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How to Build Credit in a Recession - Even with No Credit

The American economy is spiraling downwards. Unemployment is rising quickly. Consumer confidence is down. Mortgage defaults are up. The Dow Jones is up and down. How, in such an unstable economy, can you build good, solid credit when all around you there is default, foreclosure, and rising prices?

It is possible to build credit, even in a recession. Despite what happens to the economy, your spending and repayment habits can work for you in positive ways. Since most of your credit score is based on how well you pay your credit obligations, as well as how much of your available credit you actually use, you can still be in control of building good credit, even in times of recession.

  1. Obtain a Gasoline, Department Store, or Secured Credit Card If you have bad or no credit, you can still use credit cards to start rebuilding a positive credit history. Make positive results on your credit report by getting approved for a secured credit card or by obtaining a gas or department store credit card. Gas and department store cards typically are easier to obtain, and a secured credit card is almost guaranteed with your monetary deposit that acts as your credit limit. With a new card, you can begin the process of rebuilding credit.

  2. Use Only One Credit Card If you already have multiple credit cards, determine that you will only use one, or no more than two, with the lowest interest rates.

  3. Keep Well Below Your Credit Limit Regardless if you have a secured or non-secured credit card, you can improve your credit score by keeping your balance well below your limit. Part of your credit score is determined by what percentage of available credit you use. If you keep your credit balance low and available credit high, you will start making positive marks on your credit score.

  4. Pay on Time Always pay your credit card bills on time each month. The thing that affects most consumer credit scores is late payments showing up on credit reports. Every late payment shows up as a negative mark. And payments 30 days late or more have an even greater negative impact. In order to build your credit, you need to discipline yourself to pay on time every month.

  5. Pay In Full Each Month In order to stay well below your credit limit and avoid interest and finance charges, you should pay your credit balance in full each month. If you are unable to pay in full, you should at least pay much more than the minimum required payment. Paying only the minimum amount as determined by your credit card company can translate into years of payments before you pay in full. Avoid this hassle by paying in full as often as you can.

Your credit history is always keeping score. Regardless of whether the economy is working full speed or in recession, or whether the stock market is bullish or bearish, you can improve your credit score. Take the time to make the right choices and disciplined payment practices, and you will be on your way to building a higher credit score.


Does Life Truly Take Visa?

Have you checked what’s in your wallet lately? Most likely, you have at least one or a variety of credit cards ready at hand to make a purchase. This is because “life takes Visa.” Why else? “Because it’s everywhere you want to be and there are some things money just can’t buy…and for everything else there’s MasterCard.” But don’t forget, “it pays to Discover.” Why do consumers obtain and use credit cards? Are they pushed into having credit cards from marketing ads?

Marketing surely plays a part in determining which credit card to apply for, but there are many other reasons for consumers to have and use them. Here are some good reasons why:

Purchasing Convenience

The biggest advantage to having a credit card is that of convenience. Up to a few hundred years ago, consumers lugged heavy purses full of coins and dipped into it whenever they made a purchase. Nowadays, you can use a single piece of lightweight plastic to make purchases almost anywhere: department stores, rental cars, merchandise, services. You can even use your card to purchase a value meal at a fast-food restaurant. Truly, it is convenient to purchase on plastic and make one easy payment to your credit card company.

Reservations and Rentals

In some cases, it is an absolute must to use a credit card. Hotels and rental cars are an example. To make a hotel or rental car reservation, you must provide a credit card number to hold the reservation. Even during check in, most high class hotels will want a credit card number to charge “incidentals” in case you skip checking out. Rental cars are the same way. You cannot rent a vehicle without a credit card reservation and number on file during the rental period.

Obtaining Cash

Sometimes, we just need immediate cash. If your bank account is low and a need for cash arises, you can withdraw cash from your credit card via an ATM. Some credit card companies will even provide you with checks that you can use to make purchases or transfer credit card balances to make it easy.

Reward Yourself

Even with so many credit cards on the market, demand is high and competition is stiff. Credit card issuers will use enticements to obtain new customers. Some of those enticements can benefit the user with free rewards. Rewards cards are very popular, and credit card issuers partner up with many merchandisers and service providers to create a variety of rewards products. Using a rewards card, you can earn points with every purchase that you can redeem for free benefits like airline tickets, free shopping, free gas, free restaurant meals, and many more. With rewards, you get a great benefit, and if used properly and smartly, the credit cards end up “paying” you, while you never have to pay a fee.

Indeed, life in this current high-tech society can be much easier and convenient with credit cards. While credit cards are not a necessity, they do allow you to take full advantage of merchant rewards and purchasing conveniences.


Why MasterCard is an Asset for Your Pocket

Having a MasterCard in your pocket is “priceless.” If you are like many consumers, you most likely have at least two credit cards in your wallet, and one of them is a MasterCard credit card.

Credit cards come in many forms. Department stores provide them for easy and convenient shopping purchases; Target, Wal-Mart, Macy’s, and Nordstrom’s all provide a charge card. Gasoline companies do the same for quick and easy gas and convenience store purchases. However, you can’t use a Target card to buy gas, and you can’t use a gas card to purchase a sweater.

That’s why bank companies came up with the idea for a universal charge card. Thus, credit cards like Visa and MasterCard were born. These types of charge cards are accepted for payment at almost any merchant, and nearly anywhere in the world. If you have a MasterCard in your wallet, you can be sure you’ll have the purchasing power you need for anything from fast food to airline travel tickets.

What are some of the benefits of a credit card such as MasterCard?

Convenience

The biggest reason most consumers use a credit card like MasterCard is for the convenience. Since most merchants for goods and services accept MasterCard, it makes it convenient to charge items and services on the card, and you simply make one easy payment to the credit card company at the end of the month.

Online Shopping

Online shopping is becoming the fastest and easiest way to get the items you want. Using the internet, you can make purchases for plane tickets, that vintage guitar on eBay, and even stock your bookshelves from Amazon.com. But without a major credit card with the MasterCard or Visa logo, your online purchasing comes to a halt.

Purchase Protection

By using a major credit card, you can get purchase protection. Most major credit card issuers offer a short-term insurance warranty against loss, theft, or damage. This is particularly useful for large item purchases, such as a wide-screen HD television. If it breaks or is stolen within the warranty period, you can get your money back through your credit card company.

Flexible Repayment

Using a major credit card for purchases allows you to make only one payment to the credit card company. And if you choose, you can finance your purchases over a period of time by making monthly payments until the balance is gone. Remember, it is always recommended to pay your credit card balances in full each month and to only charge what you can afford to pay. Nonetheless, the convenience of a major credit card allows for easy financing when you need it.

The credit cards you choose to carry in your wallet influence how you make purchases. You can choose to have many cards from gas companies to department stores to diner’s cards on top of major credit cards. However, with worldwide acceptance, a single major credit card like MasterCard may be all you need.


Finding the Perfect Rewards Card

In the credit card marketplace there are a million and one different rewards schemes out there to attract you to certain credit cards, but how do you find the perfect rewards card for you?

The various different reward cards out there all have their own ups and down. However, some give you a far better deal than others, and the savvy credit card shopper will know what to look for. There are two main types of reward cards available: those that are attached to your credit card and those that are attached to your retailer or a group of retailers. Retail rewards cards can be used regardless of the payment method you use.

The reward cards that are attached to your retailer are those that are like loyalty cards that you get from your local supermarket or department store. They also come in the form of credit cards, but they must be used in order to gain points. These types of cards haven’t been as prevalent in the rewards card market place of recent years, although they are still out there. They’re cards which you scan at the checkout and get point or discounts. With these types of cards, there is usually not variety. A retailer will usually have their set rewards system and that is it. If they’re free, then you may as well join because you don’t have anything to lose. And you never know you might get a-few freebies along the way. The same goes for credit cards, but they should be used sparingly in order to remain within your budget.

The other type of reward cards are those that are integrated or connected to your credit card, and it is these cards which offer the greatest variety. This is where you, as a customer, need to weigh up the pros and cons of each card to ensure you get the most out of the reward schemes.

When choosing a reward scheme, you need to decide what you want to gain from the reward scheme. Also, what you have to consider is how many points you get per dollar you spend. Ask yourself questions: What is the interest free periods on the credit card that offer the scheme? Do the points expire are a period of time? What are the rewards and how many points do you have to get to obtain these rewards?

These are all things you need to take into consideration when picking your perfect rewards card. You also need to take into consideration things such as transferability of point if you change your card to another provider with the same point’s scheme in place.

If you pick the right credit card for you with the right rewards system, they will give you some real advantages and benefits for participating in these schemes. So whenever you go on the search for a rewards card, you should always weigh up the pros and cons of each scheme when making your decisions, taking into account your own financial needs as you would when taking up any new credit product.


About Airline Credit Cards

In the credit card marketplace, we are all increasingly seeing airlines getting in on the act. They are offering airline credit cards and, for the consumer, this can mean a whole new range of exciting credit card products available to them.

Airline credit cards are credit cards that, when you make purchases on them, you get points or miles put towards your next air trip. If you make enough purchases, you might even get a free flight. These are essential credit rewards cards that have been geared toward the air industry. There are a million and one different deals and programs out there and the airline industry has added one more. The consumer needs to, like with any reward card, decide on what rewards package and credit card best suits their needs.

You need to take into account whether or not there is any expiration on the points or miles that you collect through making purchases. You also need to look at the amount of points required to get a flight and where those points will take you. Furthermore, look at what flights they offer as part of their rewards scheme, and if you as a consumer can pay for part of your flight if you don’t have the points to cover the other part of the flight. These are just the basic things you need to take into account when choosing an airline credit card.

Many credit cards offer things like purchases made for flights on that credit card get bonus points. Maybe if you pay for a ticket on the credit card, you get a companion ticket free. These are all things that can benefit you from an airline credit card, and things you need to take into account when choosing the right airline credit card for you.

Don’t think it gets any better? It does. Airline credit cards also allow you to connect your airline credit card with your frequent flyer program, which can be a real bonus if you’re a frequent passenger on airplanes. This can get you some really decent rewards.

Many of these credit cards also offer introductory offers, so once you spend a set amount of money, you get a large amount of bonus points as a reward for joining that credit card. This can also be an added bonus for joining an airline credit card, which could help greatly on your next trip away.

Overall, airline credit cards are a very good product for the frequent flyer or even for those who only fly from time-to-time. They can really help you, the consumer, save some serious dollar in a market where airline tickets are forever rising.


Credit Report Primer

Credit Report Primer

With more consumer credit extended each year through home mortgages, car loans and credit cards, understanding the role of credit reports is important for anyone planning to borrow money. A credit report is simply a document containing a detailed history of a consumer’s credit. Creditors—banks, lenders, credit card issuers and retailers—provide information to credit bureaus about the status of each borrower’s accounts. They also rely on the information contained in the reports when deciding whether to offer credit to a consumer and when determining what terms—down payment, interest rate, loan length—to offer.

Credit Report Details

Credit reports contain several important pieces of information about each consumer, including identifying information, credit information, public record information and recent inquiries. Identifying information may include the consumer’s name, birth date, Social Security number, current and past addresses and current and past employers. Credit information may include a list of current and past accounts with banks, credit card companies, utilities, retailers and other lenders, as well as the each account’s opening date, credit limit and payment history. Public record information may include court records showing arrests, tax liens, bankruptcies or court judgments. Recent inquiries may include information regarding creditors or other entities that have requested copies of your credit report.

Credit Bureaus

A credit bureau, also known as a credit-reporting agency, is a company that collects and compiles information about consumers’ credit activities and makes the information available for a fee to credit grantors and other entities. In the United States, the three major credit bureaus are Equifax, Experian and TransUnion. Federal law requires each of these companies to provide consumers with a free copy of their credit reports annually upon request. For details, visit /www.annualcreditreport.com or call (877) 322-8228.

Credit Report Access

Federal law regulates who has access to consumer credit reports. Credit bureaus may provide your information only to entities with a legitimate need, including current or potential creditors, employers, insurers and landlords. In some cases, such as employers and potential employers, a consumer must provide written consent before the credit report will be issued.

Credit Report Errors

Periodically, incorrect information appears in a consumer’s credit report. Under federal law, the creditor that reported the error and the credit bureau are responsible for correcting inaccurate credit report information. When a consumer finds a credit report error, he or she should notify in writing both the credit bureau and the creditor that supplied the incorrect information. Notification should include details about the error and copies of any documents that prove an error has occurred. The credit bureau and creditor are responsible for investigating errors and correcting them if they are found to be legitimate.


How to Use a Credit Card Without Going Into Debt

Using a credit card without going into debt is surprisingly easy. A lot of people have this perception that a credit card is a sure fire way to get into debt, but this isn’t the case if you’re a savvy credit card user who follows just a few basic guidelines.

The first of these guidelines is to always plan what money you’re going to spend and stick to it. This is an absolute essential part of using a credit card without going into debt. If you make a plan of what you’re going to spend money on, then you remove one of the biggest causes of credit card holders going into debt. What is that cause? The cause is impulse buying. That’s why you need to have a plan and stick to it.

Secondly, always ensure that you pay your credit card off during the interest free period; this will ensure that you won’t get charged the massive interest rates of 15-25%, which a credit card attracts. Getting charged interest on your credit card is just one of the sure fire ways to get into debt with your credit card, but not going over that interest free period is very easy. Just contact you credit card provider and arrange for direct debit of your credit card balance every month from your bank account. Make sure you have enough money in your bank account at the end of each month.

Thirdly, always ensure you set your credit limit as low as possible. This will ensure that any urges you might get to impulse buy will be quickly defeated with the credit limit in mind. Often, the bank or financial institutions will offer you sky high credit limits hoping you will get into debt and have to incur their sky high interest payments, but you can always opt to have a lower credit limit. This helps you to ensure that you won’t get into debt unless, of course, there is a minimum credit limit in place. However, these are still usually a lot less than what a bank will offer as a maximum credit limit.

Finally, but still an extremely important point in ensuring you don’t go into debt when you have a credit card, is avoid as much as possible impulse buying. If you see something and you think “wow, I really want that,” it’s usually best to go home, sleep on it, and make a decision in the morning. If you still want it, make sure it fits into your budget, and then go buy it. This takes the impulse out of impulse buying. This doesn’t mean that you have to miss out on the once in a life time deal. You can always carry some other funding source, such as cash around for those because impulse buying with cash won’t cause you to go into debt, whereas with credit it could.

So as long as you take into consideration the points outlined above and always carefully plan your finances with a financial planner, you hopefully won’t go into debt as the result of a credit card anytime soon.


Budgeting with Credit Cards

Budgeting with a credit card is much the same as budgeting with any other source of finance. There should be no difference in the way that you budget the money you spend on your credit cards from the money you spend with any other funding source.

Households should budget on a monthly basis because this allows you to plan how you spend the money you get from you income, regardless of how you get paid. A monthly budget is always a good idea. Long term budgets are also helpful, but these generally won’t include the day-to-day living expenses that we include in a monthly budget. A monthly budget should be divided into saving and spending. A lot of the time, everyday Americans don’t have that much left over after we take out all of our living expenses. However, it’s always good to have some money left over just in case. Also, you may need some extra money put aside for when tax time comes around in case you need to pay a tax bill, which needs to be included in your monthly budget.

When you work out you monthly budget, you need to take into account all your expenses. This includes living costs, rents, mortgage repayments, shopping, loan repayment, and everything that is an expense. You then need to take around 10% of that and have that as a surplus in your bank account. The rest you can save through whatever means you wish. The reason you should do monthly budgets is that the cost of living can change in a month, such as if the Federal Reserve lifts official interest rates. Also, when budgeting monthly or long-term, the advice of a financial planner can really help, as they can give you tips and tricks on how to most effectively budget your finances.

Once you have your budget worked out, then all there is to do is to spend the money you need to spend and save the money you need to save. The spending part is where a credit card comes in and, as a consumer, you should view your credit card just like any other source of funding. It shouldn’t be seen as something you can use when your bank account can’t afford to pay for whatever you’re purchasing. That’s why a budget is so important.

The most important thing people need to do when budgeting with a credit card is stick to your budget. See a credit card like any other non-credit finance like cash or debt card. The advantage is that you don’t actually lose the money until the end of the month, meaning your getting more interest, but, other than this, it should be seen exactly the same as any other source of money.


How to Make Your Credit Card Interest Work for You

One of the main reasons people choose not to get a credit card is because of their fear of interest. They think paying off a credit card fully is next to impossible because the interest rates are so extreme. In some cases, interest rates can get up to almost 20 %. With a credit card payment of $5,000 or more, this can definitely add up. However, this is nothing to fear. In fact, interest can work for you.

So what is interest exactly? Basically, interest is the fee a person pays for borrowing money from the credit card balance. In some cases the fee can be as little as 0 %. However, most people pay an annual fee of 17-20 % interest. The fee will depend on how much you owe on your credit card statement. For someone who owes $ 5,000 at 20 % and only pays the bare minimum of 3 % per month, this monthly interest will cost around $80 per month.

However, there are ways to make your credit card interest work for you! Most credit card companies offer 0 % APR (annual percentage rate) as an introductory rate. This means that for a certain amount of time, usually 6-12 months, you will pay no interest on all purchases and overdue bills. However, try to pay off as much as possible within this first year so you won’t be stuck with a large debt and a large interest rate when the introductory rates are up.

Another way to make interest work for you is with a balance transfer. Essentially a balance transfer is a switch from one bank to another, transferring your credit card balance with you. Because banks want your business, they often give you low interest or no interest on this balance transfer. This can mean you return to the introductory interest rate of 0 % for another 6-12 months thus allowing you to pay off your credit card faster without the extra monthly interest fees.

For the extra savvy saver, there is a trick to really benefit from your credit card with a low or no interest rate. During the introductory period, some take out a large amount from your credit card money (borrowed money) and deposit it into a high-savers account. Then, once the introductory time is over and the interest fees go up, return the borrowed money into the credit card account and pocket the interest you have made from keeping the money in a high-savers account for a certain period of time. The process is sneaky, smart and, depending on your high-savers plan, extremely beneficial.

Don’t let your fear of high interest fees dissuade you from getting a credit card. Follow the above tips and take advantage of the low interest rates while you can. Let interest fees work in your favour.


About Secured Credit Cards

These days there are endless possibilities when it comes to choosing a product. Do you want a plasma or LCD big screen TV? Do you want a matte or glossy photo design? Do you want a salad or fries with your meal?

Credit card companies are no different. They offer many different deals from reward points to low-interest cards to mileage plans to no-annual fees. It is hard to decide which one is best for you. However, the first question you need to ask yourself when choosing the right credit card is this: do you want a secured credit card or an unsecured credit card?

So, what’s the difference anyway?

A secured credit card is a credit card given to you if you have a security deposit in the bank. The money in the bank acts as your payment guarantee, or assets which allows you to use your secured credit card. A secured credit card only allows you to make purchases on a certain percentage of the money you have in the bank. In a sense, a secured credit card is like a bank manager, making sure you only spend a certain amount.

An unsecured credit card, however, does not require any collateral. You do not need money in the bank, you will have more flexibility and you will receive more freedom from your purchase limits. With an unsecured credit card you may also incur higher interest rates and stricter penalties for missing payments.

So, which is best for you?

A secured credit card is best if you have money in the bank and want to ensure your credit card balance is always under control. If you do not plan on using your credit card often, especially not for spur-of-the-moment purchases and big splurges, then this is a good way to go. Secured credit cards are also good for those who have poor credit and need to rebuild their credit score.

However, if you are planning on using your credit card for larger purchases, even if you don’t have the money in the bank to back it up, then an unsecured credit card is best for you. An unsecured credit card will give you freedom to buy a big screen television or book a trip to the Bahamas for the weekend, even if you don’t have the money quite yet. If you choose an unsecured credit card you must keep in mind that the interest rates may be higher. In order to keep your credit card in check, make sure you always make the payments and try your best to bring your balance back to zero.

Weigh your options, your spending habits and your financial placement in order to decide which type of credit card is right for you.