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By the end of 2018, United States Americans owed over $800 billion in credit card debt.
And the same source tells us that 48% of those credit card users make only minimum payments on their credit cards. Those customers typically have rollover amounts each month.
To keep up with friends, almost 40% of millennials spend money they don’t have. And 3 in 10 cardholders don’t even use their rewards.
If you aren’t financially aware, credit cards can be a detriment to your future earnings. But if you use them correctly, they can improve your credit significantly and help set you up for success.
Before you get your first credit card, make sure that you’re ready. Keep reading to determine when you’re ready and to learn some essential tips for being a responsible user.
Getting a credit card is an essential step in almost every person’s life. But before you get one, you should understand the way they work.
Plus, it helps if you already have a bank account. Understanding how to deposit, save, spend, and budget money is an integral step in learning about finances.
When you use your debit card that’s attached to your checking account, you’ll get practice for when you use a credit card.
Do you already have self-discipline? Do you prioritize? If the answer is yes to either, you’re one step closer to being ready for your first credit card.
You should know about how much money you have in your checking account at any given time.
Make sure that you don’t overdraw your account and can manage any regular payments before spending money on anything else.
Have you ever saved up for anything, big or small?
It’s good to be in the habit of saving up for things, especially when it comes to bigger purchases.
Don’t think of your credit card as a blank check. It’s a great idea to only buy things on your credit card that you could already pay for with funds from your checking account.
Using a credit card is an excellent way to build credit, especially if you pay it down regularly, and don’t max out your available credit.
There are a few different types of financial institutions that offer credit cards.
Your bank is a great place to get your first credit card. While it used to be harder for someone with no credit to qualify, there are now quite a few options for those with no credit.
And applying through a bank where you already have an account may significantly increase your odds of being approved.
Sometimes these cards are easier to get, as you can typically only spend money in the store for which you hold the card. However, many of those stores have different card options, some of which DO work in other venues.
If there’s a particular retail store you frequent often, try there, especially if you have no credit. These are easy to get approved for, but they generally have higher interest rates.
Lenders other than banks also offer credit cards. Some only offer to low to high credit, but some lenders who offer cards to those without any credit yet.
Getting your first credit card isn’t always easy. If you don’t get an offer on your own, you could always try enlisting a co-signer in your application.
Your co-signer’s credit history and income will be used to determine whether or not you are eligible.
A secured credit card is another viable option, and banks offer them a lot of the time.
The way it works is that you’ll put a deposit on the card first, and the lender may match those funds, or approve you for a certain amount.
It makes things less risky for the lender in choosing to trust someone with no credit.
There are a few tips and tricks that will make your first credit card adventure a success.
First and foremost, make all of your payments on time. Late payments will only lower your credit rating and put you further into the hole. Plus, there’s no sense in starting with bad habits.
If you can help it, don’t ever spend more than what you could pay in full. If you pay your balance in full every month, you’ll avoid significant interest charges and a lower credit rating.
Plus, when you purchase things you technically can’t afford, you’re borrowing from and making decisions for your future self.
Try to keep your credit utilization ratio under 30%. If the amount of credit you’ve used is not significantly lower than the credit you currently have available, you won’t be building good credit.
Before you get your first credit card, it’s in your best interest to open up and use a checking account with a debit card.
You must know how to manage your money and to put bills and essentials ahead of other purchases.
Plus, you must make your payments on time and make more than the minimum payments. And the lower you keep your credit utilization ratio, the better it is for your credit.
If you’re determined to better your credit, here are some life-saving tips that’ll boost your score quickly.
And if you’re ready for your first credit card or have any questions, give us a call.
Over 43 million Americans have bad credit.
If you have bad credit, you might think you are stuck in a never-ending cycle. You need good credit to be approved for a loan, but you need to be approved for loans to build your credit.
If you can get approved for a loan, the terms are usually less than favorable.
Fortunately, there are ways to improve your credit quickly and easily. One option is to take out a short-term personal loan.
These types of loans come with many benefits and few disadvantages. They can help build your credit and don’t come with the tradeoffs that bad credit loans usually do.
Keep reading to learn more about the benefits of short-term personal loans.
Short-term personal loans allow you to have your cake and eat it too.
Most loans that those with less than stellar credit are approved for aren’t worth taking. The cost is often too high to the borrower.
And that’s if you can even get improved.
So if your credit doesn’t qualify you for a loan, how do you build your credit? This is where short-term loans come into play.
Short-term loans are less risky for the lender and the lender can expect to be paid back more quickly than with long-term loans. Short-term personal loans are customizable by the borrower.
This means you can choose a loan that works for you. If you simply want to use this type of loan to improve your credit, you can take out a loan for a few months.
So long as you repay the loan within the agreed-upon time frame, your credit score will improve.
For the most part, short-term loans will save you money.
When you have a long-term loan, you end up paying more interest. This is simply because you will be paying interest for such a long time.
With short-term loans, you pay back the loan in a much shorter amount of time. This means you’ll pay less interest.
Even if the interest rate for the short-term loan is higher because of your bad credit, the interest paid will be less in the big picture because of the shorter time paying interest.
The loan amount might also be smaller, meaning the interest paid will be less. Short-term personal loans usually have much lower interest rates than credit cards.
If you need a loan quickly, a short-term personal loan is the loan for you.
They are similar to payday loans in the fact that they are usually approved within just hours. Waiting to find out whether you will qualify for a loan can be torture, especially if you aren’t sure if your credit score will measure up.
While it depends on your lender, in most cases you will receive your funds either the same day or the next business day. This offers a level of convenience that is unique to the type of loan.
Short-term personal loans offer convenience and flexibility to the borrower. As mentioned above, the loans can be customized to fit your individual needs.
Most lenders are online and you can access their website 24/7. This means you can apply for a loan at any time and from anywhere.
Short-term loans are significantly less stressful than long-term ones.
You will avoid the dread of viewing your statements and continuously accruing interest for years at a time. Instead, you’ll see your loan being paid off quickly, boosting your confidence and your credit score.
When you have a long-term loan, the end is often not in sight. It’s easy for the looming loan to cause emotional stress.
Watching the interest accrue month after month and year after year can be downright torture. Even if you are making the minimum payment each month, you are barely making a dent in the principle.
Short-term loans avoid this problem and instead offer satisfaction upon repayment.
With short-term personal loans, you’ll know exactly how much you owe each month and for how long you will need to make payments.
These loans are sometimes offered unsecured as well. This means that you won’t have to put up collateral.
Common forms of collateral include personal assets like your home or car. Instead, your credit history and credit score will be enough for your lender.
If you have bad credit, you might be required to put up collateral. However, short-term loans are much easier to manage.
There is less risk of things getting out of control and you not being able to pay back the loan. As mentioned above, it’s easier to keep interest in check with short-term loans.
Therefore, your assets are at less risk. If you do end up going with a secured loan, you will have access to more favorable terms and lower interest rates.
Short-term personal loans offer you more time to pay than other fast cash options.
Payday loans, for example, have much shorter payback time frames. With short-term loans, you can set the repayment time frame so that it works with your life’s schedule.
You will also have more flexibility when it comes to choosing the amount of the loan. Borrowing limits are often significantly higher than you could borrow using a credit card.
If you are looking to secure a loan with bad credit or improve your credit score, considering applying for a short-term personal loan. Your loan will help you establish good financial habits.
Click here to start your application to see if you qualify.
Nothing like a beautiful sandy beach, a turquoise ocean and a cabana boy ferrying mai-tais to let you convince yourself you CAN spend a little extra. The credit card limit is twice the debt on there now, after all. You won’t be angry at yourself for. . . say . . . another ten days or so. And you’re having so much fun!
Taking convenient prepaid debit cards on your trip instead ensures today-self and future-self remain in harmony.
European, Asian and the Middle Eastern travelers have been using prepaid debit cards for years. It’s time Americans get with this convenient — and budget-friendly — payment method. Prepaid cards are safer than cash because they require a code to redeem. You can get a prepaid card in a few days online without having to go to a bank, and there are no credit dings for getting one. Some prepaid cards can even be pre-loaded with the currency of the country to which you are traveling. In that case, if exchange rates favor your currency, you can save on purchases once you land!
Prepaid cards ensure you’re not stuck, either. You can always reload them as long as you have access to the internet. Because you reload them with funds from your bank account, you’re less likely to put too much more onto the card. Also, just the process of having to go to the internet and make the transfer helps to stop you from your impulse purchase.
Another advantage of using prepaid debit cards for travel is that you have a list of all your purchases available either via your computer or phone. This is particularly important if you have teens traveling with you. They want their independence and a little money to spend. But before you let them out of the hotel, make it clear you will know where their money is going.
While you will miss out on the rewards that credit card companies now offer, the prepaid debit card helps protect you from your own lack of discipline. That can mean more savings. Get this aspect of your travel taken care of when you order prepaid debit cards online now.
We’ve all seen movies depicting employees whipping out the corporate credit card to pay for extravagant meals and entertainment. Business owners shudder at these scenes, and they should. The Association of Certified Fraud Examiners tells us that 15 percent of all employee expenses can be categorized as fraud. In another study, 66 percent of employees admit to abusing the company card with:
Another portion admit to inflating transportation expenses, getting a cash refund from an expensed item and even creating a fake expense. These last three are full-on fraud. Still, with every opportunity, some people will take advantage. The credit card with a limit of thousands of dollars just trips some kind of spending wire in some employees. When a card’s limit set at $5,000, a $75 dinner for one seems reasonable.
Business owners can reduce their exposure to “expense padding” and fraud when they give their employees secure prepaid debit cards as opposed to credit cards. Like a teen with a set spending amount, employees must budget within a the debit card’s finite amount.
When presented positively, the prepaid debit card can be just as appreciated by employees as the credit card. Simply explain that the debit card works best for your taxes and/or accounting structure. Make this expense tool a decision based on business goals, not something to keep employee spending in line. Avoid mentioning potential expense abuse or fraud all together.
Other benefits of the prepaid debit card for business includes:
Prepaid Debit Cards Control Employee Spending So You Don’t Have to!
Some businesses choose company credit cards rather than debit cards because of the potential for rewards and the lower fees. Debit cards can also come with more fees than credit cards. Still, when compared to the financial losses due to abuse, these fees are negligible.
When a small business becomes a mid-sized business, expenses accounts follow quickly, especially for sales professionals. Then, additional office locations can mean travel expenses. Debit and credit cards empower employees to make their own decisions while keeping spend under control.
Want to maximize your money and scrutinize your spending? Use credit cards! Most come with no monthly fee, and if you pay them off every month, no interest accrues. In addition to convenience at the parking structure exit and online store, credit cards make life easier in so many ways.
Credit Cards Protect Your Purchases
Hopefully, you choose your purchases only after careful consideration. If you want extra protection, however, use credit cards for online purchases and even large in-person transactions. Money transferred via debit card, check or cash is far tougher to retrieve if the purchase turns out to be defective or not what you have expected. With credit cards, however, you can call the issuer and dispute the charge. This puts the financial transfer on hold until the vendor can satisfy the buyer, until the vendor agrees to return the money, or the bank sides with the consumer and refuses to pay. The protections afforded by the credit card give you a chance to try out the product so you can make sure you’ve gotten what you expected.
Consider, too, putting home and lawn remodeling on a credit card to protect yourself. If you cut a down-payment check up front, that money is gone. A landscaper can leave your yard an excavated mess and never show up again. If you put the down-payment on a credit card, you can dispute the charges and hopefully get your money back from the bank. While a dispute is pending, you won’t have to pay interest charges according to federal law. If your credit issuer decides in your favor, you won’t owe anything.
Credit Cards Protect You from Fraud
Barely a month goes without hearing about how a large company’s customer data has been hacked. Your financial liability for charges resulting from identity theft depends how quickly you find out about it and alert the card issuer. Federal law mandates that your liability for credit card fraud can never be more than $50.00.
You Want Vacation Benefits
Hotels, restaurants and car rental companies know your credit card most likely has a higher limit than the money in your checking account. They want you to use your credit card and will offer all kinds of incentives if you pull out the plastic. All you need is a little self-discipline to take advantage of the perks without getting into over-spending. And, whatever you do, don’t fall for messages that you can afford more. Stick to your budget. They’re happy to run your credit cards up to the limit, but you have ultimate control.
The cards themselves, too, pass along incentives from time to time. If you read your credit card agreement, you may find extended warranties on large purchases, insurance coverage on rental cars or price guarantees on products bought with the card. Want to leverage every penny you earn? Read your credit card fine print! You won’t find rewards on debit cards.
Transacting business in the United States today often takes credit cards. They not only make life convenient, they make it safer and filled with more fun perks. If you want a credit card that fits your lifestyle and helps you achieve your goal, don’t hesitate to review First Financial’s wide variety of credit cards here.
Technology continues its forward charge and no aspect of our lives is left untouched. Even credit cards are changing based on advances in coding, competition and rewards. When you know the innovations unfolding in 2019 from the best credit card issuers, you can hold out for the best perks, the most iron-clad safety and the best in customer service.
First, understand that that Gen Z, the generation born between 1995 and 2015 uses Google, Amazon and the social networks like the rest of us use laptops and texting. Gen Z will be 40% of of all US consumers by 2020, so credit card issuers will be catering to them as well as the Millennials. That means the rest of us must push ourselves to understand the newest bells and whistles that come with new credit cards. Most of all Gen Z wants highly personalized credit card experiences . . . a good thing, as card issuers will deliver more relevant offers to each of us as the years go by. Keep in mind, too, that GenZers use mobile banking apps more than desktop or tablet access. That could mean that card issuers will spend more money on their apps than on their desktop/laptop interfaces. Getting proficient with every issuer’s mobile app will ensure you get all the convenience available.
Mobile Payments Will Continue to Evolve
Up to now, consumers have dealt with clunky mobile credit card payment options. With advancing APIs and open banking, card issuers will begin to offer more valuable, customer-centric payment experiences. These will include immediate rewards, card balance alerts coming to smartphones and more, as issuers work to bring true value beyond simple credit card transactions.
American consumers have embraced rewards cards. It’s no wonder. In 2018, they got a total of $15 billion in rewards value through airline miles, cash back and other perks. While the rewards enticements are raising marketing costs for card issuers, they must continue them to keep up with the competition. In fact, these marketing costs have doubled from 2008 to 2016. Still, they’re all the better for the consumer, who consistently demand more rewards. If a rewards program isn’t robust enough, consumers don’t hesitate to switch.
Another rewards-related development is real-time rewards delivery. While today rewards get redeemed after a month or so, experts predict they could come through with every purchase soon. Look for that advantage as you review your options in the coming year!
Credit Cards Getting Even Safer
Chipped cards did help with credit card safety, but even more safety measures are coming down the pike. “Tokenization” is a system that creates a unique code for each customer and purchase on each website. If this code is stolen, it won’t work for any other transaction. Listen for the term, tokenization as credit cards advertise to you via the internet and live streaming.
Cards used everywhere
Babyboomers remember when only department stores accepted credit cards. Now Etsy vendors, salsa makers at the Farmer’s Markets and ecommerce stores ALL accept credit cards. This trend will grow to include service providers as well. This means, soon, you won’t have to stop for cash to go to the resale shops or roadside stands. PayPal, Venmo, Stripe and Square will enable even the smallest businesses to accept payments. Universal acceptance is on its way!
Be alert to these changes and demand them from the credit card issuers you are considering. In the customer-centric era, they will be competing with each other to give you the lowest rates and the best rewards.
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