Using Your Credit Card To Make Investments

  • The majority of the time when you take money out on a credit card, you are doing so with the understanding that this is a loan that is going to charge you interest. In other words, you understand that you are going to be paying more money back to the credit card company than what you take out as a loan on the credit card (unless you pay back the loan within a time period during which no interest is charged). But what if you could take money out on your credit card, invest it in something that would yield you an income and actually make money off of the loan from your credit card company? This is not something that is easy to do but it is possible if you understand money, interest rates and investments.

  • The first thing that you will have to realize with this type of financial move is that you need to do this on a card with a very low interest rate. The ideal situation would be to find a credit card that would offer you a zero percent interest rate on cash advances for a specific amount of time (hopefully six months to one year). Alternatively, a very low interest rate on cash advances could be useful for this type of investing but only if you are going to be able to invest the money to earn an interest rate that is higher than the interest rate on the credit card.

  • What you would do if you could find this type of deal would be to take out as much on a cash advance from the credit card as you possibly could at this zero or low percentage interest rate. You would immediately invest that money in something that could earn you back the higher percentage interest rate. For example, you might invest this money into a high-yield savings account. Alternatively, you may be able to find a business investment opportunity in which you earn a percentage of a company’s sales for investing your money into the start-up of the company. Either way, you have to make sure that the amount you are getting monthly is higher than the amount paid monthly on the interest rate on the card.

  • When making this type of investment, you have to be very careful to pay attention to the repayment of the credit card loan. Typically you will only make the minimum payment on the credit card. If you have a zero percent interest rate on the credit card then you are merely paying back the principal balance in small monthly installments while that money is actually earning you income elsewhere. It is critical that you remember to make these minimum payments on time (you should set them up to pay automatically from your bank account far earlier than the deadline so that there are no payment problems) because you don’t want to accumulate fees on the credit card which will cut into your income. If you understand how all of this works then you can make money off of the money you borrow on a credit card.

  • Posted on Wednesday September 24, 2008 | Comments (0)

    House Passes Pro-Consumer Credit Card Legislation

  • Congress has been considering a number of different pieces of legislation that are designed to improve the state of the credit card industry for the benefit of credit card users and consumers in general. Earlier today the House passed one such piece of legislation which offers several different benefits to credit card holders. The bill will now need to be reviewed by the Senate which may or may not pass the bill but is unlikely to actually make a final decision on the issue until sometime next year. This means that the passing of the bill by the House today is a good step forward in the direction of a better credit card industry for consumers but it’s far from guaranteed to make changes of this kind anytime soon.

  • The bill that was just passed by Congress is called the Credit Cardholders’ Bill of Rights Act and some are calling it the most progressive legislation ever designed to curb the predatory lending practices of credit card companies. The ultimate goal of this legislation is to make the credit card industry more fair for consumers so that consumers don’t get bogged under by the massive amounts of debt that many of us are facing today. This legislation involves making a variety of different changes to the credit card industry based on the laws that are in place which govern this section of commerce.

  • One of the major changes that this new piece of legislation does is that it makes it so that credit card companies can no longer be able to increase interest rates retroactively on the balances that already exist on a credit card. In other words, if you owe $10000 on a credit card at a 9% interest rate and the credit card company increases your interest rate to 15%, the balance of $10000 would be required to still be charged only at the 9% rate. This is a really important change because it means that you can’t be punished on old balances that were accrued prior to changes in the terms of your credit card and therefore makes it likely that you’ll have fewer problems with debt.

  • Although the issue of retroactive interest is one of the most important parts of the bill, it is not the only thing that the legislation makes changes to. There will be a variety of other changes implemented if this bill is eventually passed by the full Congress. These changes are all related to reducing fees and limiting the amount of punishable interest that can be charged by credit card companies. An example is that a customer who mails payment to the credit card company at least one full week in advance of the due date will not be allowed to be charged any sort of late fee even if the payment doesn’t arrive or get processed by the due date. Another example is that credit card companies will no longer be allowed to make customers pay off their lowest interest rate debts first. All of these changes help to reduce overall debt for credit card consumers.

  • Posted on Wednesday September 24, 2008 | Comments (0)

    Recent Credit Card Changes That Have Occurred

  • If you are someone who has been using credit cards for at least the past few years then you have probably noticed that there are some changes that are taking place in the credit card industry today. These changes are due to the general economic changes that are occurring in society. There are also changes that have occurred as a result of changes in the law related to lending. The majority of these credit card industry changes are not drastic but borrowers should be aware of them since these changes do directly impact the borrower who uses credit cards regularly.

  • Some of the credit card changes that have occurred recently include:

  • It is much more difficult than before to get approved for a credit card. Sure, credit card companies are still issuing new credit cards and there are even still credit cards out there for people with poor credit or no credit. However, it is not nearly as easy to get a credit card as it was just a few short years ago and the ones that you can get typically don’t offer the high credit limits that used to be available to many borrowers.

  • Many credit cards have increased their interest rates. You may have noticed that what qualifies as a “low interest rate” seems to be changing. While those people with excellent credit scores can still typically get good rates – especially on promotional offers like balance transfer credit cards – other people may find that what now qualifies as a “low interest rate” or a “fair interest rate” is high in comparison to what it was before.

  • Credit card companies have gotten stricter with their fees. Right now the market is in the favor of the credit card industries. They don’t want to give an inch to their customers right now. And that means that credit card companies are implementing more fees on their credit cards and actually acting on those fees with more strictness than they had in recent years.

  • You can’t easily negotiate with your credit card company anymore. There was a period of time when almost every borrower was calling up the credit card company and threatening to make a balance transfer if the company wouldn’t lower the card’s interest rate or offer better rewards on the credit card. Companies aren’t so quick to negotiate with these types of customers today.

  • Rewards have been reduced. There are still some good rewards programs out there. There are even niche programs – like gas rebate cards – that have been improved in recent years. But, on the whole, credit card rewards have gone done in the past few years as changes have occurred in the credit card industry.

  • The majority of the changes that have taken place with credit cards aren’t impacting those people who have really terrific credit. Unfortunately, the average card holder is the one who is feeling these effects. To combat the changes, it is important to be aware of what the changes are and to understand how to limit their impact on you.

  • Posted on Monday September 22, 2008 | Comments (0)

    Should You Cut Up Your Credit Cards?

  • Yesterday we took a look at the fact that there are two disturbing trends taking place today with Americans and their credit cards: higher-than-before credit card debt and failure to be able to make on-time credit card payments. These trends are causing some people to think twice about the benefits of using credit cards. And some people are seriously thinking about just cutting up their credit cards and relying on cash for everything that they need.

  • Although it is definitely a good idea to use your credit cards sensibly and in moderation, it probably isn’t a wise idea to just go ahead and cancel those cards or cut them up. Here is a look at some of the reasons that you don’t want to give up on credit cards just yet:

  • You may need that money. Like it or not we are in a time of recession and that means that you simply might not have the money that is required to take care of your daily needs without some assistance from your credit cards. Yes, you should budget and cut back on things that aren’t necessary. But you shouldn’t suffer either. Those credit cards just might be something that you want to rely on in a pinch.

  • You may need that credit card. Even if you aren’t actually going to use your credit card much, you may need it for certain types of purchases. Renting a car, for example, is something that is really difficult to do if you don’t have a credit card to secure the car rental.

  • No credit is bad credit. You have established a credit history with your credit cards. That is what lenders are going to look at when you want to take out big loans like auto loans and home mortgages. More people are looking at getting new cars today because they want a car that’s more fuel efficient than the one they currently have. And getting a home mortgage is more and more difficult than in the past. If you cancel your credit cards, your credit score is going to take a hit and you could find it more difficult to qualify for these other types of loans that you spent time building up a credit history to obtain.

  • There are benefits to making certain purchases on a credit card. You may not take advantage of all of the perks of your credit card but those perks are there for you to use. For example, most credit card companies offer certain terms that make it easier to return items bought on the card even if the return policies of the stores where they were purchased aren’t that great. You aren’t going to get that perk when you pay with cash.

  • It’s easier to stay organized with money when using a credit card. You can always see where your money is going because your credit card statement will tell you and this means that you can make wise choices about budgeting that you might find more difficult to make if you are using cash for all of your purchases.

  • You certainly need to change some of your credit card habits if they are causing you to get into too much debt or to be incapable of making your basic payments. However, you don’t have to go so far as to give up on credit cards altogether. Make smart changes so that you can benefit from your credit card companies instead of having them benefit from you!

  • Posted on Tuesday September 16, 2008 | Comments (0)

    Disturbing Trends in American Credit Card Debt

  • There are two disturbing trends that appear to be taking class with American credit card debt today. The first unfortunate trend is that people seem to have an increasingly level of debt as compared to the amount of debt that they had at this time last year. This is probably caused by the problems occurring in the economy today. The second trend (which might arguably be even worse) is that more people are late on their credit card payments now than were late on them at this same time last year. These trends indicate that people may have debt problems that are starting to get out of control which could mean additional problems for the American economy in the not-too-distant future.

  • The problems with today’s economy are causing people to be unable to stretch their dollars as far as they could just one short year ago with the most obvious culprit being the rising cost of fuel that people are dealing with today. The fact that people are earning the same amount of money as before (and sometimes even less than they were earning before) but that they are facing a higher cost of living in terms of basic needs like fuel and food is causing people to borrow the money that they need to have in order to get those needs met. This means that people are accumulating more debt which they are having trouble paying off. One study shows that there has been an increase of over eight percent in the average American’s debt in the past year.

  • The problem is exacerbated by the fact that these people don’t actually have the money to pay back that debt. That’s why they are borrowing it in the first place. The result of this problem is that they are getting later and later on the payments that they owe to their credit card companies. This actually increases their debt in the form of late fees and interest rate hikes. Over one percent of credit card holders are more than ninety days delinquent on their bills! Although one percent seems like a small number, that’s a lot of people that haven’t paid their credit card bills in the past three months.

  • These are problems that don’t just impact the individual borrowers who are suffering from the money issues. They impact the areas in which these people live. (Some areas are better off than others with North Dakota, Vermont and Utah doing fairly well with their debt and Florida and Nevada being the states that are worst off in terms of delinquent debts.) These problems also impact the general U.S. economy and could lead to additional problems for all credit card borrowers in the near future.

  • Posted on Tuesday September 16, 2008 | Comments (0)

    Consumer Reports Defines Best and Worst Credit Cards

  • One of the biggest questions that people have when considering getting a new credit card is how to tell if a credit card is good or not. For the most part, what a good credit card is depends on your own specific needs, spending style and repayment habits as a borrower. However, there are some basic things that you want to look for when trying to choose the right credit card for you. If you’re thinking to yourself that you don’t have the time to sift through all of the credit card offers that are out there in search of the right one then you’re in luck. Consumer Reports has just defined the best and worst credit card offers on the market so that borrowers can make better decisions more quickly in regards to which is the right credit card for them.

  • Consumer Reports chose one dozen credit cards that are considered to be really good credit card offers. They did this after looking at various factors to make this decision. Those factors included interest rates, a range of different fees and some of the tricks or “traps” that might be hidden in the fine print of the offer. These are the same things that you would want to look for if you were reviewing the best credit card offers out there for yourself. Consumer Reports found that the best credit cards have interest rates between 4% and 14.99% and offer better rates to borrowers with a good credit history. They also found that these cards had fees but that these fees were considered to be reasonable. Furthermore, there were no major hidden tricks in the fine print of the applications for these cards.

  • Consumer Reports also realizes that not every borrower is the same and divided up their “best credit cards” list to show that some apply mostly to those people who carry a credit card balance and that others apply more to those people who are going to be paying their monthly balance off in full each month. This is another thing that you would want to take into consideration if you were going through credit card applications yourself since the needs that you have as a borrower are different depending on your standard repayment plan. Borrowers paying off their credit cards every month can reasonably get a higher interest card with fewer fees and better rewards whereas borrowers that need to carry a balance must concern themselves more with the interest rate on the card.

  • Consumer Reports did not only let people know which types of credit cards were the best credit cards to consider getting. They also looked at some of the worst credit cards out there. One example that is given is a credit card which has a reasonable interest rate of under ten percent but which drowns the borrower in fees including a set-up fee, a program fee, an annual fee and a monthly service charge. Someone looking only at the interest rate on a card may not realize what a bad deal this is which is a reminder to us as consumers that we really need to know what we are looking for and to get assistance from reports such as this one to help us make the best choices for our bank accounts.

  • Posted on Friday September 12, 2008 | Comments (0)

    Credit Card Shaving: A Scam You Should Know About

  • When you think about the different credit card scams that you have heard of over time, what comes to mind? Most likely you will be thinking of some form of identity theft that occurs through the Internet in the form of phishing or hacking. That’s because this is the type of credit card scam that is most common today. But that doesn’t mean that it’s the only credit card scam that is taking place or the only thing that you should be aware of if you want to make sure that you are doing all that you can to protect your own credit. There are other scams out there as well. For example, there is credit card shaving.

  • Credit card shaving is a fairly elaborate scam but one that an amateur criminal can accomplish fairly easily. It involves the following basic steps:

  • • Get the number to a credit card that is valid. This may be done in any number of ways including purchasing such numbers off of the black market and copying numbers down when you see credit cards in public places (such as on tables in restaurants or in stores where you work).

  • • Peel these same numbers off of invalid credit cards and gift cards. For example, if your valid credit card consisted of sixteen 1’s, you would shave those 1’s off of whatever credit cards or gift cards you could get your hands on.

  • • Apply the numbers in the correct order to a blank credit card. This is done easily with basic glue and a little bit of patience.

  • • Scratch part of the magnetic strip on the back of the blank credit card. This will mean that the clerk at any store that you use this credit card at will then have to go ahead and enter the number that has been so carefully glued on to the credit card.

  • • Use the credit card. It’s that simple. Once you have a number that you can use and a card that it’s on, you can purchase items on the card without arousing much suspicion.

  • The truth is that these credit cards do look a little bit sketchy if you take the time to look at them carefully. However, most cashiers aren’t going to bother doing so because they are too busy and just really don’t care all that much. This means that the people who need to be most active about learning of and preventing this type of scam are those people who work in retail positions where the scam may take place. By spotting these credit cards, they can help to reduce this method of credit card scam.

  • As for you, the most important thing that you can do to protect yourself from this kind of scam is to reduce the risk that your credit card number is going to get seen by people who shouldn’t have it. You should also make sure that you are regularly reviewing your credit report and your credit card statements so that you know immediately if you have become the victim of this type of credit card scam.

  • Posted on Thursday September 11, 2008 | Comments (0)

    Economic Changes Cause Student Credit Card Debt to Increase

  • The current state of the U.S. economy is causing some financial headaches for many of the people who live here. One specific group that may find itself facing more trouble than in the recent past is the group of college students who are approaching their college graduation. The changing economy has reduced the number of good student loans that are available to these students and has also made it more difficult for these students to get jobs. The result is that a large percentage of these students are taking on more credit card debt than they did in the past in order to cover the cost of their education and the gap that may occur between graduation and getting a job.

  • The first problem that college students are facing is that they may not qualify for as much student loan money as they did in the past. The changing economy has reduced the number and amount of scholarships, grants and student loans that are available to some students. Students may still get the cost of their tuition covered but may find that there is less money available to help pay for books and living expenses. As a result, these students will turn to credit cards to pay for the things that they need on a daily basis during the time that they are in college. That credit card debt can add up quickly.

  • In addition to the problem of student loans, many graduating college students are finding that it is more difficult for them to get a job than it may have been for their peers who graduated a few years back. This means that these students are out of school and no longer have any sort of financial assistance from school loans but are not yet employed. In order to pay for their housing, food and other needs during this time, they may turn to credit cards. Credit card debt rises rapidly when you don’t have an income to help pay it off so these graduating students can easily find themselves crushed by overwhelming credit card debt.

  • A student can’t do much about the economy but he or she can do things that limit the impact of the situation on their own finances. The first thing to be done is to be very active in searching out the loan and grant money that does exist for students. It’s still out there but it’s not as easy to find so students interested in avoiding other types of debt will need to be very proactive in finding good student loans and working towards scholarships. The student should also seriously consider doing work study or getting a part time job. This job may not be a professional job in the student’s area of study due to the economic situation but any job that brings in money in the meantime will help to reduce the student credit card debt that is plaguing so many young people today.

  • Posted on Wednesday September 10, 2008 | Comments (0)

    The Importance of Reading up on Credit Cards

  • One of the reasons that you have landed on this blog is because you are interested in learning more about credit cards. That means that you are ahead of the curve when it comes to being smart about money because there are a lot of people out there who are using credit cards regularly without ever having read about them at all. Those people are making a big mistake since education is the single best way that you can protect yourself from problems including issues with debt and trouble with identity theft. Even if you have already started reading about credit card issues, you may find that there are other resources out there which you have been neglecting.

  • Here is a look at some of the different options that you have for reading up on credit cards and improving the relationship that you have with money:

  • Blogs. You have already started reading up on credit cards through blog posts like this one but that doesn’t mean that you should stop here. There are a lot of blogs out there about money and credit cards and each one will present a slightly different view of the credit card topics that are important to people today. Reading through these different viewpoints can give you a broad perspective of these issues and allow you to make fully-informed decisions about your own use of credit cards.

  • News Reports. There is actually a lot of news out there today that impacts credit card holders. There is news about legislation that may change the way that credit cards are issued and used. There is news about the latest scams that are taking place with credit cards. And there is general news about the credit card industry and its place in today’s economy. Knowing the latest news helps you stay on top of changes that are taking place with credit cards today.

  • Books. There is no substitute for the in-depth information that you can get from reading books about credit cards. These reading materials can give you tips on how to properly use credit cards, information about the history of credit cards and even guidelines about niche uses of credit cards in businesses and other areas of your life. Reading books about credit cards will provide you with a solid foundational understanding of the use of money and will make you a better borrower.

  • You certainly don’t have to choose to read about credit cards if you don’t want to. There are plenty of people out there who just use their cards and read nothing more than the statements that are sent to them by the companies that have issued them those cards. However, these people typically aren’t savvy about the best ways to maximize use of their credit cards. By choosing to read about credit cards, you can be one of the smart ones!

  • Posted on Wednesday September 10, 2008 | Comments (0)

    Congress Could Pass Pro-Consumer Credit Card Bill

  • Although the chances are slim there remains some hope that Congress could opt to pass pro-consumer credit card legislation before the November election is here. There is legislation being discussed by Congress right now that is strongly opposed by the banking industry because of the benefits that it gives to you, the consumer, at their expense. Because of the potential impact of a new president on the forward motion of this type of bill, it is believed that some in Congress want to hurry up and approve this legislation before the change occurs. The House is highly likely to pass the legislation but it could get hung up in the Senate and end up delayed until the new president is in charge of the White House.

  • The legislation is based on the idea that the rates and terms offered by credit card companies today are causing problems for the consumers who opt to take advantage of the availability of credit cards. People with credit cards are suffering from overwhelming debt due in part to the practices of credit card companies. These practices include fees, interest rate increases and billing issues which would all be changed if the law is allowed to pass through.

  • There are three major things that the new legislation would seek to do in order to protect consumers from some of the common problems that are faced in today’s credit industry:

  • 1. Require card issuers to notify consumers about interest rate increases 45 days in advance of the increase. This would give the consumer enough time to consider other options such as balance transfers to a lower interest credit card.

  • 2. Eliminate fees on the remaining interest-only balance when a credit card payment has been made on time.

  • 3. Require that monthly bills be sent to the consumer 25 days before the date that they are due. This would mean that customers would have more time to make on-time payments even if there are problems with mail delays.

  • These three things are addressed in one version of the bill that is being considered. Additional bills are also being reviewed that cover some of the same issues and seek to find solutions to the same problems.

  • Whether or not this type of legislation passes at the current time, it is indicative of a change that has taken place in the climate of Congress. Both the House and the Senate have been under the spell of the credit card companies for a long time. Much of the legislation that has been proposed regarding rules that limit the credit card company has been rejected in the past. The fact that there is a big push right now to pass through legislation that is pro-consumer at the expense of the credit card companies goes to show that there is a shift taking place in the government that could benefit the consumers in this country and improve the state of the economy here.

  • Posted on Tuesday September 9, 2008 | Comments (0)

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