That all important credit rating can make a big difference to what loans you can get and how much interest you’ll pay, so these tips on ways you can ruin your credit can remind us of the best ways we can act to be sure we don’t damage our credit score, wherever possible:

• Don’t forget to pay a bill on time. Sure, if you can’t get to the post one day and your payment arrives a day late - one time only - it’s unlikely to have any effect on your credit score. But make it a habit to pay your bills on time or early.
• Don’t spend up to your credit limit. The ratio of your debt compared to your credit limits is a big factor in calculating your credit score. Experts recommend spending no more than 10% of your credit limit.
• Don’t cancel all your old credit cards. Keep one or two credit cards that you have a long history with as this will help your credit score.
• Don’t sign up to a dozen new cards a year. Ignore all the offers that land in your mail box. Stick with the cards you have and your credit score will like you a whole lot more.
• Don’t borrow money you don’t actually need just because somebody thinks it will help your credit score.

photo credit: TheTruthAbout…

Whether or not you use credit cards is your decision. But the fact of the matter is that you can find yourself in a large financial hole if you use them to “get by” month after month. Your budget should be simple: you need to earn more money than you spend. If this is not the case, and you neglect to cut out any expenses, you will have to use credit cards in order to make ends meet. While doing this you may not feel much pressure, but over time, as your debt adds up, this is sure to change.

When you use credit cards to bridge the gap between your income and expenses you are only making things worse on you in the future. Remember, the more you use your credit cards the more you are going to owe down the road. This means that while you may be getting by right now there could come a point when you are using credit cards to pay off credit cards. See how bad this can get for you in a hurry?

If you don’t make more than you spend, change your budget. This is better than using credit cards to make up the difference.

photo credit: Andres Rueda

More and more credit card companies are trying to push plastic on college students. If you are a college student it is safe to say that you have seen credit card reps setting up shop and signing up unsuspecting passer-bys. The question is: are student credit cards good or bad?

Generally speaking, college students should stay away from credit cards. It is entirely too easy to spend recklessly when carrying plastic. Additionally, more and more students are ruining their credit history and score before they ever leave college. As you can imagine, this will put you behind the eight ball after graduation.

There are sometimes when a student credit card may make sense. For instance, if you need money to purchase books, or just want to carry plastic for emergencies, this may be something to consider. But before you fill out an application you want to think long and hard about the pros and cons.

Student credit cards can be both good and bad. As a student you will have a lot of pressure on you to obtain a credit card. Whether or not you give in is up to you. Just make sure you know what you are getting into, both the advantages and drawbacks.

By now everybody knows that credit card debt can be crippling, and with a poor economic situation this is especially the time when you do not want to be creating any more debt than you absolutely must to survive. Although most advice on avoiding credit card debt is becoming common sense, it never hurts to hear it again, according to CNN’s Gerri Willis who has some more tips on controlling your credit card, including:

• Take a look at your credit card habits and calculate how much they are costing you. For one thing, only paying the minimum repayment each month will result in huge interest payments and a long time to repay your debt. Try to increase your monthly repayments as much as possible to cut down on debt and interest payments.
• If you have a credit card problem, then try using cash to pay whenever you possibly can. Research apparently suggests people will spend up to 18% less if they have to hand over cold, hard cash rather than a credit card.
• Try to negotiate a lower interest rate on your credit card. Before you do this, make sure you’ve been making payments on time for at least six months, preferably longer. If you don’t ask, you don’t get, and they say that half the people who ask for a lower rate actually get one.

Millions of people in the United States carry at least one credit card. And guess what? A large number of them are college students. This is becoming a popular trend as costs go up, and the number of students in college also increases. The question is: do college students need a credit card? This all depends on who you talk to.

Generally speaking, you should never obtain a credit card until you are responsible enough to do so. If you are going to run up a huge bill, and then find out how to pay it later, a big mistake is in the works. And unfortunately, this is how many college students think.

Is there a time when a college student should have a credit card? There is nothing wrong with using a credit card for essential purchases such as books, food, and supplies. But as noted above, the student must be responsible enough to only use the card for these types of purchases.

Some college students can benefit from having a credit card. Others, those who are not responsible, are better off waiting until they graduate and land a full-time job.

Are you worried about overusing your credit card? Is this something you have done in the past? If so, there are ways you can avoid future problems. One of the easiest is to use your debit card instead of a credit card. Believe it or not, this can do wonders for your finances.

As you probably know, a debit card is connected to your checking account. Every time you make a purchase the proper amount is debited from your account. This is in contrast to a credit card in which you are borrowing money that you will eventually have to pay back, many times with interest tacked on top.

The main benefit of using a debit card instead of a credit card is that you are not going in debt. If you don’t have enough money in your checking account to make a purchase you simply do without for the time being. This may be a major change that you are not used to, but from a financial perspective it will go a long way in keeping you debt free.

By using your debit card instead of a credit card you can more easily manage your money while also staying out of debt. How does that sound to you?

Who would’ve thought that paying less interest on your credit card could be as simple as asking? I don’t know anyone who’s ever tried this, and I certainly haven’t, but according to Jeremy Vohwinkle at About’s Financial Planning site, paying less interest is often just a matter of requesting a lower rate.

We often forget that a credit card company actually wants our business, and any interest we pay, and will often accept a little bit less in interest payments rather than lose you completely as a customer. If you haven’t requested a rate drop before (or at least not recently), if you usually make your payments on time and especially if you tend to pay more than the minimum repayment, your chances of getting a rate reduction on your credit card are quite good.

If you ask the credit card company for a lower interest rate and they say no, you can also try the strategy of telling them you plan to do a balance transfer to another card company offering a lower rate. That might entice them to lower the rate then. And the best part is that you can’t really lose here - if they say no, that’s fine, you can try again in a few months, and it hasn’t cost you anything to ask. If they say yes you could save thousands of dollars in interest payments.

photo credit: Logan Antill

Obviously, the best place to start at building yourself a good credit rating is right at the beginning, and not waiting until debts start to mount up and you have to fix it. Here are some tips that young people should follow to ensure from the very start that they do the best to have a good credit rating:

• Open checking or savings accounts and maintain them well - no bounced checks - as these will prove you can handle money reliably.
• Apply for a credit card - but always pay the balance in full every month. If for some reason things get out of hand, always pay the minimum amount and wherever possible, pay more.
• Don’t apply for multiple credit cards or loan facilities at the same time. Wait at least six months in between applications.
• If you have a parent or sibling with a good credit rating, you can ask them to be added as a secondary card holder on their credit card account, and their good credit will reflect on you.
• Get your credit report annually to check for any errors on it, and always fix them immediately.
• Don’t close your credit card accounts even if you are not using them anymore - debt-free credit cards that you’ve had for a longer period show financial stability.
• Make all your payments for credit cards and loans on time. Late payments affect your rating badly.
• Increase your allowable credit but don’t use it - having a bigger credit limit (but lower debt) means you have a good debt-to-credit ratio which has a good affect on your credit rating.

Overdraft protection is a simple concept: If you incur charges to your bank account without having sufficient funds to cover that charge, your bank will temporarily “loan” you the difference for a flat, $25-35 fee. For many, though, overdraft protection is more hindrance, less help, as bank customers get slammed with multiple fees.

Many banks have the policy that larger transactions get debited first. Therefore, if you have $100 in your account, and charge $10, $10, $150, your $150 transaction will be debited first, incurring you three $35 dollar fees instead of one, despite the chronological order of your transactions. Given this scenario, many believe that this bank “service” is anything but, hurting those who can least afford it.

Nevertheless, incurring any overdraft fee is a poor financial practice. Basic skills, like knowing how to balance a checkbook, will help anyone prevent spending more than he or she earns. Simply put, expenses should not exceed income, and overdraft fees will not occur.

Banks, on the other hand, claim that overdraft protection is a valuable service meant to help. “We process checks and other debits starting with the largest amount. That way, important, large bills such as mortgages, rent and car payments will be paid first,” spokesman for Chase bank, Tomy Kelly, said.

Overdraft protection, depending on your side of the bank statement, can be a very positive, helpful service. However, many have expressed their desire for it to be opt-in, so that those customers who prefer for checks to bounce, will be able to elect that option.

photo credit: Logan Antill

You’ve seen the commercials and can probably sing along to the catchy theme songs - free credit reports are widely available, and everyone seems to want to get your yours. But buyer beware, many of the free credit report websites and companies actually charge for their services, merely luring you in with one, free credit report.
To sign up for many of these sites, you’ll need to provide your credit card. Read the fine print, because in most cases, your credit card will be charged for monthly site subscription fees, which will generally monitor your credit report and let you know of any activity.
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