Almost everyone has at least one credit card. Many people have four or five of them. That’s not a good idea. I have seen firsthand how customers get into trouble having so many cards. Most of them usually end up consolidating all of the balances onto one card so they can finally start to pay the bill off.
I have experience helping clients and pointing them in the right direction when it comes to credit cards. There is a small minority that doesn’t even want to have one card. I used to be one of them up until two years ago.
I recommend that almost all of my clients carry at least one card. That is because if you have an emergency, it can come in very handy.
Most people have a debit card for their checking account. But if you don’t have the money in your account, you don’t want to use it and pay the overdraft fee because you opted in.
Example: Most tow truck drivers will not take a check because they have too many come back that bounce. They want a debit card or a credit card or good old cash.
The trick is to use your card wisely and only when you need it. You don’t want to get into the trap of having to pay interest every month. That’s when the trouble starts. If you have a card that gives you reward points, don’t get carried away with it. Only buy what you need. Don’t use the card just to get points.
You are certainly protected whenever you use your card. Just remember to check your account a couple times a week. Report any fraudulent activity as soon as possible. This is so easy to do. You can call the toll free number or go online to check your account.
One of the best websites to go to if you are looking for a card is Credit Karma. They compare cards so you can see the differences and make an informed choice. They also have the free credit monitoring. For example, if someone checks your credit for a potential job, you are alerted via email.
You can also check your credit unions. They also have lower interest rates on credit cards. But remember to only use your card only when you absolutely need to so you don’t pay any interest.
Make Your Credit Cards Work for You
Using Credit Card Perks
I once watched noted lawyer and economist Ben Stein on a television program. I remember nothing about that program except that he pulled out his wallet and with a tossing motion, out came about a hundred credit cards, accordion-style, in a plastic protector.
I was impressed. I mean, I had a dozen cards, but, nearly a hundred? When he did so, he told the host that the credit card companies consider him to be a ‘deadbeat’. I couldn’t believe my ears. Here was a man who was an actor, writer, lecturer, and most of all, money maker saying he was considered a deadbeat.
He went on to explain why. It seems that Mr. Stein not only uses each credit card very judiciously, but each is used only for specific items or for specific purchases. Where and how they are used is dependent upon the ‘perks’ being given by each card issuer.
Take Their Money
I currently have about eight cards in my wallet which I carry on a regular basis. My Costco branded American Express always gives me cash back on all purchases. I receive 3% for all gasoline and restaurant charges. I get 2% on hotels, motels and other travel, and one percent on all other purchases.
With gasoline currently selling for around $3.00 a gallon; that equates to about 15 cents per gallon or about $3.00 savings on every 20 gallon fill-up. This card also doubles the manufacturer’s warranty (up to one additional year) on things such as televisions and other electronics.
My two Citi Platinum Select cards also give me cash back. In the last couple of years, the constant percentage has dropped from 5% to 3%, but I receive this on gasoline, groceries, and prescription drugs. Currently they have a three month promotion which gives me 5% cash back on restaurants, hotels, and car rentals.
The Discover Card I carry changes up quarterly on their 5% cash back. Currently it is on gasoline, hotels, and movies.
AT&T gives me the same thing all the time. Frankly, due to my cell phone, I don’t always take advantage of it. I receive 30 minutes of free calling each month and two free calls to information.
My Bank of America issued Royal Caribbean card doesn’t have cash back. It builds points for my next cruise. By putting monthly Netflix and other recurring charges on it, I almost have enough for a free companion fare.
With my AAA card, I also get gasoline perks and free travel insurance. I haven’t used it this quarter due to the good promotions of the other companies.
Beware Of The Details
I found out the hard way that you have to read the fine print and pay attention to details. Discover’s 5% cash back is only good on purchases of up to $400.00 during the quarter, meaning they’re only going to give you an extra $20.00 back in the quarter.
Citi has a limit of $300.00 in purchases, meaning $15.00 in extra cash back. Doesn’t sound like much, but $20.00 per quarter times 4 quarters is $80.00 and up to another $60.00 from each Citi card, I’ll take their money. By paying each in full monthly, I pay no interest!
The Credit CARD Act Doesn’t Completely Protect You
Most of the new rules in the Credit CARD Act have gone into effect. While many of these rules will stop some abusive credit card practices, and hopefully protect consumers, there is still plenty that issuers can do. This is because the Credit CARD Act doesn’t cap fees and interest rates. So, here are three things to watch for in terms of amendments to your credit card agreement:
1. New Fees
In order to keep making money off of you, credit card issuers are considering the implementation of new fees. Some of these fees include statement fees and inactivity fees.
That’s right, if you keep a credit card for emergency purposes, but don’t use it much, you can get hit with a fee because you are responsible. Also, some credit card issuers are introducing statement fees and other fees. And be on the lookout for the return of the annual fee.
2. New Interest Rate Protocol
Many card issuers are amending the way they set interest rates. The old way called for them to pick a recurring day (such as the last day of the billing cycle or the first day of a new quarter) and set the interest rate based on the market rate that day.
Now, though, credit card issuers are toying with the idea of setting the rate based on the highest rate seen in the last 90 days. This means a few less dollars in your pocket if you carry a balance. And, of course, there is no cap on interest rates that credit card issuers can charge.
3. International Transaction Fees
Until now, if you carried out business in the same currency, credit card issuers normally wouldn’t charge an international transaction fee, even if you bought across borders. Now, though, some cards are charging based on geography, instead of currency.
So, you could be charged a fee for items bought in another country — even if U.S. dollars are used and no currency exchange take place. This means that some card issuers will double up. They’ll charge you a fee for the international transaction and an exchange fee if a currency conversion takes place.
Make sure you read the fine print, and watch for information from your credit card issuers to see what new tricks are in store.