Thursday, May 28, 2015

Cashback Credit Cards - How They Actually Work And What You Need To Know

Cashback Credit Cards - How They Actually Work And What You Need To Know

As Singaporeans, we're an interesting species. When it comes to looking for good food or places to make out, we look online. But when it comes to our personal finances, like looking for the best credit cards, we ask our family and friends.
And the first thing your family and friends will say is, "Get a cashback credit card. You won't regret it." And you know what? As annoying as it sounds, they might be on to something there.
What is a cashback credit card?
A cashback credit card is basically one that earns you cash rebates whenever you use it. In "kiasu" Singapore, this is also known as a WIN-WIN situation.
It's like how "Shop N Save" became a household name in Singapore simply with the suggestion that you could save while spending. Never mind that the brand has since become absorbed by Giant. The fact remains that as a concept, it always makes sense to find ways to save money.
How does cashback work?
Every time you charge a cashback credit card, you earn cash rebates. These cash rebates are often put in a separate account, so that you can redeem them at participating merchants or whenever it's convenient.
Say you get 5 per cent cashback for dining on the new ANZ Optimum World MasterCard. If your meal is $100, that's $5 cashback.
Now, I must emphasise that cash rebates are not immediate discounts. You still need to be able to pay the full amount for your transaction first.
Let's use the example of the $100 meal with 5 per cent cashback. It doesn't mean that only $95 gets charged to your card. If your available credit is $95 and you use your cashback credit card, your card will get declined because you can't afford the full amount.
How do you redeem your cash rebates?
There are so many different cashback systems available in the Singapore credit card market today. However, in general, this is how it works.
The cashback you earn each month is accumulated in a separate account. These rebates are then automatically used to offset your spending for the month, subject to several requirements, of course.
For example, the American Express True Cashback Card needs your account to be in good standing and not overdue before they give you your cashback rewards. The Citibank DIVIDEND Card only credits your account when you accumulate $50 worth of rebates.
The redemption of rebates is an extremely important factor to consider when deciding on a cashback card because if your lifestyle and expenditure isn't able to fulfil certain requirements then you're wasting an opportunity to save more.
What do you need to look out for when you choose a cashback credit card?
There are just two main questions you need to ask yourself when choosing a cashback credit card:
1. How much cashback can you earn?
This is often the most important question to ask. There's really no point getting a cashback credit card if it offers you a pathetic amount of rebates. As we pointed out before, you can use the POSB Everyday Card to pay your utilities bill but does it really make sense to if you only earn 1 per cent cashback? That's only $1 a month.
Some cashback cards now offer 5 per cent cashback and more on specific transactions. The OCBC FRANK Card, for example, offers an impressive 6 per cent cashback on every online transaction.
2. How easy is it to earn cashback?
While it's important to know how much cashback you can earn, but you should not make your decision based on this question alone. You also need to find out exactly how many hoops you need to jump through to earn your rebates.
For example, the UOB One Card promises to give up to 3.33 per cent cash rebate on any transaction, even recurring payments. That alone should make it one of the highest cash rebate amounts on the market today.
What's the catch? Here are just three problems I have with cards like the UOB One Card (and there are certainly other cards with some similar requirements, but this is one good example).
Firstly, you need to spend at least $300 each month for three consecutive months. That means if you miss the minimum spending requirement of $300 for just one month, you don't get ANY cash rebates for three months.
Secondly, you have to make at least 3 purchases on the card each month, or you're not eligible for the rebates. Now, you might say, this should be easy to do, especially if you're making recurring payments for your phone bill or insurance. But the fact still remains that, if you're not careful, you could forfeit your rebates for three months.
Thirdly, the cash rebates you earn are "UP TO 3.33 per cent". In reality, the cash rebates are tiered at fixed amounts of $30, $80 and $150 per quarter (depending on a minimum required spend of $300, $800 and $1500 per month respectively). Basically, you may not get 3.33 per cent cash rebate all the time.
Say you consistently spent $750 monthly on the UOB One Card, for example. This is less than the second tier minimum requirement of $800 per month.
What happens? You then only earn $30 for the quarter, or $10 a month in cashback, which equates to 1.33 per cent a month. Quite a difference from the 3.33 per cent advertised.
Compare this to cards like the ANZ Optimum World MasterCard, where you earn at least 1 per cent cash rebate with no minimum spending and no cap on how much cash rebates you can earn. You earn a little less, yes, but you never need to worry about jumping through any hoops in terms of expenditure amounts.
Why should I choose a cashback credit card over other types of credit cards?
The short answer - to keep your life less complicated. Unlike rewards cards or air miles cards, you usually know exactly how much you're getting back with a cashback credit card. However, it ultimately depends on your lifestyle.
Take the example of those of you who travel regularly, for example, because your family lives overseas. It makes much more sense to get an air miles card, and channel all your expenditure into earning frequent flyer miles so that you fly for free.
But if you're just looking to save while you shop, then getting a cashback credit card is for you. And then YOU can be the one annoying your family and friends with your stories of just how much your cashback credit card is saving for you.
One final thing you MUST note: as with the general principle of utilising credit cards, paying your bills on time is especially key for cashback cards.
Unfortunately, we will probably never live in a world where cash rebates compound as well. So pay your bills. In full, and on time.

Monday, May 25, 2015

Credit Card Declined? Eight Possible Reasons.

Credit Card Declined? Eight Possible Reasons.
Understanding why your credit card was declined is the first step in preventing it from happening again. Lack of funds, international purchases, or simply an expired card could be to blame.

The English language has seven words, which, when spoken together, will nearly always ruin the day of the person on the receiving end of them. That fateful sentence? "I'm sorry, your card has been declined."
 It can happen without warning. Maybe you're at Starbucks, ready to enjoy your morning coffee, or at Best Buy, about to buy the perfect Christmas present for your husband. No matter the situation, when the clerk hands you back your credit card with a shaking head and an apologetic smile, that sinking feeling in your stomach is universal.
Understanding why your card was declined is the first step in preventing it from happening again. I polled the finance experts here at Brad's Deals, and came up with a list of the eight most common reasons why a credit card would be declined:

1. You lack the funds or you've reached your credit limit.

The most simple explanation for a declined credit card is a lack of funds. Most credit card companies will not allow you to make purchases that will push you over your credit limit, so if you haven't been paying close attention to your credit card statements, or haven't made a significant payment in a while, that cap can come up quicker than expected.
This is a problem for debit card users as well, especially if you have overdraft protection enabled on your checking account. While having your debit card declined might be better than overdrawing your account and having to pay the steep overdraft fees charged by your bank, it's still an embarrassing inconvenience.
Avoiding being declined for this reason should be easy enough: just keep better track of your finances. Paying off your credit card in full every month can help you build credit while at the same time stopping any surprise card declines in their tracks. If you can't do that, make a habit of checking your credit card statement or bank balance online before you buy anything. If you don't have the money, you can't make the purchase--it's as simple as that.

2. Your account is delinquent.

Even if you haven't yet reached your credit limit, if you've missed some payments on your card, your credit card company could put a delinquent stamp on your account and prevent you from spending any more until you pay up. If you have really good credit, the card issuer might give you some slack and let you miss multiple payments before they cut you off, but if your credit report is marred with delinquencies, they'll probably put a stop to it after just one or two missed payments.
Having a delinquent account can really do a number on your credit, so if your card is declined for this reason, fixing the problem should be a priority. Pay off your delinquent balance ASAP or face serious credit problems in the future.

3. Misplaced fraud prevention

Make sure you call your credit card company before you take a big trip!
To prevent you from being a victim of identity theft, most banks and credit card companies monitor your spending patterns and locations to ensure that you are the one using your card. If they see purchases being made that don't fit the bill, they might freeze your account. While this is helpful if someone steals your wallet in Minneapolis and then tries to spend $500 the next day at a Target in Chicago, it can be a hassle when traveling or making large, out-of-character purchases.
So if you live in Boston but plan on vacationing in California, call your bank or credit card company before you get on the plane. They'll make a note of the fact that you're going out of state, and green light all the purchases you make while you're there (within your credit limit, of course). Same goes for big buys, like a TV, a down payment on a car, etc. If you're planning on buying something expensive that's not something you'd typically purchase, let your credit card company and bank know beforehand just in case. They might not freeze your account in all cases anyway, but it's better to be safe than to have your card declined while trying to buy something you really want or need.

4. You're making an international purchase.

Making online purchases from a foreign company is another way to set off your bank or credit card company's fraud alarm. While it might be tedious, giving your credit card company a heads up before you make a foreign transaction is probably your best bet. And always make sure to vet overseas websites to make sure they're legit before buying anything from them--online shopping can be a veritable landmine of identity theft just waiting to happen, so make sure you know what you're getting into before giving out your credit card number.

5. There's an authorization hold on your account.

A lot of businesses, like rental car companies and hotels, will put holds on your account when you make your reservation, which can sometimes be as much as a few hundred dollars. While you'll get that money back (when you return the car dent-free or check out without having damaged your hotel room beyond repair), if you're close to your credit limit when you make the reservation, the authorization hold could push you over the top, and cause your credit card to be declined.
It's a good idea to make sure you've got ample credit available before making a purchase or reservation with a company that will put a hold on your account, and you should always ask and make a note of how much the hold will be, and how long it will last so you don't end up getting a surprise decline.

6. Your card is expired.

When you first get a credit card, the expiration date can seem like a long time in the future. Most cards typically expire two to three years from the day they were issued, but if you're not keeping track, those expiration dates can really sneak up on you. If you try to use a card that's expired, it's going to get declined. Some credit card companies stay on top of this stuff and send you a new card in the mail before your old one expires, but others expect you to update your account yourself.
To avoid having your card declined because it's expired, make sure you're up to date on the expiration dates of all your credit and debit cards. If they're almost up, call up your card issuer and ask for a new one. Simple as that.

7. You made a typo on an online form.

I tried to order lunch online yesterday and my debit card was declined. I was worried for a minute, but then remembered I had recently moved and updated my address on my card's account. When filling in the online form, I'd put in my old zip code out of habit, not the new one that was actually attached to my account. This is an easy mistake to make, even if you haven't recently changed your address. Careless typos or even extra spaces left in the address box can cause your card to be declined, so next time you shop online, make sure to double check that all your info is correct before you press the "order" button.

8. Your bank or credit card company is having technical issues.

Sadly, banks and credit card companies occasionally experience technical issues that interrupt their customers' card service in a certain area, or even across the world. When this happens, there's really nothing you can do but wait it out. Most banks and card issuers take this problem very seriously, and will fix it quickly, but in the meantime  you won't be able to make purchases with the affected cards. The best way to be prepared for situations like this (and every other one on this list, too) is to bring backup--be it cash, another card, or a checkbook--you should always have a few different ways to pay on you so you don't get stuck in a sticky situation.
Has your credit card ever been declined? How did you handle it?

Thursday, May 21, 2015

20 Productive Habits of Wealthy & Successful People

habits of rich people
The vast majority of rich people didn’t get there by accident or luck. Accumulating wealth requires hard work, dedication, and – most importantly – maintaining a specific set of habits that foster prosperity. As Aristotle said, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.”
If you’re looking to train your focus in work and in life but don’t know where to get started, these 20 habits of wealthy people can help illuminate your path to success.

Common Habits of Rich & Successful People

1. Wake Up Early

There are plenty of axioms about the benefits of getting up early, and they’ve remained popular for a reason: Rising early is a powerful path to success. Millionaires simply do not sleep in – they have too much to accomplish every day.
Author Thomas Corley spent five years studying the lives and habits of rich people and poor people before writing Rich Habits: The Daily Success Habits of Wealthy Individuals. Corley found that 44% of wealthy people wake up three hours before work starts, compared to just 3% of poor people.

2. Don’t Check Email First Thing

If wealthy people get up earlier than others, what are they doing with that extra time? Well, here’s what they’re not doing: checking their email. Many people believe starting the day with a perusal of the email inbox is productive, but wealthy folks know there are better things to do with that early morning time.
Some make a habit of meditating or writing in a journal, reading something educational, or getting a head start on an important project. Some simply have a healthy breakfast and get some exercise. Generally, wealthy people leave their inbox for later in the day and don’t make email a top priority.

3. Eat Healthy

Wealthy people value their health and structure their eating habits accordingly. Corley found that 57% of wealthy people count calories every day, as opposed to 5% of poor people. He also found that 70% of rich folks eat fewer than 300 calories of junk food per day, but 97% of poor people eat above that mark.
There are many reasons wealthy people watch what they eat, but the most significant could very well be to ensure a longer life – and therefore an extended opportunity to earn more.

4. Exercise Regularly

Coupled with healthy eating, wealthy people also believe in staying fit by exercising. Millionaires may be busy people, but they nearly always find time in their days to work out. In fact, Corley reports that 76% of wealthy folks do aerobic exercise at least four days per week, compared to 23% of poor people.

5. Have a Primary Goal

Wealthy people choose a primary life goal and focus on it with laser-like precision – even if it seems outrageous or unattainable. Everything they do, every decision they make and action they take, is done with this primary objective in mind. Intense concentration of this nature is what enables the wealthy to accomplish what others only dream about. According to Corley, 80% of wealthy people focus on achieving a single goal, compared to only 12% of poor people.

6. Write Down Goals

Setting goals is crucial to achieving wealth, but if it were the only requirement then nearly everyone would be rich. For the wealthy, setting specific goals and writing them down is a winning habit that works.
Of course, broad objectives – simply wishing to be rich, for example – are not goals. Specific goal-setting involves planning something tangible, such as earning X amount by Y time through Z activities.
Successful goals are actionable, and the wealthy are deliberate, dedicated goal-setters. In fact, Corley states that 62% of rich folks focus on their goals every day, as opposed to 6% of poor people – and 67% of the wealthy put those goals in writing.

7. Keep a Daily To-Do List

In order to achieve an overarching goal such as attaining wealth, you need to accomplish a number of smaller goals that feed into that main objective. For this reason, the majority of wealthy people create daily to-do lists – 81% percent of them, in fact, compared to 19% of poor people. What’s more, Corley finds that 67% of wealthy folks actually complete 70% or more of their to-do lists every day.

8. Believe That Time Is Money

In general, wealthy people work hard to achieve their goals, to the exclusion of most other activities. They avoid wasting time on nonproductive things like social media, and that’s because of their belief that time is money, and time misspent is money lost.
Instead of considering their weekly, monthly, or annual incomes, the wealthy focus on how much they should be earning every hour – and how much money they would lose by engaging in tasks that don’t produce money. This allows them to avoid the time sinks that most non-wealthy people engage in on a regular basis.

9. Be Frugal

There’s a popular saying that you have to spend money to make money. While this is true, most non-wealthy people don’t take into account the fact that the more money you spend, the less you have – and spending more than you earn does not result in wealth.
Rich people avoid overspending. Just because they could throw down half a million dollars for a brand new car doesn’t mean they do. The wealthy invest their time in comparison shopping andnegotiation, getting the best deals for their dollars and saving more money than they spend. Theydevelop reasonable budgets, and stick to them.

10. Take Long Lunches

Many wealthy people take breaks of an hour or more for lunch. This may seem to go against the idea that time is money, but the rich also understand how to work smarter, not harder – and taking breaks is an important part of that. A long, relaxing midday lunch allows you to refresh yourself, and return to work ready to put in more productive time.

11. Read a Lot – But Not for Pleasure

Wealthy people tend to believe in the importance of self-improvement and continuing education, and they typically turn to reading to fulfill these needs. Corley states that 86% of wealthy people love reading, as opposed to 26% of poor people.
What they read is just as important as how much: The rich person’s reading material of choice is nonfiction, usually self-improvement. 88% of wealthy people spend at least 30 minutes each day reading on that subject.

12. Take Calculated Risks

Wealthy people understand that risks lead to rewards, and as a result they’re more willing to go out on a limb – though they generally take calculated risks, not reckless ones. Furthermore, the rich know exactly what they stand to lose if a risk fails to deliver its reward. They are more likely to have contingency plans in place to minimize potential fallout in the event that things don’t go according to plan.

13. Network With Success

The wealthy understand that in order to be successful, you must surround yourself with successful people. Networking with other rich people, or people with the drive and potential to become rich, is crucial for your own success.
Corley finds that 79% of wealthy people spend at least five hours a month networking – whether it’s at a conference, client event, online webinar, or just over coffee – while only 16% of poor people network consistently. This allows the wealthy to align their mindsets with others who have achieved success.

14. Know When to Stop Working

Hard work is critical for rich folks, but they also understand the importance of personal time for relaxation and self-improvement. For this reason, they rarely burn the midnight oil.
Knowing that if you push yourself to continue working every waking moment, you’re only going to end up exhausted, inefficient, and unable to produce worthwhile results is essential to success. The wealthy typically walk away from work by 5pm or 6pm, and don’t return to it until the next morning, according to Inc.

15. Give Back

Charity and philanthropy are hallmarks of the wealthy. Those who are rich and successful tend to be generous with their wealth. Examples throughout history support this – from Nelson Rockefeller and Andrew Carnegie, to Carlos Slim and Bill Gates. Giving back to the community and improving the world is an important characteristic for the wealthy.

16. Avoid Television

According to Corley, 67% of rich people watch television for one hour or less per day, while only 23% of poor people limit their TV intake. They also generally avoid reality shows – only 6% of the wealthy watch them, compared to 78% of the non-wealthy. Rich folks simply choose more productive ways to spend their time.

17. Avoid Gambling

Winning the lottery would make anyone instantly rich. For the most part, though, the wealthy don’t believe in luck. Instead, they believe that actions and habits create the opportunity for luck.
That’s why only 6% of rich people play the lottery regularly, compared to 77% of poor people. Wealthy people believe you have to create your own luck through focus and hard work.

18. Control Emotions

There’s a general assumption that wealthy people can afford to be honest and blunt, but the rich understand that not every thought or emotion should be aired. Good relationships are a crucial foundation for financial success – and speaking your mind can damage those relationships. Only 6% of the wealthy say what they’re thinking regularly, compared to 69% of poor people.

19. Listen More and Talk Less

Effective communication is another critical skill for the wealthy, and listening is an essential part of it. In general, rich people spend five minutes listening for each minute they speak. This enables them to truly understand where others are coming from, and to facilitate conversations that further relationships and foster success.

20. Don’t Retire

While the wealthy may have extensive savings and vast retirement portfolios, they generally have no intention of retiring – or at least, not as early as others. According to a Gallup poll, the average retirement age for Americans is 61, but the majority of wealthy people don’t plan to retire until at least 70 – not because they have to keep working, but because they want to.
The longer you continue to work, the more money you can make. The drive to stay healthy is connected to this goal. Rich people often choose not to retire, and since the majority enjoy what they do, the idea of continuing to work is both welcome and comforting.

Final Word

Money doesn’t solve every problem, but it’s often a sign of passion, capability, and drive in those who have acquired it. Try incorporating these strategies into your daily living and working routines, and put yourself in a position to increase your own riches, both in money and in life.
Do you know of any other habits of wealthy people?

Monday, May 18, 2015

This One Financial Trick Lets You Buy Happiness

This One Financial Trick Lets You Buy Happiness

Conventional wisdom has it that, to be happy, we should make a certain amount of money, wear certain clothes, or buy a house in a particular neighborhood. There are so many "should-do's" out there that it's easy to lose sight of the fact that making money isn't the end goal. Money is a tool, a tool we can use to build a life that's best suited for each of our individual needs.
Everyone has different happiness triggers, though, and a surprising number of us spend a lot of money on products that detract from overall happiness. According to Mindy Crary, Financial Coach and Certified Financial Planner Practitioner in Seattle, WA, "Conscious spending is about being aware of what kind of spending makes you happy and what kind of spending doesn't make you happy so that you can make successful financial decisions."
So, how exactly can one gain financial clarity?

Track Expenses

There's nothing sexy about the act of financial tracking, but the end result can be mind blowing. According to Crary, people are often astounded when they uncover how much they're spending in categories that really aren't that important to them.
People automatically spend a staggering amount on coffee, dinners out, clothing, or other items that don't necessarily enhance life satisfaction. "Once you have complete clarity about where your money is going," she says, "you start to make better choices automatically."

Change Your Mindset

People tend to view budgeting as a negative or in terms of what's being taken away from them. "We get into this unconscious cycle of buying what we think we're supposed to buy," says Crary. "We get into routines without really examining them."
According to the research, we're happiest when we spend our money on "restorative activities" like exercise, sleep, travel, and spending time with family and friends. Conversely, consumption based purchases like a bigger home or fancier car tend to detract from happiness.
According to Crary, it pays to think about the things that you'll gain by focusing your dollars in a direction that's really meaningful to you. "Conscious spending is about being more yourself and how being more yourself helps you save money," she says.

Make a Plan

Once you know what's truly important to you, it's easy to scale down on the things that are not. In other words, it's important to spend your money — so long as it's on things that increase your overall happiness. In her practice, Crary has seen people entirely change the way they live their lives. After assessing their spending patterns, clients have downsized homes, increased travel, and spent more time with family. Some have even given up their daily latte, although if that's what truly brings meaning to your life, by all means, keep buying it.
Ultimately, we often get caught up in a consumption treadmill and forget that we earn money to make our lives easier and more enjoyable. "Once people set up a plan, when they're really conscious, they're spending money to make themselves happy," says Crary. "Only once they're truly aware can they get the best piece of every dollar."
Are you a conscious spender? How do you control your spending?


Thursday, May 14, 2015

Should I Apply for a Credit Card?

karen roach via

Recent trends have shown that Americans, particularly millennials, are weary of using credit cards. The problem largely stems from the way credit cards are viewed today. They are typically perceived as a "last resort" for consumers who can't afford to pay for their purchases. In reality, credit cards are an essential tool - for the right consumer, they can serve to improve financial standing and even earn them money. You should consider applying for a credit card if:

You Have a Bad Credit Score
Responsibly using one's credit card, and paying off balances, is a fantastic way of rebuilding your credit history. Individuals who have defaulted loans, declared bankruptcy, or damaged their FICO score in any other way may be distrustful or weary of taking out any more credit. However, these consumers need to try and think of credit cards as a tool rather than a crutch. Making small credit card purchases and paying them off in full each month can serve to mend a tarnished credit history. While you may not get approved for the best cards available, a secured or entry level credit card may still be available to you.

You Travel Frequently
Some of the best credit card rewards are those affiliated with airlines and hotel chains. When you pay for your travel purchases using these cards, you will earn rewards which can be, in the future, redeemed for more flights or nights. Each of your travel expenses will be offset by some rewards percentage - effectively working as a 2-4% discount. The only caveat is that this will rarely be a pure cash discount. Instead, you will be rewarded in the form of points or frequent flyer miles. However, if you are a frequent traveler, you will undoubtedly be able to make use of such rewards.

You Plan to Take Out a Mortgage
Even though buying a house or apartment may seem like the distant future, it is never too early to start preparing. The same way in which putting money away in your savings account is planting seeds that will help with your future purchase, using a credit card to slowly build up your credit history helps as well. Your credit score will predominantly affect two things when it comes to a big purchase: loan approval and interest rates. The higher your FICO score, the better your odds of being approved for your mortgage. Furthermore, a good credit score correlates with low interest rates - this will ultimately decrease the total cost of your investment, as you will pay less interest on your purchase.

You Want to Get the Most Out of Each Purchase
If you use the right rewards credit card to make your purchases, while at the same time diligently paying off your balance in full each month, you are getting the most out of each purchase. Banks are vying for your business, and as a result rewards programs on credit cards are getting better and better due to fierce competition among issuers. If you use the right cash back credit card, for example, you can earn 2% off all your spending. Paying by cash or other means simply doesn't provide anything like it.

Bottom Line
Underlying all these points is a central theme of fiscal responsibility. You should never use a credit card if you will end up paying fees or interest. The ads that come in your mail, the banker, or some website talking about credit cards - none of these things know your personal habits as well as you do. If you know you can use credit cards responsibly, they can act to provide you with fantastic value. Making these little pieces of plastic work for you can strengthen your financial portfolio and put a few extra bucks in your pocket!


Monday, May 11, 2015

10 Ways Being Frugal Can Actually Cost You Money

10 Ways Being Frugal Can Actually Cost You Money
It pays to spend less whenever you can, right? Well, not necessarily. There are some cases where the “less is more” principle doesn’t work.
Being cheap cuts costs for the moment, but may cause you to incur additional expenses in the long run. That ends up being the antithesis of frugality.
Here are a few instances where thriftiness can backfire:

1. Couponing

As an ex-couponer, I know all about this. I remember sitting at the dining room table every Sunday afternoon cutting away at the weekly circulars and matching the coupons from my ridiculously large collection to the sale items.
I saved a ton of money, but I also ended up with a massive stockpile of items for which I had no real use.
The moment of truth came when I headed to my stockpile, only to realize I had accumulated six jars of mayonnaise and 18 sticks of deodorant, which I likely wouldn’t use before the best-by date. That’s not to mention the hours of my life spent clipping away that I could have used to generate additional income.
The choice is yours, but I suggest you conduct a cost-benefit analysis to determine whether the hours spent on couponing are worth it.

2. Adopting a deprivation budget

When you create a budget to curb spending and reach financial goals, it may be tempting to jot down the leanest figures imaginable. But what will you accomplish if you severely underestimate your expenditures?
I understand cutting costs, but being unrealistic means your spending plan will fail. For example, if you typically spend $600 at the grocery store for a family of four, what sense does it make to shave that number all the way down to $200? The answer: None at all.

3. Cutting corners on insurance

Are you riding the wave of luck when it comes to your insurance policies? Do you carry the bare minimum level of auto coverage your state requires? Or perhaps you’ve signed up for mediocre health, dental, homeowners or life insurance policies.
You may have done these things to keep premiums low. But if an emergency arises, your wallet and bank account could be turned upside down by out-of-pocket costs and exorbitant deductibles.

4. Ignoring routine medical visits

Ever heard the phrase “an ounce of prevention is worth a pound of cure”? Keep that in mind the next time you’re tempted to skip a visit to the doctor or dentist. Even if you dread doling out cash for co-pays or meeting deductibles, it’s worth it to stay on top of things.
Just think about those individuals with debilitating medical conditions who could have detected them earlier — when they were more treatable — with routine blood work. Others ignore dental visits for so long that they now must live with gum disease and costly deep cleanings for the rest of their lives.

5. Buying inferior big-ticket items

If frugality is deeply embedded in your genetic makeup, it’s no surprise that big-ticket items with low sticker prices may be enticing. However, cheaper is not always better, especially in this situation.
A perfect example is the purchase of a cheap car. It may look good, smell great and be priced at an incredible point, but snagging this “good deal” could leave you with a clunker.
Car leases can work the same way. You cut costs for the life of the agreement, but end up where you started when it’s all said and done.

6. Avoiding car maintenance

It’s imperative that you schedule routine maintenance to keep your car running.
According to
Postponing maintenance is the No. 1 car maintenance mistake, according to research by, which polled certified master technicians. Of the top 10 maintenance mistakes in the firm’s study, four of them were related directly to regularly scheduled car maintenance and could be avoided.
Avoiding the mechanic may shelter your wallet, but could put your life at risk.

7. Cutting back on nutritious food

You may be tempted to reduce the presence of healthy, costlier foods like fresh produce in your family meals. But replacing nutritious food with less expensive fillers or processed foods can be bad for both your waistline and overall health.
Need tips to reduce spending at the grocery store? Check out “9 Tips to Cut Your Grocery Bill by Up to 50 Percent.” We’ve also explained how to save when you’re spending on meat and how to make less expensive (but nutritious) food much more palatable.

8. Frequenting deal websites

These are what I like to call the forbidden fruit. When websites like Groupon and LivingSocial burst onto the online scene, Americans were in a frenzy. According to Forbes:
Sure, Groupons can save you hundreds of a dollars a year if used right, but they also come with plenty of risks attached. You could risk the fear of double-booking yourself, as most of the Groupons run by dates. Then, you would be missing out and losing money, to boot.
I’m no exception. I got sucked in and vowed to myself that I’d buy just this one thing. But it turned into a lot of fine dining vouchers, spa treatments and weekend excursions, some of which I didn’t even use.

9. Shopping at warehouse clubs

This is another area where doing it properly can produce major savings. These businesses pride themselves on selling you massive quantities of a particular item at a discounted rate.
But what happens if you can’t consume it all before the expiration date? And let’s not forget about the membership fees and the storage space you will need at home.
Plus, have you compared the per-unit price? Are you sure you’re always getting a better deal?
Customers may believe they’re paying for a chance to save money, but some experts think membership fees actually cause consumers to spend more.

10. Raising your deductibles

This one is also insurance-related. It’s often said that you can reduce the cost of insurance by raising the deductibles.
But what’s the point of raising your deductible so high that you don’t have enough money in the bank to cover it if you need to? Will you have to borrow the money and pay interest?
Don’t set a deductible that’s higher than you can afford to pay. You can always revisit the deductible after you have a healthy emergency fund in place.
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Thursday, May 7, 2015

How to Get the Most Out of Your Secured Credit Card

How to Get the Most Out of Your Secured Credit Card

If you're jump-starting your credit history or rebuilding bad credit, there's nothing more frustrating than hitting a brick wall. You need credit to build credit — one of life's super-annoying catch-22s — but when your credit history is nonexistent or marred by past mistakes, just being approved for a credit card so that you can start over is an uphill battle. But not all hope is lost. A secured credit card can provide the credit you need to establish or fix your credit.
Secured credit cards work just like unsecured cards, with one main difference: you give the bank a security deposit, and the amount of your deposit determines your credit line. These cards are the next best thing if you can't qualify for other credit cards. Here are six ways to maximize your experience with them.

1. Start With a Smaller Credit Line

A secured credit card is by no means a prepaid credit card. The deposit is nothing more than collateral — in case you skip out on payments. You'll receive a monthly statement just like any other credit card, and you're required to make at least the minimum payment each month.
Ultimately, you determine your own credit line. You can give the bank a security deposit as low as $250 and receive a small credit line, or you can give the bank a security deposit of $2,000 and receive a higher credit line. But if you've had self-control problems in the past (and you probably have; that's why you have a secured credit card now), it might be best to start with a low deposit and credit line. Too much available credit might be too tempting, but with a low credit line you won't get in over your head.

2. Make Sure the Bank Reports to the Bureaus

Not every bank issuing a secured credit card reports to the credit bureaus every month. Since you're trying to rebuild or establish credit, it's crucial that the bank updates your credit report with positive activity, such as timely payments.
Read the fine print before applying for a secured credit card or contact the bank and ask how often it reports to the three credit bureaus. Some banks only update credit reports every few months, while other banks never send updates. Ideally, you want to get a secured credit card from a bank that reports activity every single month.

3. Minimize Credit Card Fees

Secured credit cards are helpful, but expensive. They might have an annual fee, which is also typical with some unsecured credit cards. But many secured credit cards also charge monthly maintenance and a setup fee. The bank charges these fees directly to the card, which means the credit card arrives in the mail with a balance — before you make your first transaction. You can't avoid fees, but you can shop around and compare the cost of different secured cards.

4. Choose a Low-Rate Card to Save Money

Don't believe anyone who says every secured credit card features a high interest rate. Yes, some cards have rates significantly higher than unsecured credit cards; this is expected since secured credit cards help individuals who need to build or rebuild their credit. However, some secured credit cards also feature competitive rates. If you know you're going to carry a balance from month-to-month, compare rates before applying to save on interest charges.

5. Only Buy What You Can Afford

A secured credit card can improve your credit history, but only if you use the card responsibly. Timely payments make up 35% of your credit score, so you need to pay your statements on time every month. Since the amount you owe makes up 30% of your credit score, only charge what you can afford and pay off your balance every month. Your spendthrift days are officially over, son.

6. Ask Questions and Know What You're Getting

When it's all said and done, a secured credit card is a steppingstone to an unsecured card. Depending on your bank, you may automatically qualify for an unsecured credit card after 12 to 18 months of timely payments, at which time the bank refunds the security deposit. But, you won't know about this perk unless you ask. Additionally, some banks will increase the credit line on a secured credit card without requiring an additional deposit from a cardholder, and some secured credit cards come with a rewards programs or offer other perks, such as free access to credit reports.
Do you have experience with secured credit cards? How did they help you

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