Tag Archives: Credit Cards

Plastic Wars: Credit or Debit Card?

Do you think there are certain purchases that make better sense to use the credit card over the debit card?

No doubt that debit cards are still main plastic used for shopping, because as consumers we choose to spend below our means (that is your reason right?). But the question popped up in my thoughts the other day when I was making travel arrangements to San Francisco. It dawned on me that I use a credit card everytime I travel. But why?

For me, I enjoy the ease in tracking expenses on one card and I have a limit available that exceeds my travel budget should an unplanned expense occur (this does not mean an unplanned shopping excursion. This is more related to unplanned transportation and hotel charges that could occur; like if your roommate can’t pay their share of the room charges due to a gambling loss).

Keep reading. Let’s look at when you should or should not use each type of plastic.

Credit Cards

For Big Purchases

You don’t want to buy, say, a laptop or other bit-ticket item with a debt card, especially if you purchase it online. Credit cards allow you to withold the payment if something goes wrong with the purchase, and the issuer will often investigate the problem for you. With a debit card the money is deducted from your checking account immediately, and it will most likely mean it is up to you to resolve any problems with the merchant.

Some credit cards, including American Express Cards, add up to a year to the manufacturer’s warranty on the products you buy with them. You can also get additional protections against fraud, identity theft, damage, or plain old theft. Many credit cards offer complimentary travel insurance, car rental loss and damage insurance, and 24-hour travel, roadside, and emergency assistance.

For gas, hotels, and rental insurance

Retailers like auto rental companies, restaurants, gas stations, and hotels are likely to put a hold on the money in your checking account until a debit transaction is processed, with might take up to several days. What’s more, the amount that is blocked is usually much higher than the amount of your purchase. If you don’t plan accordingly, these hold can prevent you from accessing the funds in your bank account and result in bounced checks, declined transactions and overdraft charges.

To earn rewards

Not as many debit cards have rewards programs, and the programs of the one that do aren’t as good as those of credit cards. Usine your debit card won’t maximize the amount of cash back or points you can earn. Rewards credit cards, however, tend to have the highest interest rates, so unless you pay off your balance in full each month, you shouldn’t use one.

Safety

Under federal law, your liability for fraudulent charges on a debit card can be greater than it is for a credit card. You’re are responsible for up to $50 in unauthorized purchases on your credit cards. But with a debit card, you can lose up to $500 if you don’t report the theft or loss of your card or PIN within two business days of discovering the problem.

Use a debit card…

For budgeting

Debit cards are fine for small purchases. such as groceries and other everyday purchases. You should also be inclined to spend less using debit, since you generally know how much is available in your bank account. Debit cards may also curb the tendency to spend more to earn rewards, a problem for some people with credit cards.

Debit cards have become even better for budgeting now that new federal rules require banks to get your permission to allow overdrafts made with debit and ATM cards and charge fees for those transactions. But the rules, which took effect for new cards on July 1 and for existing accounts on Aug. 15, don’t cover overdrafts from checks or recurring transactions, such as automatic bill payments.

Are you pro credit card or debit card? And why?

(photo credit: Flickr)

Home Depot – Next Rise on the List


Hi y’all! Just posting a quick note for today. Guess I missed a week in my financial updates. Hmmmm….. (making mental note). Sorry, I just have been extremely busy with work that I haven’t had time to make a solid post, read or reply to my fellow bloggers. I hope things calm down soon cuz it sure is giving me a headache!

BTW, Florida was great! Beautiful weather, great people and food. The conference turned out great and I met a lot of great people!

Okay, Now to my topic:

If you have a Home Depot credit card, WATCH OUT! They are jacking their already high 22.99% APR to 29.99%!

And to think I almost threw out that piece of pertinent information. You know… junk mail. As it was making its way to the trash pile I thought, “not so quick” cuz the whole Chase/BofA issue(s) popped up in my mind. Smart move!

Moral of the Lesson: Pay your card In Full every month or carry a zero balance (like I do).

I have to say, it is really nice having these CCs PIFd when I get notices like this. What a blessing.

Happy Sunday, y’all!

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5th Card All Gone!

Quick Note:

I officially ERRADICATED the 5th Card! Woo Hoo!

This is the Card with the offer for the 0% APR good until Oct 2009. So, my next card to erradicate has a $1001.05 (hubby’s business trip). I will be transferring this balance onto the 0% offer. And onto the 6th Card! Here we Come!

Happy Weekend!

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Darn it! Time to think about an EF (emergency fund)

Quick blog: Over the last couple weekends, I have (once again) increased my bad-debt-to-income ratio. Up 2%.

This is due to a few factors:

  • school tuition due of $795 – so perhaps this is good debt, but I included it in my increase because it was charged on my CC with 12% interest and not charged against a student loan at 3.25% – 6%. So, in my book this fits in the mediocre category.
  • Then, a series of mishaps equalling $595 – which, should have been covered under an emergency fund if I had one larger than $75 in it. We went over budget this week by $115 ish (don’t take the husband grocery shopping because he thinks money is expendable), the pump blew out in the pond, etc…

And then coming up this month I still have school shopping for 2 kids (one is a teenager). But, I have a plan of attack – it will momentarily increase my percentage, but quickly decrease because I am working overtime at work to cover that bill. Overtime, I am hoping will continue a bit more to knock down some of these bills…like the $1390 or 2% increase that I occured.

So, even though I knew this was going to be a bumpy ride…one, I feel guilty for bringing up 2%…it may not be all that bad when the overtime check comes in to clear up and set me back down to 80% (or lower). 80%??? ghastly!

But, the lesson to my family is… it is probably very wise to build an emergency fund of, at least, $2000. Any idea how to do this while trying to snowball the debt down???

Money Flying Away…

Now that I am actually trying to Wrangle my finances straight… I have this notion that money flies away. Literally grows wings and flies away! Yup, that’s gotta be it.

This Friday is picking up the pieces from a downfall. No one said this be fixed straight up, right? Although, we all wish it could be that way.

Anyhoooowww, even with that nice stress reliever of a bonus…we (my family) spent too much. We kind of regressed over the weekend – went to dinner, bought take out. You know the drill. I had to take out extra money to cover funds. Maybe not a significant amount, but it has caused me the unavailable funds to STOP!

So, as I was writing this blog…I was bummed because I wasn’t going to be able to pay that extra on Kohl’s. But, then… I remembered I said I was going to be adamant about sticking to my guns and using my increase in salary to pay off bills and NOTHING else – not to cover low funds, buy stuff, etc… Just bad debt.

So, I stuck to my guns. Shuffled a bill around (will still be paid before due date) and paid another mininmally less expensive one. Done. Got Kohl’s CC paid w/ the extra payment and normal payment. Now owe $187.00. YEAH! :)

And my bills are still intact and on schedule.

Lessons Learned: Your family has to be with you on this project. If they aren’t than your going to have a hard time.
My husband is with me all the way. The kids…well, they will survive. I don’t think they can croak from complaining.

You have to communicate with your partner about what is being paid, how much, and how much is left to spend for the week on gas, groceries, etc… Work as a team.

This is a project worth fighting for. For the benefit of sanity. For the benefit of health. Are you working on your financial project?

Credit Card Interests are a pain in my…

I’m trying to get my Percentage down right?

But you know that $7,711.43 (say it, it hurts more: “seven- thousand seven hundred eleven dollars and fourty-three ceeeeeennnnnnttttsssss” we pay annuallyto have ‘pretty’ things. Bleck!!! I say, Bleck!

Think about what you could do with that much money? I want to travel. That amount of money will let my whole family of 4 travel nicely! Think about all that money that could go into our retirement fund? Or savings account? Or? or? or? You know, it plain sucks. Facing financial pains has it’s rewards, but it also has it’s “blecky” moments. Suck-le-bleu! <--expression of distaste.

So, what I was getting to… that interest my husband and I to pay annually kicked my Percentage up 0.02% today. Hmph!

Have you figured out your bad-debt-to-income-ratio?
What’s your pain?
I’d love to help share misery with someone. And then we can put our wonder-twin-powers (Hanana Barbara ring a bell?) together and work to making it better. : )

Pay Down That Credit Debt

I love Motley Fool – they have great articles, advice, forums, seminars, etc… They are sincere and have nothing to hide. They will advise you how to climb out of the negative and go into the positive. I am not affiliated with the Fool, just lovin’ the fool. So, don’t be surprised if you see the Fool. :)

Pay Down that Credit Card Debt
Fool.com

There are millions of Americans out there who have paid off heavy credit card debt, and now it’s your turn to join them. It won’t be enough, however, to just make minimum monthly payments. Here are six bigger steps you can take to get your debt under control:

Stop using your cards. The last thing you want to do with heavy credit card debt is add to it. Take all your credit cards out of your wallet or purse, and leave them at home (though you may want to keep one for emergencies — and, no, a really great sale or a cool new CD player does not qualify as an emergency).

Cut up the cards if that’s what it takes to stop using them. Some people keep their cards out of reach by freezing them in glasses of water. (I have them folded in a piece of paper, bound by tons of packing tape, and filed in a folder at work) ->not in my wallet!

Stop the flood of credit card offers. You can force credit bureaus to stop selling your name and address. Dial 1-888-5-OPTOUT to get the forms. If you’re searching for a low interest card, don’t wait for it to come to you. Visit a site like cardweb.com or bankrate.com to do your own research. this tip is great! i don’t get no-need credit card offers and I help save the planet all in one. pretty good, huh? One less tree. Love the trees. :)


Always pay more than the minimum. The credit card companies are not just being nice when they require only a small minimum payment on your total balance. They calculate this minimum to extend your payments for as long as possible, to boost their profits. Scrimp if you need to, and pay as much as you can above the minimum every month. cranky. although, it makes you think about savvy free entertainment that maybe available – pack a picnic, go walking at a park (exercise & enjoyment all in one), hit the beach, ride a bike, hike, read a book, check out movies at the library… What do you do?

Plan your attack. Don’t just throw yourself at a mountain of debt without preparation. How many cards do you have? What interest rates do they charge? Which have the highest balances? Write down your balances for each card, and their interest rates. (There’s space in the workbook for this.)

Generally, you’ll want to start by paying off the card with the highest rate first, and then the next highest, and so on. If you want a quick boost, go ahead and pay off a card with a low balance, just to have one paid-off card under your belt. Paying off the small card, like my Kohl’s card, is offering me that immediate gratification I need since I don’t go shopping anymore.

So, after Kohl’s (which is almost paid off – yeah!)… do I go after the Wells Fargo, JCPenney, or Best Buy? WF is a big one… JCP I do pay interest on…Best Buy, I still have 0% and am on track with those payments to have it paid off before that free finance interest offer expires… Hmmm… I think we are going to have to pay off JCP! $911.00. I still need to think of what my family’s reward is for paying Kohl’s off, too. We are thinking of a decent night out at the beach with dinner. No more than $100 reward.

Reduce the interest rate. Most credit cards charge anywhere from 16% to 20%, which is huge! But you can negotiate with your credit card company for a lower rate. Particularly if you’ve had any of your cards for a while, take advantage of being a faithful customer, and call them up to demand a lower rate. Shoot for 11% or 12%. You’d be surprised at how easy it is. Haven’t done this one yet. Although, I noticed a month ago that my Bank of America interest rate automatically went down. That is was a nice surprise!

Consolidate your debts. OK, so you know what the interest rates and outstanding balances are for each of your cards, and you’ve reduced the rate on at least some of them. Next, consider combining your debts onto one or two of your lowest rate cards, if you’ve got some credit room on them. (If you’re maxed out on those cards, then forget it.) Simply call your lender and ask how to transfer funds.

If you’re making payments well above the minimum, have reduced the interest rates on your cards, and have consolidated your debt, then you’re in good shape with your credit card debt.

Good luck with you CC debt. I thought this was useful advice to post for all to see. Spreading the word.

Question: do you pay your debt from Largest-to-Smallest or Smallest-to-Largest????

Here is my take: if we didn’t take the initiative to pay our debt down in the first place than I would have tons of interest to owe anyway for the rest of my life. So, I may technically be paying more interest starting smallest-to-largest, but I think that continuous gratification will really help to keep me on track.