Something I’ve said numerous times here is that 0% balance transfers are great if used correctly and extremely dangerous if used improperly, that’s why a post over at Blogging Away Debt, titled 0% Balance Transfers Are The Bait, Understand The Trap is so valuable. It lists three traps that most people may not be aware of when it comes to 0% balance transfer offers.

The first is in the form of fees, often these offers have 3% balance transfer fees that eat into your savings. The second is in the rate after the promotion, some could be higher than what you’re doing now, so do the math to make sure it’s a smart decision. Lastly, don’t fall into the same cycle of debt over and over again. You’re getting a breather, use it to catch up, not fall farther behind.

Last August, The Motley Fool, one of the most entertaining personal finance and investing websites out there, published an article called the 8 Commandments of Credit that I feel every consumer should read. Some of the commandments are common sense, some of them may not apply, but an educated consumer has a duty to read and understand what these rules mean and ensure that they follow them. They address some of the tactic that credit card companies use to try to extract as much money as they can from unsuspecting consumers like you and I. In this series I will elaborate on some of these commandments and give my personal take.

Commandment VII. Carry just what you need.

The Motley Fool recommends that you only carry one or two cards - one for purchases and another for emergencies, and that more than that is overkill. Personally, I carry several cards based on their cash back potential (one for restaurants, one for gasoline, one for everything else) and I recommend that if you have the discipline then you should do the same. The key to using credit cards is to maximize your cash back potential at every opportunity and lower your incidence of mistakes (missing a payment, exceeding your limit).

Source: The Motley Fool

Last August, The Motley Fool, one of the most entertaining personal finance and investing websites out there, published an article called the 8 Commandments of Credit that I feel every consumer should read. Some of the commandments are common sense, some of them may not apply, but an educated consumer has a duty to read and understand what these rules mean and ensure that they follow them. They address some of the tactic that credit card companies use to try to extract as much money as they can from unsuspecting consumers like you and I. In this series I will elaborate on some of these commandments and give my personal take.

Commandment VI. See yourself through others’ eyes.

This tip is another good one, from a general personal finance perspective; review your credit report from the three major reporting agencies (Experian, TransUnion, and Equifax) and you can get a free report each year because of a federal mandate. Review your report for errors, omissions, and inaccuracies because each one of those will reduce your credit score, which will affect what sort of rates you’ll get on loans - including car loans, mortgages, and credit cards. It’s imperative that you review your report every few months to ensure your credit history is being correctly recorded.

Source: The Motley Fool

Last August, The Motley Fool, one of the most entertaining personal finance and investing websites out there, published an article called the 8 Commandments of Credit that I feel every consumer should read. Some of the commandments are common sense, some of them may not apply, but an educated consumer has a duty to read and understand what these rules mean and ensure that they follow them. They address some of the tactic that credit card companies use to try to extract as much money as they can from unsuspecting consumers like you and I. In this series I will elaborate on some of these commandments and give my personal take.

Commandment V. When you get into trouble, stop charging.

This is a great tip… if you can’t make the minimum payments, please please please stop charging to your credit cards (they recommend “stop, drop, and roll” - hence the title of the post) because you’ll only dig yourself into a deeper hole that you’ll have to dig yourself out of later. Stop charging, drop the card, and roll that balance to a lower interest rate (or simply ask for a lower interest rate) so you can stem the bleeding.

Source: The Motley Fool

Last August, The Motley Fool, one of the most entertaining personal finance and investing websites out there, published an article called the 8 Commandments of Credit that I feel every consumer should read. Some of the commandments are common sense, some of them may not apply, but an educated consumer has a duty to read and understand what these rules mean and ensure that they follow them. They address some of the tactic that credit card companies use to try to extract as much money as they can from unsuspecting consumers like you and I. In this series I will elaborate on some of these commandments and give my personal take.

Commandment VIII. Teach your children well.

What a great way to end this series… this is something you should do in every aspect of your life, teach your children responsible credit use so that they won’t make the mistakes you and I probably did in our youth - over spending and living beyond our means. With the direction our society is going in terms of credit (less cash, more credit) it’ll be crucial for our children to know how to use credit cards responsibly.

Source: The Motley Fool

Last August, The Motley Fool, one of the most entertaining personal finance and investing websites out there, published an article called the 8 Commandments of Credit that I feel every consumer should read. Some of the commandments are common sense, some of them may not apply, but an educated consumer has a duty to read and understand what these rules mean and ensure that they follow them. They address some of the tactic that credit card companies use to try to extract as much money as they can from unsuspecting consumers like you and I. In this series I will elaborate on some of these commandments and give my personal take.

Commandment IV. Play the system.

They want you as a customer more than you need them as a creditor so use that to your advantage, ask for a lower interest rate or a fee taken off - they’ll most likely oblige because that fee (or that interest) is nothing in the long run. You make them money when you swipe (they charge the vendor a large chunk of fees) and you make them money when you carry a balance, so they want you to keep making them money - make them pay for that right to be the top card in your wallet or purse.

Source: The Motley Fool

Last August, The Motley Fool, one of the most entertaining personal finance and investing websites out there, published an article called the 8 Commandments of Credit that I feel every consumer should read. Some of the commandments are common sense, some of them may not apply, but an educated consumer has a duty to read and understand what these rules mean and ensure that they follow them. They address some of the tactic that credit card companies use to try to extract as much money as they can from unsuspecting consumers like you and I. In this series I will elaborate on some of these commandments and give my personal take.

Commandment III. Don’t pay by their rules.

Don’t ever just make the minimum payment, in fact, try to pay off the entire balance or as much as you can every single time you get a bill. The minimum payment, a paltry 2-5%, means you’ll pay an arm and a leg for that cup of coffee last week and you’ll be paying it in bits and pieces for the better part of forever. Would you go into a bank and try to get a loan at 18% for a cup of coffee? No. Would you ask your friend to borrow five bucks (yeah, coffee’s expensive these days) that you’d return tomorrow for a cup of coffee? Sure. And you wouldn’t pay your friend back a quarter at a time, would you?

Source: The Motley Fool

Last August, The Motley Fool, one of the most entertaining personal finance and investing websites out there, published an article called the 8 Commandments of Credit that I feel every consumer should read. Some of the commandments are common sense, some of them may not apply, but an educated consumer has a duty to read and understand what these rules mean and ensure that they follow them. They address some of the tactic that credit card companies use to try to extract as much money as they can from unsuspecting consumers like you and I. In this series I will elaborate on some of these commandments and give my personal take.

Commandment II. Ignore bankers’ rules on what is an “acceptable” level of debt.
Did you know that it’s “acceptable” for someone to carry 25% of their income in debt? That means if you make $30,000 a year after taxes, bankers believe it’s reasonable for you to be carrying $6,000 in debt! Six thousand dollars! They don’t give any consideration to what kind of debt that is, whether it’s a 6% mortgage or a 20% credit card balance. Do you consider that debt the same? A low interest tax-deductible mortgage or a high interest credit card balance, which is worse? Or better?

My take on this is that you should keep your level of debt as low as possible and certainly as little of the 20% credit card variety as you can. The more debt you incur, the more your life belongs to the credit cards and not yourself. If you buy a car and have a car payment, you’re working towards paying off something you use every day and something that is probably a requirement for you to function (cars, unfortunately, are like that). You work in part because you want to but also because you have to, you have that payment you need to make.

Now imagine you charged to a credit card a whole bunch of things that you no longer own or that you temporarily used or consumed, now you’re working for the past, working for the credit card companies, and not working for yourself. You’re not working because you need to pay off a mortgage or a car note, you’re working because you’re enslaved by the credit cards. Don’t let yourself fall into that trap and you’ll be much better off for it.

Source: The Motley Fool

Last August, The Motley Fool, one of the most entertaining personal finance and investing websites out there, published an article called the 8 Commandments of Credit that I feel every consumer should read. Some of the commandments are common sense, some of them may not apply, but an educated consumer has a duty to read and understand what these rules mean and ensure that they follow them. They address some of the tactic that credit card companies use to try to extract as much money as they can from unsuspecting consumers like you and I. In this series I will elaborate on some of these commandments and give my personal take.

Commandment I. A credit card is just that — a credit card

You shouldn’t approach a credit card and its associated line of credit as an obligation to spend that money; or even proof that you should or even can spend that money without consideration to how you’ll pay off the card. You should be looking at that credit card as a proxy of your own cash, you should treat it no differently as you would your own debit card (where you can only spend what you have in your account), because you don’t want to be carrying a balance.

If you need a short term loan of any kind, it’s usually better to investigate other options (unless you are able to get a 0% on purchases or even 0% on balance transfers) before succumbing to the usual rates of 18%.

Source: The Motley Fool