Monday, January 26, 2015
Thursday, January 22, 2015
Image via iStock.
New year, new credit card? Before you apply for a credit card to go along with a new year full of possibilities, read on to find out why you should or shouldn’t get a new credit card in 2015.
I don’t have a credit card — why should I get one in the new year?
Responsibly using a credit card is one of the easiest ways to build credit. A good credit score can help you obtain credit at reasonable rates, which will come in handy if you choose to purchase a home in the future, since a 1% difference in interest rate could cost you thousands. Good credit also allows you to set up utilities without paying deposits, get a new cell phone contract or get a new job. Credit cards also come with the perks of potential rewards, protection benefits, a grace period between when you buy an item and when you have to pay it off, and low liability in case of fraud. Getting your first credit card means you be able to take advantage of all of these perks and benefits.
I have a credit card — why should I get a new one in the new year?
If you have a credit card, chances are you’ve built credit already. This year, you might want to take advantage of that hard work by getting a credit card approved for those with good or excellent credit. The perks and benefits are often better, and they tend to offer the best rewards programs. You could plan ahead and get a credit card with an awesome signup bonus to use for your summer travel. Or you can apply for a rewards credit card that gives you high ongoing rewards for the things you spend on most, such as groceries, gas or dining out. Another reason you might want a new card is if your current card lacks EMV technology. Credit cards with EMV chips aren’t easily compromised, protecting you from having your card information skimmed. If you have a chipped card, use it the proper way to take full advantage of the chip — dip, don’t swipe. It’s easy: Enter your credit card into the terminal, follow the prompts, and remove the card when the receipt begins to print.
Why shouldn’t I get a new credit card in the new year?
Of course, getting a new credit card has disadvantages, too. Each new credit card application triggers a hard inquiry, which pulls your credit score down a bit. If you’re firmly in the excellent credit score range, this isn’t a big deal. But if you’re between fair and good, or good and excellent, you won’t want to sacrifice any points to get a new credit card. If you’re spending habits aren’t the most responsible, a new credit card isn’t a good idea. It will give you access to more money and could lead you deeper into debt. So before you apply for a new card, make sure you’ve cleared your existing credit card debt and proved to yourself that you can responsibly handle plastic now.
The takeaway: Before you apply for a new credit card for 2015, consider the pros and cons. Get a credit card if you want to build credit, obtain a better credit card than you have now, or need a card with an EMV chip. Don’t get one if your credit score can’t handle the hard inquiry or you don’t feel you have a good handle on your spending. Image via iStock.
Monday, January 19, 2015
Thursday, January 15, 2015
1. Before Investing or Saving for Retirement, Be Debt-Free
2. Pay off Your Mortgage Before Saving for Retirement
3. Don't Borrow Money to Invest
4. Save 10% of Your Income
5. Go to University to Get a Good Job
6. Don't Use credit cards
7. Get the Biggest Mortgage the Bank Will Give You
8. Tax Refunds Are Good
9. Build Credit by Carrying a Balance With Your Credit Card
10. You Have to Spend Money to Make Money
11. A Budget Keeps Your Spending on Track
12. Choose Index Funds for Passive Investing
13. You Need to Have a lot of Money to Invest
14. Your Emergency Fund Should Be Six Months' Expenses
15. Leasing a Car Is Bad Value
Monday, January 12, 2015
Here’s a catch-22: you need a credit card to boost your credit, but you can’t boost your credit without a credit card. Secured credit cards can help people with poor credit escape this paradox. But what’s the difference between a secured credit card and an unsecured card anyway?
Unsecured credit cards
Most credit cards are unsecured, which means they don’t require a deposit as collateral in case cardholders can’t pay off their debt. Rewards, retail and low-interest cards are typically unsecured, and they offer benefits such as cash back, travel perks, store discounts and interest-free introductory periods. Since they’re less likely to pay off their debt, it’s difficult for people with bad credit to qualify for secured cards. There are a few unsecured credit cards that are easy to qualify for, but they have high annual fees, which are deducted from the credit limit. Rather than opening a high-fee card, we suggest applying for a secured one.
Secured credit cards
Secured credit cards are designed for people with bad credit or no credit. Since these customers are considered a bigger risk for card issuers, they’re required to make a deposit. The deposit amount varies, but it’s typically equal to the credit card’s credit limit. For example, if the credit limit were $500, the deposit would also be $500. Once the initial deposit is paid, secured cards work just like unsecured ones. They’re accepted wherever credit cards are, including online, and you incur interest if you don’t pay your balance off in time. You can get secured credit cards from the same issuers and networks as unsecured cards. Like unsecured cards, some secured cards come with annual fees, but we suggest you stick to cards with yearly fees less than $50.
Although they require a deposit, secured credit cards are better than no credit card at all. If you get one, your goal should be to improve your credit score until you’re eligible for an unsecured card. Some issuers will let you transfer your secured line of credit to an unsecured one when you qualify. If you minimize your credit card spending and pay off your balance in full and on time, you’ll eventually become eligible for an unsecured card and escape the bad credit trap.
Thursday, January 8, 2015
You are new able to live longer than before because of better health care. It means you need to have more money to spend and cover inflation as well. According to data compiled by the Social Security Administration:
A man reaching age 65 today can expect to live, on average, until age 83.
A woman turning age 65 today can expect to live, on average, until age 85.
And those are just averages. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95.
Here are seven wise things to do for those who are about to retire:
1. Be debt-free: The biggest enemy of financial freedom is debt because you are going to pay more than what you have actually incurred. The longer you delay, the more interest will be added to the outstanding amount and it will be more difficult to clear as the amount grows bigger over time.
2. Continue to work and earn: If you enjoy what you do, it would be prudent for you to continue working. When you work, there is a source of regular income and you and your employer will continue to contribute towards your retirement fund. Another point is that you are not touching your retirement fund and it continues to grow. The longer you work your retirement years will be shortened and the less money you will need.
3. Focus on sources of passive income: It is a smart move to build a constant stream of regular income during retirement. One such source is shares which are making regular dividend payments. When one regular source of income stops, another one takes over.
4. Build new sources of income during retirement: Another wise move is to start a second career during your retirement. What is your expertise? Can people pay you for your services? While you can continue to earn during your retirement, it is more important to keep your mind active and alert.
5. Spend less: You will never know how long you are going to live. It is prudent to adopt a frugal lifestyle so as to last your retirement fund as long as possible.
6. Save as much as you can: Save your bonuses, if any. Don’t spend your tax refund check. The more you save, the bigger will be your nest egg.
7. An emergency fund: It is also good to set aside an amount to cover unexpected expenses such as a major car repair or illnesses. Such expenses, more likely than not, are excluded in your retirement fund.
Take action now and enjoy financial freedom later.
Monday, January 5, 2015
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