Would you like a free gift with your purchase? Reward cards are a great way to get tons of free gifts by doing what Americans do naturally – buy more stuff! No, this isn’t a scam because many credit card users have been doing it successfully for years. In fact, its one of the best methods to get some payback on those pesky credit card companies for flooding your mailbox (both email and snail mail) with constant advertisements for their latest credit card advertising campaign. So if you’re tired of “taking one for the team”, let me show you a sure fire way to make your money work for you and make the credit card companies pay your way to a free weekend in Cancun or add some extra cash to your bank account.
First, let me add in one quid pro quo. If you currently have credit card debt or carry a balance from month to month, you should essentially forget about getting any type of serious reward cards. However, its still possible to profit from a carry over balance if you absolutely have to carry one. It is a 99% bad idea to obtain a rewards card if you do not pay the monthly balance to $0.00 each and every month unless you find the right card (I’ll explain the 99% explained later). Let us use a real life example of a poor instance to use a rewards card.
Hypothetical: you want a free plane ticket from New York to Los Angeles. This fictitious ticket will cost you $300.00. Now lets assume the interest rate on your shiny new rewards card is 15%. For simple math purposes, lets say you carried a $1,000.00 balance each month for the first year, hoping that you’ll gain enough points to get that free flight within the first year of having the card. Guess what? You have effectively paid for half of the ticket price in interest charges because 15% annual interest on a $1000.00 balance is $150.00. Whereas, depending upon your reward points system, you’ve more than likely obtained a very meager reward point balance (5-10%) to even qualify for a reward ticket.
Now that you see how you have been duped, lets explain THE TRUTH behind how the business works. Credit card companies purposely dangle the opportunity of a “freebie something” and the unsuspecting consumer signs up. However, with the 15% interest charges (or >25% if you fail to pay on time) paid to them for your mistake in carrying a balance, the profits from the card are much greater than the cost of free airline tickets or the 5% cash back awards given to those consumers (like me) that maintain a zero balance every month. Their business model therefore generates an automatic minimum 10% profit if you consider that for every 1 person who carries a balance versus every 1 person who doesn’t. Rest assured that this value is not a 1 to 1 ratio because if it were, the credit card companies would most likely pull all of their reward card programs off the shelf due to increased customer reward payouts. They not only have very little probability of making a financial loss on this deal, but can retract their offer “at their discretion at any time without prior notice”. Talk about a great business model right? Worst of all, you likely got duped into paying an annual fee!
Luckily for most unsuspecting consumers, it is often difficult for low credit score individuals to obtain a rewards card. They are perk of a having good credit, but a person with reasonable credit scores can obtain a decent rewards card with very little search. Although, the premium reward cards typically require a very good to excellent credit score.
Still with me? Here is the good stuff because I’m going to show you several excellent credit cards with no annual fee, low or zero interest rates, and best of all real rewards.
The American Express Blue. This card features 3 versions at last count: a travel card for jet setters, a 5% cash back program, and a generic blue card that can be used for cash and travel. The Discover Open Road Card. For all you road warriors, this card gives you 5% back on all gas purchases. So now that your SUV takes $100 to fill up, you’re putting $5 back in you pocket. So what is a lousy $5 compared to a $100 fill up? Say you fill up twice a month for 1 year, which is equal to $2400.00 so you just saved yourself $120 bucks or 1.2 fill ups that year. For duel income families, gas can cost more than $200/month, so take advantage if this applies to you. The Discover More Card. This card allows you to gain cash back from the balance you carry up to 5%, and has a 0% interest for 1 year. So you get the 5% reward for signing up with Discover bottom line for 1 year. After that, you could just cancel the card or switch to another card program to eliminate any chances of paying a finance fee. If you’re seriously strapped for cash, look into this card further as it may just be a lifesaver if you’re paying 10-25% interest on your other cards.
The take home message is that when these programs are thoroughly researched, it actually pays you to use their services IF you are financially responsible and spend some time accurately following your finances. Remember, all of this information is available online so it benefits you to do your investigative work or find an online resource to distill the information for you (hint read my profile).
Personal Note: as always, questions/comments/concerns are always welcome. I have no affiliation with any of the cards mentioned in this article.
Rewards Cards – Use Them For Your Own Profit!
30-06-2009 by adminCredit Repair Tips for Consumers
29-06-2009 by admin
Many Americans have had problems with credit, sometimes through no fault of their own. Perhaps you are one of those Americans that have experienced difficulty with credit, perhaps you have maintained a stellar credit history, but your credit report tells a different story. The sad fact is that nearly 80 percent of the credit reports issued in the United States contain correctable errors.
Whether you have experienced some problems with credit in the past or your credit report does not clearly or truthfully represent your credit history, a less than flattering credit report may mean the you are denied credit altogether or will be asked to pay a significantly higher rate of interest than someone with a higher FICO credit score.
There are some very simple things that can be done to improve one’s credit score that require little or no effort on your part. For example:
Avoid overspending by establishing a realistic and manageable budget If your debt to income ratio exceeds 25% take steps to reduce that ratio. Try to keep your debt to income ration under 15% thereby allowing a cushion for emergency needs. If you haven’t done so, establish a savings account, an investment account and begin to build a financial cushion. Even when money is tight, one can save a minimum amount each paycheck. If you can save through tax sheltered savings through your employment all the better. The point is save for your future. Get regular copies of your credit reports. Read and understand those reports. It often helps to consult a professional in the field to help you interpret what the reports mean. If you discover errors on the report, and the probability that you will is high, get them fixed immediately. If you don’t know where to start, consult an expert. Don’t avoid your creditors. If you have come on hard times the worst thing you can do is avoid your creditors. The bottom line is they want to get paid without having to take drastic steps to collect what is due them. Talking to the creditor, negotiating a deal you can live with, and making the agreed upon payments goes a long way to add positive information to your credit report. If your credit report is less than perfect it helps to get positive information added to your credit report. If you don’t know how to do this, consult an expert in the field. Finally, protect your Social Security number at all costs. Don’t give the number out to anyone but a trusted person. Don’t ever fill in your SSN on an unsecured web site. When asked to verify your SSN ask the person to read it off to you and you will tell them if they are correct. If they won’t do this you are being scammed. Ask if you can just verify the last four digits of your SSN. If this is not acceptable then you are being scammed. Ask if there are alternate identification numbers you can use other than your SSN. If not, then you must conclude that you are being scammed.
This advice is simple to follow. The consequences for not following these simple suggestions can be devastating. One client I am currently working with is paying over 20% interest on a car loan because of errors on his credit report. His car payments include over $300.00 of interest each and every month he makes a car payment. If he cannot refinance this car he may pay up to $15,000 extra in interest over a 60 month period than if he were able to finance the car at a reasonable rate through a prime lender. Your credit report tells an important story. Make certain it tells the right one.
Online Car Financing – Find the Lowest Possible Interest Rate Online
28-06-2009 by admin
For many people online car financing is heaven sent because it helps reduce the stress related with finding good and cheap car financing. However, there is a big misconception among people when it comes to online car financing as people with good credit often think that online car financing has nothing for them since banks and other financial institutions offer them the lowest interest rates. The truth is that regardless of whether you have good or bad credit it’s possible to find the lowest possible interest rate online. As a matter of fact people with good credit have the most to get out of online car financing as many lenders are competing against each other to offer the lowest and best interest rate.
There is however a drawback with online auto financing and that is the sheer number of businesses online which means that there are many crooks out there as well. When you are choosing to do business with a lending company it will probably be a good idea to find out just how good the lending company is. This can be achieved in a number of ways which includes speaking with people online who have done business with the company as well as visiting various forums where people talk about their experience with a particular online car financing company.
People with bad credit should also do their research as many online bad auto financing companies use slick advertising to lure unsuspecting victims into their scam. If you have bad credit and you are being offered an outrageously low interest rate it would be a good idea to do some research into your own credit history as well as into the company which is offering you something which is too good to be true. I always recommend that people get a copy of their credit report and go though it through paying particular attention to their FICO score which is what lending companies look at when you are applying for car financing.
Many online auto financing companies will mention as to what type of interest rates they offer to a certain group of people that have a particular FICO score. If you are in your initial stages of research it should give you a fair idea of what you can expect. However when you are applying for an online car financing quote make sure that you state you case with as much detail as possible which will ensure a good targeted quote.