“Take care of your pennies and the dollars will take care of themselves” is an old adage, and it applies to these techniques for paying down your credit card debt.
You may not realize it, but each month that you carry a balance, you pay interest on the “average daily balance” on your credit card. In addition, interest begins accruing from the date of your last statement, so your average daily balance every day thereafter includes that interest.
Thus, the sooner you make that payment, the lower your average daily balance, and the less interest you’ll pay.
If, for example, you have a balance of $10,000 and you’re paying an 18% annual percentage rate. If you make a $350 payment on the last day of the billing cycle, you’ll pay interest on an average daily balance of $9,989. However, if you pay on day 2 of the billing cycle, your average daily balance falls to $9,661.
At 18% per anum, you’re paying 1.5% per month, so your interest if you wait to pay until the last day will amount to $149.83, while your interest if you’d paid on the 2nd day would be only $144.91. That’s a savings of about $5 per month.
It’s not huge, but over the course of a year it’s $60 that you could have used to pay down your debt or take care of some other obligation.
A second trick is to make a habit of making “micropayments.”
Say you worked some overtime one week and saw a little bump in your paycheck. Instead of letting that extra money flow into your general spending, go straight to your credit card account on line and make a micropayment.
You could do the same if you happened on some high value store coupons or found a sale on grocery items you buy regularly. Figure the savings, then go apply it to your balance. Even if you only pay $5 at a time, it will add up.
Remember, each time you make one of these unscheduled micropayments, you’re reducing your average daily balance – which means your balance is reduced by the amount of the payment, plus the amount of the interest that would have accrued.
At 18%, the interest on $100 for 15 days is seventy-five cents. Not much, you say? No, it isn’t, but when you consider that you’ve paid that $100 and you won’t pay interest on it again next month or the month after that, it begins to add up fast.
Of course, this will only benefit you if you continue making your regularly scheduled payments.
Orchard Bank Classic Mastercards® provide you with the opportunity to establish better credit, while enjoying all the conveniences of a traditional credit card.
Because we report to all 3 major credit bureaus, your good payment record builds your credit rating each month, and with your ability to choose your own payment date, you can be assured that your payment will come due after your paycheck arrives.
Orchard Bank Classic Mastercards® are accepted at millions of locations worldwide, including Internet stores and reservations desks across the country. In addition, you can get discounts from many of your favorite merchants when you enroll in the services offered at www.mcnearby.com.
It’s easy to manage your finances any time of the day or night with our Account Management Tools and Online Bill Pay.
When you enroll for online management, you can even request email or text messages to remind you of your upcoming payment due date and let you know when you’re approaching your available balance limit.
Keeping track of your spending is easy. Our system allows you to sort your credit card transactions by date, amount, description or category, and we store 12 month’s worth of transactions for you – making it easy to review your activity for the past year and catch any of those deductible transactions that you’ll need for tax time.
Of course you can view transactions since your last statement, and speak to a trained Customer Service Representative when you have questions.
You can view and download up to a year’s worth of PDF statements, and download your transactions directly into MS Money or Quicken – saving you from that time consuming data entry and assuring that you didn’t miss an expense.
Interest rates range from a variable 14.9% to 19.9%, with a default rate of a variable 29.49% Annual fees range from $35 to $79, and the processing fee to open your account ranges from $0 to $49.
Guarding your credit card against theft is a first defense against identity theft, yet many people leave their cards where a thief can easily have access.
Do you do any of these things:
- Leave your credit card in a desk drawer at home?
- Leave your credit card in a “handy” spot – like the kitchen cupboard or the top of your dresser?
- Leave your credit card in your purse or wallet in your car?
- Leave your credit card in a gym locker?
- Leave your purse in a grocery cart while you go into a cooler?
- Leave your credit card in your purse on a restaurant chair while you get up to visit the salad bar?
- Leave your credit card in your pocket or purse when you’re in a night club and get up to dance?
- Leave your wallet laying on the checkout counter while you run back to get a missed item?
If you do any of those things, you’re inviting theft.
You may think your cards are perfectly safe at home – and they probably are, unless you’re burglarized. If that happens, finding your card is like finding a gold mine – although your thief will have to act quickly if they’ve made a mess of your home.
Those other “loss spots” can be even more dangerous. Because you may not use your card every day, you might not notice the loss immediately. That gives your thief time to use the card extensively, as well as use it as a guide to stealing your identity.
One other danger spot that most people don’t even think about is restaurants. Most of the time, when you use your card, you either scan it yourself or the clerk does it while you’re standing right there, watching. But when you go to a restaurant, the practice is usually different.
First, the wait person brings your check – if it’s an upscale establishment, it will be in a tasteful fold-over binder. You then place your card in the binder and that person takes it away to process. And that’s where the danger lies.
It takes only seconds to photograph both sides – thus the thief has your numbers, your expiration date, the code on the back, and a copy of your signature. And you have no clue that anything has been done until you begin getting bills with strange charges.
It wouldn’t even occur to the majority of restaurant personnel to do such a thing, but all it takes is one to ruin your day. Or rather, a lot of your days. Because you don’t know about the theft, you won’t report it immediately, so you’ll be in the position of proving that a lot of fraudulent charges weren’t yours.
That’s easy enough if they leave town, but if they happen to live in your neighborhood, you’ve got a bigger problem.
What can you do? Wait to pay the bill until you’re leaving the restaurant. Then take it to the counter and pay it in person. A little inconvenient, yes, but worth the safety.
One more thing about restaurant charges – they usually include a space to add in a “gratuity.” If you prefer to leave cash on the table for your server, make it a habit to enter a zero in that spot and bring the total down to the bottom line. If you don’t, a dishonest person can fill in any amount they choose.
The Upromise® World MasterCard® credit card is the card to choose when you’re saving for college or paying off student loans.
Every time you use your credit card to shop with a Upromise partner, a percentage of your purchase goes into your Upromise account, where it continues to grow until you use it to pay down your college loans or pay for current college expenses. It can be used to cover your own expenses, or it can be a college savings account for your child. With no annual fee and no application fee, using this card is pure savings.
Even better, it’s tax-free and others can join and contribute. What better way for Grandma and Grandpa to help fund your child’s college education.
You’ve probably seen similar savings programs that limited you to a few vendors – many of them not even in your community. Upromise is different – our partners include over 700 on-line stores, over 8,000 restaurants, and more than 22,000 drug and grocery stores nationwide. And they’re names you know – like McDonalds, Target.com, Exxon Mobil, Gap, Sears, J.C. Penny, eBay, Barnes & Noble, Ace Hardware, Coldwater Creek, Office Depot, Walgreens, and Best Buy.
So whether you’re using your credit card for shopping online, buying groceries, filling the gas tank, eating out, or booking travel, you’ll be saving money doing the things you’d normally do. Visit our site to get all the details and see the complete list of partners and eligible purchases.
Just to get your savings started, you’ll earn a $25 bonus with your first qualified purchase within 90 days of card activation, so why not apply today?
To be eligible you must have a credit record free of bankruptcy or any recent delinquencies, and a credit score of at least 700.
If you aren’t sure about your credit score, order your free credit report with scores right now and check. If you need to make some improvements before making application for , it will be worth the wait.
When you join, you’ll pay no interest for the first 7 to 10 statement periods, depending upon your credit scores. Then your interest rate, which is tied to the prime rate and can vary, will be between this credit card 12.99% and 20.99%.
The Simmons First Visa® Platinum is the credit card of choice for consumers with excellent credit.
Travelers especially love the Simmons First Visa® Platinum, because it saves them the expense of insurance coverage. All cardholders are covered by $1,000,000 in travel accident insurance at no extra cost when booking travel on common carriers using their card.
Simmons First Visa® Platinum cardholders can also forget about paying for collision insurance when using their card to obtain a rental car, because they’re already covered. This coverage is available worldwide, except where prohibited by law.
In addition, cardholders who are traveling and report a card lost or stolen can get emergency cash and credit card replacement – for peace of mind away from home.
This credit card carries no annual fee, a low 7.25% variable APR for standard purchases and balance transfers, and no transfer fee on balance transfers. This rate is based on 4% over Prime Rate. Cash advances carry a rate based on Prime plus 8% – making this one of the lowest APR cards available today.
The grace period for repayment of charges is 25 days from the ending date of your last credit card statement. Transaction fees for convenience checks and cash advances are 3% – with a minimum charge of $4 and maximum of $50.
Individuals with exceptionally high credit scores may qualify for credit lines exceeding $10,000. If you wish to be considered for a limit over $10,000 a financial statement will be required. In addition, signatures will be required. We will send the required form prior to mailing your new cards.
Approximately 3 weeks after you receive your new credit card, you’ll also receive a complimentary Balance Transfer Kit. This kit contains everything you’ll need to pay off your high-rate cards (up to your assigned credit line).
If you have excellent credit, The Simmons First Visa® Platinum card should be in your wallet.
Credit cards are a way of life now, and used properly can be valuable tools for managing your finances. They’re also a lifesaver when you’re faced with something unexpected that must be paid for immediately – such as those times when the furnace goes out and it’s 10 below zero outside, or when then transmission goes out of the car and you must have it to get to work.
Teens can, and should carry credit cards – but only with proper parent/guardian supervision. By letting your teen have a low credit limit card and working with him or her each month to plan purchases and budget payments, you’re setting your child up for sound money-management throughout life. Remember, you’ll have to co-sign for a teen card, so a slip-up from your child will be a blot on your own credit scores.
College students should fall into the same category. While many are earning their own money and paying their own bills, this is not a time to run up large debts. College loans are enough to deal with when young people begin their working lives. Keep the credit limit high enough to purchase an emergency necessity – such as a textbook that a professor suddenly requires – but low enough to pay off without spiraling into long-term credit card debt.
Twenty and thirty-somethings should use credit cards to build a solid credit reputation. By using their cards sparingly and paying the balance promptly, their credit scores will build – putting them in a good position for a low-interest home loan.
This is a time when you may be tempted to splurge on a luxury you really can’t afford – because you can put it on the credit card. Resist. You really don’t NEED that fancy stereo system or tickets to that $200 concert. Paying interest on them makes them even less affordable. Wait until you’ve gathered the money, then see if the trade off between having the money and having the item really makes it worthwhile.
If you’re running a business of your own, or if you are reimbursed by an employer for gasoline or entertainment purchases, your credit card can be an invaluable record-keeping tool. Look for a card that gives cash back on the purchases you make most often, then pay the balance in full each month to avoid interest charges. Shun the cards with airline miles unless you really do travel a lot.
During your 40’s and 50’s you should continue to use your cards for record-keeping, and continue paying the balance in full if at all possible. During these years when travel is a favored pastime, using your card can save you money on foreign exchange rates – so be sure to take at least 2 cards along on vacation. And of course, look for a card that gives you cash back – or airline miles if you travel a great deal.
Credit card use among seniors has soared in recent years – primarily as a result of rising health-care costs. If you’re finding yourself taking on more and more debt, it might be time to look into alternatives such as a reverse mortgage.
For those seniors who remain affluent, using credit cards for travel and bookkeeping is still the wise choice.
The Discover® Motiva Card actually pays you for doing something you would do anyway – pay your account on time each month. The Pay on Time Bonus® is equal to one month’s interest, and is automatically credited to your Cashback Bonus® when you pay your account on time for 6 consecutive months.
In addition, it gives you a cash back bonus of .25 % to 1% on all your purchases, plus 5% to 20% cash back when you shop at top retailers through Discover’s® exclusive online shopping site. Plus, your cash rewards are unlimited.
If that wasn’t enough, you can get even bigger rewards when you redeem your Cashback Bonus® for gift cards from over 100 brand-name partners.
The introductory APR on your new Discover® Motiva Card is only 3.99% and applies to purchases and balance transfers made at the time of your application. This introductory rate will expire at the end of the billing period in June 2010, at which time your APR will increase to a variable rate between 11.99% and 19.99%
Cash advances carry a 23.99% variable rate. Variable rates are based on the Prime Rate.
Your due date will be not less than 25 days from the closing date of your last statement, and Discover® will not charge interest on new purchases if your previous statement was paid in full.
Thus, the rewards are great for consumers who routinely pay their balance in full each month. Since The Discover® Motiva Card carries no annual fee, shopping with this credit card can help your dollars go farther by putting cash back in your account each month. Your rewards have no expiration date, as long as your account remains in good standing.
Apply today, and start earning those Cashback Bonuses®.
Do you have a son or daughter in college? If so, they’ve probably been bombarded with credit card offers.
Credit card issuers are offering a variety of incentives to entice college students into opening accounts. They not only mail to them, they set up tables where college students congregate and give everything from stuffed animals to pizza coupons to CD’s to get the kids to fill out an application – right now.
And kids being kids, students often go ahead and do it just to get the goodies. They see it as a no-risk situation. They get the gifts, and after all, don’t have to use the cards when they arrive, so there’s no cost – they think. If they took the time to read the fine print, in many cases they’d learn differently.
Warn your college student about this – because filling out that application form might not be in their best interests. In fact, it could be costly for them (or you!). Some of those cards will come with a hefty annual fee – added as the first “charge” on their new card. Others come with monthly fees – some as high as $20 per month. Some have both.
Your student might be in for a shock when he or she opens the first letter from the credit card company and finds a statement showing a new balance hovering near $100 – in exchange for that pizza or teddy bear.
Having a credit card on hand is often a good thing for a college student, but the card should be chosen carefully.
First, if the card will be in the student’s name only, get a copy of their credit report to see their scores. From there you can determine if they’ll be eligible for a “good credit” card or will have to start with a “poor credit” card. If they’ve had some financial problems, you may have to begin with a secured card, but using it well will help them build a better credit rating.
Once you decide which card is appropriate, do your homework. Or, preferably, get your student to do the homework so he or she will be well aware of the differences and how to make a sound choice.
Compare the annual fee (if any), the monthly fees (if any), the interest rate, the credit line available, and the policies. For instance, do interest charges begin on the day of the charge, or will there be no interest charges when the account is paid in full each month?
After that, look at the rewards – be they gifts for making application, points toward gifts later, or cash back.
Taking charge of your finances has never been easier or more convenient.
The prepaid Rush Card gives you the safety and convenience of a credit or debit card – without the risk of going over limit and paying hefty fees. And, when you have your paycheck or government check deposited directly into your account, you’ll never pay a check cashing fee again.
When you want to load your Rush Card with cash, simply visit one of over 40,000 Money Gram locations, including WalMart and CVS/Pharmacy. You can also transfer from a Pay Pal or bank account, or mail in a check or money order.
Different people use their money in different ways, so the Rush Card offers you two plans to choose from – either the monthly plan or the “Pay as you Go” plan.
But the benefits don’t stop there. The prepaid Rush Card gives you on-line money management tools to help you set up a budget, track spending, and even print your own monthly statements or download them into popular financial software on your own computer. With the instant alert function, you can be notified immediately if you’ve exceeded a monthly budget amount in any category.
Plus, when you sign up for the RushPath to Credit and pay your bills with the card, we’ll automatically report your payment history to Lexis Nexis® and PRBC®, where your positive credit file will begin to grow.
Consumers currently caught in a credit card debt trap are eagerly awaiting the regulatory changes initially set to take effect in July 2010. All signs are good that these changes will take place much sooner.
With that in mind, it’s interesting to look back at regulations that did and didn’t exist in the early days of the credit card industry.
For instance, until the mid-70’s there were virtually no regulations other than those imposed upon members by the industry itself.
Banks eager to cash in on the interest paid on revolving credit card accounts were aggressive in gathering new customers – so aggressive that they mailed active credit cards to consumers who had not asked for them.
Some of those consumers were income-earning adults, but some were not. In fact, it was not unusual during the late 1960’s for college students living away from home to find a shiny new credit card in their mailboxes – just begging to be used.
This practice was banned when the U.S. Congress began regulating the credit card industry in the 70’s. Interestingly, while card issuers are right now scaling back on issuing credit, reports are that they are still recruiting new card members on college campuses.
Because merchants pay the credit card companies for the use of the cards, some merchants wanted to reduce the impact on their profits by either imposing a surcharge on customers for use of the credit cards, or raising prices overall and giving a cash discount to those who did not use them. The credit card issuers said NO.
Consumer groups sued and the card issuers relented. But then consumers asked Congress to step in, which it did. The 1968 Truth in Lending Act (TILA) was amended in 1974 to prohibit customer surcharges, but allow cash discounts. That ban lapsed in 1984 and has not been reinstated.
Meanwhile, until 1996, laws existed that capped the amount of interest and fees that credit cards could charge. Then, in a case entitled Smiley vs. Citibank, the U.S. Supreme Court lifted those restrictions. That’s why late penalties that once were $5 – $15 are now $29 – $39 and even higher. That’s also why you might see an interest rate hovering at 30% if you’re late with a credit card payment.
Another practice that helped consumers become buried in debt was the low minimum payment requirement. Many card issuers required such a low minimum that consumers didn’t pay the monthly interest – causing their balances to grow even with no new purchases added. Guidelines laid out in 2003 now require banks to require a monthly payment that covers the current month’s interest plus at least 1% of the principal due.
“Take care of your pennies and the dollars will take care of themselves” is an old adage, and it applies to these techniques for paying down your credit card debt.
