Retail store representatives unfailingly try to get you to sign up for their retail-branded credit cards. “You can save 15% off your purchase today by signing up for our credit card.” They get incentives for each person who signs up for a credit card. So, saving you 15% is agenda-pushing at its best.
Given that store credit card interest rates are in the 20% range, you don’t really save 15% on your purchase unless you pay your balance in full when the first statement comes in the mail. And how many of us actually do that? You can get much better interest rates on non-retail-branded credit cards that you can use in multiple places.
Another reason you should say “no” to store credit cards, it’s never good to sign up for a credit card on impulse. Instead, you should shop around for a credit card based on your spending habits – not the stores where you shop. Even annoying credit card mail offers send you the interest rate and fees for the credit card. Store credit cards don’t give you that luxury. They expect you to open up a new credit card without giving you any information about the card, for $15 off your purchase.
Then, consider the impact of a new credit card on your credit score. First, your credit score takes a hit when you make the application for credit. An inquiry is placed on your credit report and influences your credit score for 12 months. The inquiry doesn’t fall off your credit report until 24 months have passed.
Store credit cards typically dole out credit like there’s a credit famine. You can count on having a low credit limit. Your credit utilization will increase which will cause your credit score to drop a little more.
The list of cons for a store credit card outweigh the pros. Don’t let an offer to save you a few bucks cloud your judgment.
Showing posts with label control spending. Show all posts
Showing posts with label control spending. Show all posts
Monday, December 15, 2008
Friday, December 5, 2008
How to Get Through the Recession
Though the government avoided saying the “r” word for months, it’s been officially announced that the United States has been in a recession since December 2007.
Your job could be at risk. Cutting jobs are one of the ways companies keep down their operating costs. The country has already reached its highest level of unemployment since 1996 and more companies announce massive layoffs. You never know if your job is next so it’s a good idea so have an emergency fund of three to six months of living expenses to hold you until your next job.
It could be hard finding a job after a layoff. The overall number of jobs has decreased and that makes it hard to find a job once you’re unemployed. Use your emergency fund wisely and take advantage of your state’s unemployment insurance.
Update your resume now. If you get laid off, you’ll be able to start looking for a new job immediately. Take advantage of any skills training your current job offers. The more skills you have the more attractive you will be to future employers.
Keep your credit card debt under control. Though you may be tempted to rely on credit cards or loans to help you get through the recession, it’s better to keep your debt level low. That way, in the unfortunate event of a job loss, your debt bills will be lower.
Lock in your mortgage interest rate. Part of the recession was caused by increased mortgage payments on adjustable rate mortgages. As mortgage payments increased, consumers had less money to spend on consumable goods. Work with your lender to modify your loan with a fixed interest rate. Or, try to refinance your mortgage into a fixed-rate mortgage. Though your payments might be higher than they are currently, you never have to worry about them increasing.
Your job could be at risk. Cutting jobs are one of the ways companies keep down their operating costs. The country has already reached its highest level of unemployment since 1996 and more companies announce massive layoffs. You never know if your job is next so it’s a good idea so have an emergency fund of three to six months of living expenses to hold you until your next job.
It could be hard finding a job after a layoff. The overall number of jobs has decreased and that makes it hard to find a job once you’re unemployed. Use your emergency fund wisely and take advantage of your state’s unemployment insurance.
Update your resume now. If you get laid off, you’ll be able to start looking for a new job immediately. Take advantage of any skills training your current job offers. The more skills you have the more attractive you will be to future employers.
Keep your credit card debt under control. Though you may be tempted to rely on credit cards or loans to help you get through the recession, it’s better to keep your debt level low. That way, in the unfortunate event of a job loss, your debt bills will be lower.
Lock in your mortgage interest rate. Part of the recession was caused by increased mortgage payments on adjustable rate mortgages. As mortgage payments increased, consumers had less money to spend on consumable goods. Work with your lender to modify your loan with a fixed interest rate. Or, try to refinance your mortgage into a fixed-rate mortgage. Though your payments might be higher than they are currently, you never have to worry about them increasing.
Tuesday, November 25, 2008
How to Make – and Stick to – a Holiday Budget
Christmas comes once a year, and if you’re like many people, you’re still dealing with your Christmas bills well into next summer. Most people would be surprised to learn just how much they spent celebrating that one day. And many are, once they open the first credit card bill after the holidays. If you don’t want that to be you come January, take some time to make a holiday budget and do everything you can to stick to it.
Set Your Budget
Click here for a Budget Worksheet
Decide early how much you’re going to spend. If you’ve set up a holiday savings account, wonderful. If not, then you need to work with the income that you’ll be getting during the shopping season. Use your monthly budget to figure out what you’ll have left over after expenses. Then, use that to build your holiday budget by category: gifts, travel, food, decorations, clothes, and donations.
Prioritize Your Spending
Decide what’s really important. We tend to go overboard on spending for the holidays when just a little discretion would have kept us within budget and out of debt. Second-guess every purchase you make to be sure you can afford it.
Track As You Go
As you spend, make sure you adjust your budget so you always know what you have left. Set aside some cash or use a prepaid credit card for all your holiday spending. That way, you won’t mistakenly overspend or use up money that was allocated for your mortgage or electricity bill.
Resist Guilty Spending Temptations
Don’t feel obligated to do extra over the holidays. Do your best and remember, it’s the thought that counts. Even if you can’t do everything you’d like this year, you can start saving early next year so your next holidays will be even better.
Set Your Budget
Click here for a Budget Worksheet
Decide early how much you’re going to spend. If you’ve set up a holiday savings account, wonderful. If not, then you need to work with the income that you’ll be getting during the shopping season. Use your monthly budget to figure out what you’ll have left over after expenses. Then, use that to build your holiday budget by category: gifts, travel, food, decorations, clothes, and donations.
Prioritize Your Spending
Decide what’s really important. We tend to go overboard on spending for the holidays when just a little discretion would have kept us within budget and out of debt. Second-guess every purchase you make to be sure you can afford it.
Track As You Go
As you spend, make sure you adjust your budget so you always know what you have left. Set aside some cash or use a prepaid credit card for all your holiday spending. That way, you won’t mistakenly overspend or use up money that was allocated for your mortgage or electricity bill.
Resist Guilty Spending Temptations
Don’t feel obligated to do extra over the holidays. Do your best and remember, it’s the thought that counts. Even if you can’t do everything you’d like this year, you can start saving early next year so your next holidays will be even better.
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