Manage your Credit

HOW TO MANAGE YOUR CREDIT CARD?

Our world has been rapidly advancing and it brought us various of effects as we humans has a lot different ways of coping up with all of these changes and some are not just not taking it too well and forgetting to take care of our necessities such us our environment. As years go passed by, a lot of inventions took our way of living efficiently progressing and making everything so accessible and convenient, which can be a good thing and a bad thing.

In our generation we are used to instants. Here go instant noodles, fast foods, Cellphones, internet, and any other things that just made our lives easy. As these innovations brought us a lot of good and positive ways, they also gave us a lot of adverse effects which can only be controlled by humans who possess these innovations. For instance, cellphones it is a good a thing until the user uses it to harm someone or himself by abusing the usage and its capability to affect other than themselves. So, in this article, I am going introduce one of the best inventions of our era “Credit Card” and how to responsibly manage them.

WHAT IS CREDIT CARD?

According to Cambridge Dictionary, credit card is a small plastic card that can be used as a method of payment, the money being taken from you at a later time. From Merriam Webster Dictionary, it is a card authorizing purchases on credit. And last, from urban dictionary, credit card is piece of plastic that has demonic powers in its ability to keep a person in financial slavery for the rest of their life. They all have the same definition but different perspective on what role does the credit card plays in our life. In my own definition which I learn and got from everything I know about it is, credit card is a thing that virtualized our money that makes our purchasing convenient for not carrying huge wallet full of cash and making our shopping experience more secure. However, security is very dynamic word dynamic word for using it does not even guarantee a hundred percent security (I know, how bothersome is this). Anyways, we should not fully rely on the system and make it more secure with our own doing and effort. So, I am going to help you on that, okay?

Before we focus on the security process let us widen our subject field so, the following information tackles about the different kinds of credit cards that has been published by a credit broker company called “Experian” in their very own website at: https://www.experian.co.uk/.

Types of credit cards

 Reward cards

This kind of card rewards you for using it – for example, you may get travel miles, cashback, or store discounts. It often comes with an annual fee and high interest rates, so it is important to ensure the benefits outweigh the costs. You may need a good credit score to get approved.

 Credit builder cards

Low credit score? These cards may help you build your credit history. They typically have low credit limits and high interest rates, as they are designed for people who are seen as high risk. But paying the monthly bill on time and in full can show lenders you are reliable, helping you get better credit offers in the future.

 Balance transfer cards

Do you already have a credit card? You may be able to reduce the amount of interest you pay, by moving your existing card debt to a balance transfer card – usually for a small fee. These cards typically offer a 0% or low interest rate for a set period. You may need a high credit score to get one.

 Purchase cards

Need to spread the cost of a big purchase? These cards usually have an interest-free period, which can make them a cheap way to borrow. You will need to meet the terms and minimum payments to keep the 0% rate, and it is best if you can pay off the balance before the interest-free period ends. Typically, you will need a good credit score to get this type of card.

 Balance transfer and purchase cards

Essentially, this card gives you the benefits of a balance transfer card and a purchase card rolled into one. It can help you spread the cost of a large purchase, while reducing the amount of interest you pay on your balance – although there is usually a fee. If you have got a good credit score and you are planning to pay off your cards soon, this option may suit you.

 Travel credit cards

Going overseas? If you book hotels or withdraw money abroad on your existing credit card, you may be hit with hefty fees. But taking a big wad of cash can be inconvenient and risky. Travel and currency cards can help you reduce the cost of using a card in another country.

 Money transfer credit cards

Essentially, this type of credit card lets you borrow cash. You can transfer money from the card directly into your bank account, usually for a small fee. It is commonly used to help clear bank overdrafts – although the debt will not be gone, it will simply get moved to your card. Money transfer cards typically offer a 0% rate period, although you may need a good score to be approved.

Now that we know all the types of credit cards it will be easier for us which one to avail for, we are going to focus on what particular reasons our credit cards’ purposes. These following types of cards are general information where most of the countries have but there are places that has limited types of cards that only rotate in a bounded function unlike the others. Having a good background of types of credit cards, you are more confident now which one to apply for, but how to apply for credit cards?

APPLYING FOR CREDIT CARD

So, here is an article written by David Weliver titled “How To Apply For A Credit Card (And Approval Requirements)” published last July 30, 2020 in his blog site called: https://www.moneyunder30.com/.

Here are some easy things you ought to know on applying for credit card:

 Basic requirements to get a credit card

• Be at least 21 years old or 18 with either a parent’s permission or a verifiable source of income

The CARD Act of 2009 is designed to prevent banks from certain dangerous practices, like marketing credit products to young adults without the income to repay their obligations. If you are under 21, you can still get a credit card, but you may need to provide documentation that proves you have your own source of income—or a parent’s permission.

• Have a Social Security number

In general, you will need to have a Social Security number to establish a credit history. Non-citizens without a Social Security number will not likely be able to get a credit card.

• Have a source of income

Credit card applications will always ask for your estimated monthly income. Banks are not going to lend money if you do not have a way to repay the debt.

You do not have to report all your income, just the income you want to be considered as “available” to repay your credit card. This isn’t to say a bank couldn’t one day come after all of your income if you fail to pay, but it might be the responsible thing to do not to include income earmarked for other things (for example, child support) on a credit card application.

Your reported income is one of many factors a bank will use to decide whether to approve your application and how much of a credit limit to extend. In most cases, income reporting is on an honor system, but the bank could ask for proof of income (such as a pay stub or W-2) in certain situations.

If you are a full-time college student, you may qualify for a student credit card even if you only earn a little bit of money from part-time work.

• Have a positive credit history

Unsecured credit cards require applicants to have established credit histories. Most cards require good credit scores of 700 or more, although some cards designed for fair credit.

Some of the best offers may require up to a minimum of seven years’ good credit history, but you can generally get a sense of the kind of credit score required before you apply to a particular credit card.

In general, credit cards with more lenient application requirements will have higher fees and interest rates. You will want to proceed carefully, but such cards can still be a good way to continue building your credit history.

If you do not yet have a credit history or have very poor credit, you will need to investigate a secured credit card. A secured credit card requires you make a deposit (usually between $200 and $1,000) into a bank account before you can open the account.

 How to apply for a credit card

1st Step: Find a suitable credit card for your needs

2nd Step: Once you find a card you like; you will complete a

basic credit card application.

3rd Step: A credit card application typically asks for you:

Name, date of birth and Social Security number

Gross annual income

Housing situation

(Homeowner, renter, or living with others) and your monthly housing payment. This information, along with your income, is used to determine how much disposable income you might have and, consequently, your credit limit.

4th Step: Time at current residence

Credit applications ask how long you have lived at your current address for two reasons. First, your address helps verify it is you, not an identity thief, applying. What if your application does not match your credit report? You will not automatically be declined, but the bank will take a closer look.

Secondly, a bank may consider how long you have lived in one place as a risk signal. Statistically, people who live in one place are more likely to have stable jobs and pay their debts. Moving frequently may indicate trouble holding work. It is not to say living at your address for less than two years means you will be declined—it is just one of many factors.

5th step: Your signature and date

A credit card application is a legal document. If the bank ever attempts to collect a debt from you in court, they will need to produce evidence that proves you opened this account. An online signature can serve this purpose, too.

6th Step: Optional fields on a credit card application

Some applications may ask the following additional questions:

Authorized users

You may be able to add authorized users to your account, in which case the bank will ask for their names (and, in some cases, SSNs and DOBs). These users will receive a card in their name and be able to make purchases with the card. Keep in mind, however, that authorized users are not cosigners. You alone will be responsible for making all payments on the account.

Balances to transfer

If the card allows balance transfers, you may request to have balances transferred from other credit card accounts to the new card. If you want to do a balance transfer, you will need to put down:

 Creditor name

 Account number

 Payment address

 Transfer amount

Keep in mind that you usually cannot transfer balances from other accounts at the same bank and the bank may only allow you to transfer a portion of the balance you request.

7th step: What happens next

That is, it! Credit card applications are quick and straightforward. If you have applied online, you may either receive an instant decision or be contacted within a few days. Paper applications will take a week or two to process.

After you get your credit card is when the fun starts. You can start using your card to build credit, earn rewards, or pay off debt.

And that is David Weliver’s easy steps to apply for a credit card. David is the founder of Money Under 30. He is a cited authority on personal finance and the unique money issues he faced during his first two decades as an adult. And that is why he knows his way around with credit cards and financial things.

Another thing that plays an important role is choosing the right bank, so I have look for the perfect article to feature and incredibly help us on how to choose the perfect bank. This article is written by Amanda Dixon last October 11, 2019 titled “8 tips for choosing a new bank” and published at https://www.bankrate.com/.

Picking a bank is not as stressful as picking a mate or a house, but it is not easy. Parking your cash in the wrong place can cost you. Before committing to opening an account, consider these tips to ensure you are making the right choice.

I. Identify the type of account you need

Banks offer many different types of products and services. Trying to compare all of them at once could seem overwhelming. A good place to start is deciding which type of account you want to open based on your financial goals and priorities.

If you are interested in saving more money, you could open a high-yield online savings account. The Federal Reserve has cut interest rates twice so far in 2019 and many banks have lowered savings account yields. But compared to their brick-and-mortar counterparts, online banks are still offering competitive rates.

Perhaps you are looking to replace your checking account. If that is the case, you might want to go with a bigger, traditional bank that has multiple types of checking accounts to choose from. Or you may want a high yield checking account like the ones often offered by credit unions and community banks. Money market accounts — hybrid accounts that may have check writing privileges, but allow for a limited number of monthly transactions, like savings accounts — are another option, but are not offered by all banks.

II. Focus on the numbers

Do not like wasting money? Find a bank that does not levy unnecessary charges. Since online banks have few (if any) branches, they have fewer operating costs. That is why they usually do not charge as many fees as brick-and-mortar banks.

When you are shopping for a new bank, find one that has more lenient overdraft policies. And, when you find your perfect account, do this:

 Link your checking account to another account at your financial institution so that if you run out of money in your checking account, the bank will pull money from the other account to cover the transaction. You may be charged a fee for this, but it is typically less than an overdraft fee.

 Sign up for low-balance alerts through your bank or credit union’s website. These alerts, which you may be able to receive on your smartphone, will alert you when you are at risk of overdrawing your account.

III. Think about accessibility

When it comes to banking, another key factor is accessibility.

Most consumers will want to take into account ATM location convenience, branch location convenience and the availability of online and mobile banking. The characteristic that is most important, however, varies, particularly by generation. For younger consumers, mobile banking capabilities trump branch location convenience. The opposite is true for older bank customers.

IV. Do not rule out credit unions

Many consumers are familiar with the biggest banks. But you will want to shop around and consider credit unions, too. Finding out what local credit unions offer may take time. However, doing some research could pay off.

“By not having shareholders, credit unions can reinvest their earnings in the form of lower, reduced loan rates and higher earning rates on savings,” says Jaspreet Chawla, vice president of membership at Navy Federal Credit Union. “This creates a unique relationship that generally leads to more opportunities for members to engage with and have a voice in organizational decisions.”

V. Find a bank that fits your lifestyle

The bank you choose should meet your needs. If you’re entrepreneurial, you’ll want a bank that can provide support as you build a business.

If you are trying to save more money, Ben Brown, founder of the investment advisory firm called Entelechy, recommends looking for a bank that lets you open and name separate accounts.

“What I typically do is have clients open their main checking account, which acts as sort of a clearinghouse and then multiple savings accounts for different goals,” Brown says. “You might have a travel fund, a gift fund and a regular expense fund, just to make budgeting much easier.”

Considering your spending habits is also a good idea when deciding where to bank. Many banks have budgeting tools built into their websites or apps that make it easy to track your expenses and see where your money is going.

VI. Examine digital features

Most banks offer basic services through their mobile and online channels, McAdam says, like the ability to transfer funds, pay bills, check balances, and make mobile check deposits. But not all banks offer advanced digital capabilities.

Some banks are missing features that are increasingly being demanded by consumers, McAdam says, like the ability to lock a debit card (and prevent a stranger from using it) or manage mobile banking alerts. In certain cases, there are online banks that do not offer a smartphone app.

If you value a high-tech online or mobile experience, read our bank reviews and check with the banks you are interested in to see if they can provide what you are looking for.

VII. Understand terms and conditions

You should not open a bank account without knowing what is in the fine print.

If there are monthly service fees, ask whether you can get them waived. If there are out-of-network ATM charges, find out whether the bank offers refunds. Make sure your savings will be federally insured by the National Credit Union Administration or the Federal Deposit Insurance Corp. (just in case your bank closes).

Finally, as you are comparing CD rates and other products, watch out for promotional deals that expire.

VIII. Do your homework

You do not want to become a member of a credit union or a customer of a bank without knowing exactly what you are getting yourself into. Once you have reached the point where you are comparing a handful of banks, consider reviewing what experts have to say about them.

Find out where your bank of choice might stand in terms of customer service and whether you are the type of person who would benefit most from what they have to offer.

Consumers tend to remain customers of their banks for a long time. Carefully weighing your options is best before agreeing to begin a relationship with a bank. If you are having a hard time settling on one bank, consider whether you can handle managing accounts at several different ones that can collectively help you stay on top of your finances.

Now that we know the types of credit cards and how to apply for them let me tell you and share my personal list on how to manage your credit cards responsibly.

TIPS TO MANAGE CREDIT CARDS WELL

1. DISCIPLINE – This is the best and number one rule of managing your financials, so this come first. Bear in mind that you always make sure that you can afford all of your purchases. Set in mind that before you buy something expensive or anything you have to save up for those things so you can pay off your balance.

I remember, every time I decided to go shopping or buy necessities in the grocery stores I am very much tempted to buy things that are not in my list but I fight the temptations like Jon snow in the battle of the bastards in the episode 9 of season 6 in Game of thrones. (Pardon my Nerdity and GoT reference, I cannot help it!) Which by the way (spoiler alert for those who have not watch it) I won! So yes! Be discipline because it is your money and you must save up just incase there is an emergency!

2. CHECK YOUR BALANCE – Always check your balance so you have an idea of how much you have and allowable to spend. Keep track of where all your credits go and match it to your balance. In this responsible act, you are going to avoid going over the limit and get card suspended.

I linked my card in a mobile app so I do not need to check my balance in an ATM machine or in bank branch, it’s a feature that your bank offers so it will be convenient to their customers to track their transaction and check balances so choose a good bank for your preference of convenience. With the perfect accessibility, it will be easy for you to check your balance so before you go to the store you have a definite amount that is allowed to spend.

3. Create A Timeline – It does not have to be a huge cardboard or calendar to create a timeline. A simple reminder on a refrigerator magnet or sticky notes on your desk or an alarm in your phone as reminder is enough to keep track of your payments. Because the important aspect of your credit score is your payment history. You cannot miss payments because if you do, that will crucially reflect on your scores and that means there will be additional fee or what I call violation fee for being late. The consequence does not limit in additional charges, but it will also affect the credit scores and interest rates when you apply for loans.

4. Plan! Plan! Plan! – As someone who have a credit card it only means that you are making money of your own and it is wise to create a foolproof plan for your future and for your money. For starters, budgeting is an awesome plan that would give you a great deal to pay your loans easily and faster and keeps you out of debt.

You should take care of your earnings for those are the rewards of your hard work so you must plan carefully on how you are going spend them. At such a young age, I started earning when I was a teenager and earning money is quite tempting to spend it at things you want but not need so I did bought the things I want and didn’t filled my satisfaction because I worked hard for that money and what I bought was not really worth it so learning from my mistake, create a plan and carefully weigh up the things you want and need.

Also, please do not be hard on yourself, like I said check your balance and if you have few amounts to spare please do not forget to treat yourself. Buy the lipsticks you have been longing to buy, the spa treatment that you always wanted to try or watch your favorite upcoming movies in cinema. Take care of yourself and have a little fun with the money you saved.

5. DO NOT CLOSE YOUR OLD ACCOUNTS

Saving accounts multiple due to the years passing by so as much as it is tempting to close it just think about the length of your credit history because the longer it is the more good credit management and responsible it will reflect on you. Because they can tell you have awesome credit management when you have good and improved credit scores in your account.

Aside from reputation as a good and responsible owner of a credit card and bank account the history of an account matters due to fact that interests multiply and giving you more savings as years go by. It is not much but at least it adds up a little to your savings.

6. APPLY FOR OTHER CREDIT ACCOUNTS

Having and owning different types of credit cards and good history credit score attracts good negotiations because it reflects that you can make a fixed payment over time or on time making easy to trust and approved whatever you are asking for them. Revolving accounts, like credit cards, show that you can handle paying down your debt periodically, without going over your limit. It is also one of the things that lenders considered when having a different type of cards and how well you have managed your financials in all of them.

I also find this step a life saver especially in times of emergency, One time there was an accident happened and I had to pay for the damage and my first credit card cannot cover all the damage but thanks to the second and third I was able to pay for it without causing damage and going over the limit in my balances. You can also treat them as a piggy bank for certain reasons like for instance, the first credit card is for essential things like bills and stuff, the second is for future plans like houses, cars and lot, and the third one could be like your casual wallet that you use every day and on a normal day.

7. KEEP YOUR DEBT LEVEL LOW

There will be days that you have to borrow for some things like house, car, education, business capital, and other things but the key to it is borrow what you only need. Do not borrow huge amount for money because it will be harder to repay. It is important to remember that Your total debt payments should be at least no more than 35% of your monthly income for a better credit score.

Budget the money you borrowed carefully so it will not go to waste and there might be some few remains that will help you repay it.

8. KEEP YOUR RECEIPTS, CHECK THEM AND THE REFLECTION ON THE REPORT, AND RESOLVE THE INACCURACY

Every time that you have a transaction with your credit card make sure that you have a copy of receipts and report of the transaction. In that case you can monitor the addition, subtraction and other things happening in your money with all your collected receipts. These receipts can also hold an important role as evidence in case a mistake occurred in the report.

Having these evidence can resolve the errors and the bank might offer some compensation with regard their mistakes. So, it will be a good and responsible way to manage your credit. About the receipt collection, you can collect the month-old receipts and throw away the others because it just might pile up as a trash and if there are nothing inaccuracy happening with your account it is all just useless unless you are a sentimental person.

9. REPORT IMMEDIATELY WHEN SOMETHING GOES WRONG

Sometimes we cannot help it to make mistakes and be irresponsible, when this happens, and it affects your credit card find the nearest branch and report it as soon as you can. In there, they know what to do with the card to avoid the loss of the credits.

Like I shared awhile ago, I was earning at such a young age and I had a credit card to store my money. Long vacation and I forgot the pin of my card! I tried everything until they suspended my card and I cannot make a withdrawal. So, I went to the bank and reported it, immediately they were able to resolve the issues, but I have to pay for new card and service charge and have a new card with new pin.

Another one is when I lost my card and I do not know if I actually lost or misplaced it or someone stole it from me, So I immediately reported it and they suspended the card to halt the further transaction in case the thief use it.

10. LASTLY, NEVER MAKE A NOTE ABOUT IMPORTANT DETAILS ABOUT YOUR CREDIT CARDS

I know, some details are hard to remember like pin to my card number one then pin to the others and I cannot help but save those important details in my phone’s notepad so it would not slip on my mind. A friend of mine works in a bank and as someone who works in there seriously advise us not to save our pins somewhere because it is too much risk.

Therefore, for people who are having hard time to memorize their pins create a code about it and transcribe the pin numbers to the worlds that you are the only one who can get it. Therefore, it is like a decoding or encrypting the clues to get the corresponding pin numbers. I know it is quite a lot of work, but you cannot seriously put all your savings in risk. So, protect it at all cost!

Here are my easy ten tips on how to handle your credit cards responsibly and effectively. I hope this eBook with compilation of perfect information to effectively manage your credit helps you and make you an efficient card owner. Take care of your hard works’ reward!