May 05 2009
Credit Card Info
Credit Card Tips
The credit crunch is here and you may be looking for a credit card. Here are some tips from insiders.
1. If at all possible avoid using credit cards. They will cost you money.
2. If you nevertheless want to apply for a credit card, try and make sure you get a 0 interest credit card that offers a zero per cent interest rate for balance transfers.
3. Check who is issuing the card - banks have hundreds of different brands but you will not be allowed to transfer a balance from one brand to another if they are issued by the same bank. So check before you apply, other wise you are just wasting your time and may ebe refused, which is not good for your credit rating.
4. Check the fees. Balance transfers generally cost money - usually from 2.95% to 4%.
5. Check the “negative payment hierarchy” - a system which means payments you make pay off the cheapest debt first. Any zero per cent balance will be paid off before any balance which incurs interest. So if you transfer a $6000 balance onto a zero interest balance transfer card, then spend $500 on the card, then make a payment of $300, that $300 will be deducted from the $6000. The $500 will incur interest until the $6000 is paid off.
So : NEVER use a credit card with a zero per cent balance transfer for anything else.
6. Some credit cards have uneven promotional periods, e.g. 0% for 9 months on balance transfers, but 0% for onlyh 3 months on purchases. Only use credit cards for one purpose – balance transfers or purchase - not both.
7. Do not miss any payments this have a negative impact on your credit rating. A single missed payment will cost you a lot of money in fees and interest rates and also your credit score. If you miss a payment, phone your credit card company - they will often reimburse any fees if it is your first ‘offence’ and may put the interest rate back to zero. It is preferable to set up a direct debit for the minimum monthly payment.
8. Payment Protection Insurance (PPI) - don’t sign up for it !
9. Keep a careful eye open for payment dates - they are often changed in order to catch you out. Check the payment due date on every statement you receive from a credit card company.
10. If you are using low interest credit cards on promotional interest rate, then phone up 1 month before the promo expires to get the exact date it expires. Then arrange a balance transfer before it ends.
11. Try not to pay off one credit card with another loan as issuers run regular checks it may affect your credit score.
12. Try not to use credit cards at all. Interest rates have fallen everywhere except on credit cards and personal loans ! If you need money then try to make money online - e.g. from blogs - see make money on the Internet.
