It’s the holiday season and it’s very easy for consumers to swipe a card than pull out cold hard cash when it comes time to check out at the register. Before you swipe though, think about whether or not you’ll be able to pay for this purchase by the time the balance is due. If you won’t be able to, don’t swipe it. Credit card interest rates, on average, are in the double digits. Use this calculator (Java required) from Dinkytown.net to figure out how much more in interest you’ll be paying if you charge those purchases and take your time in paying it off.

Now, if you know you can pay off the amount in six months (if not six, hopefully twelve), you can apply for a credit card currently offering a 0% balance transfer with no fee. By taking advantage of one of these credit card offers, you won’t have to pay any interest for twelve months - which hopefully will give you ample time to build up the funds to pay off your holiday spending spree.

Check your credit card agreement, if you see the words “universal default,” look out. Universal default clauses are those clauses built into your agreement where that credit card company can increase your interest rate if you are late on any payment to any other lender. Generally, “late” means you’re more than 30 days late (most credit card companies won’t report anything if you’re less than 30 days late because it’s not worth it) but miss one and now all of your credit cards will gang up on you and increase those rates. A recent Bankrate survey showed that “39 percent of credit card issuers said they apply the rule to customers, even if they had no late payments on their own card.”

Unfortunately, the universal default clause is ironclad and usually indisputable so you’ll just have to be careful not to miss your payments or they can get you. The best strategy to combat this (besides not carrying a balance if you can avoid it) is to review your credit card agreements and only put balances on those cards that don’t have a universal default clause.

Source: Bankrate

Holy crap, have you seen the latest $250 American Express promotion for signing up to their Business Gold Rewards cards? It’s ridiculous and is shades of the Chase Freedom promotion they ran a few months ago.

Basically you can get $250 in gift cards or a free airline ticket after your first purchase, for businesses only (anyone is a sole proprietorship, so it’s easy to sign up with your SSN), so there’s no reason not to snatch this up!

If you’re using a balance transfer, say one of the in vogue 0% interest, no fee balance transfers, to pay off some of your existing debt, good for you. Nothing gives you more breathing room than a twelve month balance transfer that lets you put all of your payments towards the principal, but it’s crucial that you don’t spend any more money on credit or you will be digging yourself into a deeper hole - which are steps in the absolute wrong direction. See, the point of a 0% balance transfer is to make it so that all of your payments are going towards principal, if you’re increasing that principal while you’re making payments… isn’t that counter productive?

What’s also doubly bad is that if you make purchases on the card that you took the balance transfer, you actually pay off the 0% interest debt first and your purchases accrue interest at the regular interest rate, which can be very very high. So, if you have to spend, don’t do it on the card with the transfer and try to keep it to a minimum.

The Citi Professional Rewards card has been out for quite a while now and now Citi has announced the introduction of the Citi Professional Cash card, which is like the original Professional card except it offers cash back instead of ThankYou reward points. The only major difference is the annual limit of $500 in cashback versus the 100,000 ThankYou Network reward points, which is the equivalent of $1000 dollars and the rewards card comes with $100 worth of points for gift cards with first purchase.

So, what do you get with the no annual fee card?

• Fits your professional lifestyle. Designed to make organizing expenses and getting reimbursed easier than ever.
• Earn 3% cash back on purchases at restaurants, gas stations, on auto rentals & at certain office supply merchants. Earn 1% cash back on other purchases.
• 24/7 Personal Business Assistant helps with travel, marketing, discounts & more.
• Online Expense Organizer helps track, categorize and report expenses for billing, reimbursement and taxes.
• Immediate one touch access to a live customer service representative.

Earlier this month, Citi got rid of the Universal Default clause in its user agreements meaning they can’t raise your interest rate if you miss or are late on payments to other creditors. I can understand how universal default was a safety measure for credit cards because of how low the minimum payments are compared to other expenses (such as a monthly electricity or water bill) but this clause screamed of abuse. The idea behind interest rates are that the higher the rate, the riskier the debt because there is a possibility of default. To combat default, creditors must take in more interest in order to offset any potential losses.

The universal default clause protects a creditor because they can detect a potential problem with a debt much earlier and make moves to counteract it by raising interest rates. This, of course, means that someone who borrowed at one interest rate can potentially get hosed when the lender increases the rate for any reason (which they are allowed to do, you know this before you get a loan). Either way, I think the universal default was probably abused because there’s no reason for a credit card company to “feel bad” for you. They are in the business of making money and making money off you and the stores you shop at, but it is nice to see when a big card issuer takes one of their weapons off the table in response to consumer pressure.

Two cycle billing is the practice of looking at two billing cycles to calculate your interest payments instead of just looking at the prior billing cycle. If you pay off your balances every month, then it doesn’t really matter to you how many cycles they look at to calculate your daily balance; but if you were to need an extra month to pay off something, you could be whalloped with additional interest payments on stuff you already paid for.

For example, let’s say you spent $5,000 in January and paid it off within the grace period. In February, you spend $50 but you need a little while longer to pay it off. The interest payments on that $50 isn’t just on the $50, it’s the average of the $5,000 you already paid off in January with the $50 for February. It’s really sneaky and it’s really unfair, I don’t know why credit cards thought this would escape scrutiny.

With so many credit cards out there, there is no reason why you should get one with two-cycle billing.

I’ve seen advice out there that doesn’t recommend that you take on more debt to pay off existing debt and I think that’s a bunch of baloney, who’s writing those articles? Credit card companies? It’s math… if you’re borrowing debt at 20% and you can borrow more debt at 19.99%, then borrow debt at 19.99% and pay off your 20% debt! While that is a drastic example, considering your time is worth something, you really should look into ways of reducing your debt’s servicing costs (the interest rates) so that you can accelerate your schedule of paying down the debt. So, why do places advise that you shouldn’t borrow money to pay down debt? I have no idea because you can’t argue against the mathematics! (no better way than to use 0% balance transfer deals)

For a prime example of how you can pay off your debt faster by borrowing, look no farther than Tricia from Blogging Away Debt. By borrowing from numerous sources, including Propser.com, and simply asking her credit cards to lower their rates, she was able to reduce her monthly interest payments from $400 to $100, on a debt of nearly $25,000!

So should you borrow money to pay off debt? Only if you want to save money!

On my other blog I’ve written extensively about taking advantage of 0% balance transfer offers and it’s something I’ve touched upon here a few times in the past but now it’s time to bust out the 0% Balance Transfer Arbitrager’s Toolkit - a set of links (all to my other blog) that will help you figure out how to take advantage of the 0% offers given by the credit cards.

1. First, read this introduction to 0% balance transfer arbitraging to learn about how the whole thing works.
2. Now that you understand the concept, consider opening up an account at Emigrant Direct or ING Direct. There are referrals to ING Direct where you can get $25 for a $250 deposit, no such offer exists for Emigrant.
3. Now, start applying for some of the cards on this list of cards with 0% balance transfer offers. I recommend Citi over Discover because Citi will write a check and send it directly to you.

Share of wallet (or something similar to it) is the term used by credit industry professionals and what it means is how much of your spend a particular credit card company benefits from. For example, I have a couple credit cards in my wallet right now, each one serving a different purpose, and each one of those has a share of my wallet, along with cash, gift cards, etc. Credit card companies want to get in the game, they want to just make it into your wallet because once they get there, they know you’ll use it. Even if the percentage is small, such as my Discover Gas card, which I use only for gasoline purchases; they know that sometimes I might reach for that Discover card if I’m close to a cashback rebate payout or if I just don’t care what card I’m using (for those places that you only ever get 1% cashback).

This is why places offer 0% balance transfers or 0% purchases or free promotional gift cards for you to sign up, they just want to get a piece of the action and get in the game - i.e. get into your wallet (or purse).