card 5% Cashback 2012 Q1
Citi Dividend Credit Card offers 5% Cash Back on the following purchases from January 1, 2012 through March 31, 2012:
- Health Care
- Fitness Club
- Utilities
You must enroll your card in the 5% cash back program online or call 1-800-231-0891.
American Express Prepaid Card for Rebate Payment
I recently purchased a new graphics card (SAPPHIRE 100338L Radeon HD 6770 1GB 128-bit GDDR5) and there was a $20 rebate. My rebate came back today in the form of an American Express Gift Card for $20, instead of a check. This seems to be the new choice of payment for rebates now. Some prepaid cards charges a monthly fee if there is a balance. To avoid fees, I would recommend cashing out the prepaid cards in a form that would be useful to you.
Chase Ink Bold Business Credit Card 50,000 Bonus Points
Chase is running a promotion for their Ink Bold business credit card and is offering 50,000 bonus points. The 50K points is worth $500 cash or $625 in airfare.
Highlights:
- 50,000 Bonus points after you spend $5,000 in 3 months – that’s $625 towards airfare when you redeem online through Ultimate Rewards
- Earn an unlimited 1 point per dollar spend with bonuses to earn
- Earn up to 5x points on eligible purchases
- Over 45,000 Bonus Points every year – redeemable towards flights and just about anything else!
- No limit to the number of points you can earn – and points do no expire
- Redeem points for travel, experiences, gift cards, and more
- Charge Card – No interest charges or overlimit fees
- No Annual Fee in the first year – that’s a $95 savings
For more info, please visit their website.
You can redeem the $500 cash in a check made payable to you or get it credited to your statement. Or, you can buy two free airline tickets, up to $312.50 each, for a total worth of $625.
The $95 annual fee is waived for the first year.
This is a business credit card, however you can still apply for this card even if you do not own a company. You can put your own name as the business and use your SSN as the tax ID.
How to Make and Save Money With Your Good Credit Score
With all the media attention focused on raising and improving your credit rating, everyone at this point knows it’s important and something that needs to be raised. In fact, I’d be willing to bet that you can find more information online on how to raise your credit score than information about what a credit score is or means.
There is an inherent problem in trying to achieve something (a high credit score) while not understanding the importance or significance of the achievement. First off, there is not much of an incentive to get a high credit score if you don’t understand the perks of a high score. Secondly, even if you do achieve a high credit score you might not be reaping the full benefits of that score. While a lot of the benefits some inherently, some of it is an added negotiation power (which I will get into below).
The Benefits of a Good Credit Score
Lower Interest Rates
Some of the most commonly known benefits of a good credit score are the lower interest rates, which can be compared at online sites. Whether for home loans, car loans, or credit cards, you will experience lower interest rates (and higher credit limits) if you have a higher credit score. These lower rates translate directly into savings over time, particularly for higher loans over longer periods of payment, like a 30 year $300,000 mortgage.
Negotiation Power
If you have a high credit rating, creditors will not want to lose you as a customer. Particularly if you are receiving low-rate credit card offers from their competitors, you should give your creditor a call and notify them about the low-rate offers you’ve been receiving. Ask if they can do anything about that, and odds are they will lower your rates. You can also use the amount of years you’ve been a customer, your recent number of consecutive on-time payments, and your credit score as leverage in your argument for lower rates. Don’t be afraid to threaten to switch to a competitor with lower rates, and do consider switching if your creditor doesn’t lower your rates competitively.
Job Offers
Believe it or not, potential employers often pull credit reports as a way to assess job candidates. The idea behind this is that the employer now has a quantifiable record of your fiscal responsibility and reliability, and this often translates into work ethic. Not to mention, people without financial troubles have less to worry about and can focus more on their work. Of course, this assessment isn’t 100% bullet-proof, but it is something that employers can access which gives you all the more reason to raise your credit rating.
For home and auto insurers, your credit score definitely comes under consideration when deciding whether coverage will be offered and at what premium. The reasoning is not too different from the reason employers check credit scores: People with higher credit scores were in direct correlation with fewer claims.
Utility Service
Having a good credit score can even save you money on your utilities. Companies that service gas, electricity, cable, and/or phones often waive deposits and even offer better plans. The logic behind this is extremely linear: If someone pays their creditors on time, they are likely to pay their utility bills as well. Utility companies like customers who pay on time.
Free Credit Score
It is always good to know and keep track of your credit score. To find out your current one, there are sites that will give you a free credit score.
Author Bio:
Stella Walker is a freelance writer of credit score guide where she writes about topics including credit, debt, investment, bankruptcy.
Chase Freedom Visa Card Offers Up to $200 Bonus Cash Back
Chase Freedom® Visa Card is offering up to $200 Bonus Cash Back for signing up for their credit card.
Earn up to $200 Cash Back
Get started with $100 cash back after you spend just $500 in 3 months. Plus earn an additional $100 cash back after you spend an additional $1,000 in your first 6 months.
Earn up to 5% Cash Back
Earn an unlimited 1% cash back on all your purchases. You’ll earn a total of 5% Cash Back in quarterly bonus categories that change. These categories include gas, groceries, dining, even home improvement. 5% Cash Back categories are subject to a quarterly enrollment and maximum.
Earn up to 10% Cash Back
Shop online at select merchants through Chase and earn up to an additional 10% cash back.
Chase Freedom Card benefits:
- 5% cash back on up to $1,500 spent in bonus categories each quarter
- 1% cash back on everything else you buy
- No Annual Fee
For complete details and rules, please visit Chase Freedom Visa Card.
FIA Card Services Offers 5% Cash Back on Travel until June 2011
FIA Card Services sent me a special offer letter to earn 5% cash back (up to $50) on qualifying purchases with my Fidelity Investment Rewards American Express Card from now through June 30, 2011, in these categories:
- Airfare
- Hotels
- Travel Agencies
- Car Rentals
- Cruises
I enrolled online to accept the offer. This seems to be a selected offer. If you have are FIA Card holder, let me know what you have received as special offers.
Discover Card Offers $5 Cashback Bonus Feb 28, 2011
Discover Card has been very active and aggressive with their promotions in the past 12 months. I have received numerous promotional offers with them for owning their card, but this is a nice and catchy one.
To thank you for being a Discover Cardmember, we’re giving an extra $5 Cashback Bonus on your next purchase.
The purchase has to be made between 1/11/11 through 2/28/11.
What promotional offers do you receive from Discover Card?
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