Econ 101

Introduction to balance transfer credit cards

// December 14th, 2009 // No Comments » // credit cards

Many people today are carrying balances on their credit cards and if they have a high interest rate, looking for a balance transfer credit card is uppermost in their minds.  What exactly is a balance transfer credit card?  It really is as simple as the words intimate.  People will find a credit card with a lower interest rate for balances.  That amount of money that doesn’t get paid off each month will keep accruing interest charges and if the credit card they are using has a high interest rate it may take years to pay off the debt.

So with that thought in mind it makes sense to look into a balance transfer credit card.  Some credit card issuers will offer a 0% interest rate for an introductory period.  It can be as short as three months or as long as sixteen.  They may also offer lower interest rates like 6.8% for an introductory period.  After that introductory rate is over, however, the interest rate will increase.  This is where searching for the best balance transfer credit card comes into play.

If the credit cardholder still can’t pay off the balance at the end of the period the new interest rate could wipe out all the progress that had been made.  So choosing a credit card for the introductory interest rate alone might not be in the person’s best interest.  If you know that the credit card balance that is being transferred can’t be paid off in the introductory period, then search for a balance transfer credit card that just has a low fixed interest rate for the life of the balance.  In the long run choosing this type of balance transfer credit card could save you the most money.

Everyone’s situation is different when it comes to needing a balance transfer credit card.  Deciding on the right credit card should take some time.  One of the best ways to figure out what the best balance transfer credit card may be is to use a credit card comparison website.

These websites will list all of the available balance transfer credit cards.  Usually they list them in the order of the best ones to the least favourable.  They will tell people what the interest rate is for the introductory period and what the APR interest rate is after it ends.  They list any qualifications that may be necessary for getting approved for the balance transfer credit card.  Some even let you put in information that will give you an idea if you will be accepted for the credit card.  This helps immensely because if there isn’t a good chance that you qualify for the balance transfer credit card your credit score can’t be lowered.   You save this from happening because you won’t apply for that particular balance transfer credit card.

Choose the best rate that will give the most benefits for your situation when looking into a balance transfer credit card.  Once you have the balance transfer credit card most ask that you make the transfer of balances within ninety days.

Student Credit Cards Lessons

// December 7th, 2009 // No Comments » // credit cards

The offers are plentiful for students who need college student credit cards. Applying for and getting approved for a student credit card is just what many creditors are anxious for.  They know that a good relationship at this young age will lead to a customer for life.  Having not yet learned responsible financial management can be bad news for college students.  Living in the dorm or an apartment, first time away from home can create temptation. Having a night out at the bar or dance club or chipping in for a keg of beer, the plastic makes it very easy.  With no dollars bills floating out of his wallet at the time of the purchase, credit is seen as free money. Although there is nothing free about the fact that the student has just generated some charges on that college student credit card. And then reality sets in when the calls for payments to be made start coming in from the creditor. In today’s academic world the ease of getting a college student credit card is not for everyone and only you can answer that.

Groceries and a Credit Card

// July 30th, 2009 // No Comments » // credit cards

More and more banks are having problems, unprecedented bail- outs; executive compensations that are exorbitant have all combined to make High Street bankers less than ideal places.  They have lost the loyalty they once had without question.  Because of this, major grocery chains are looking into the possibility of offering financial services to increase their revenues.

Tesco and Sainsbury’s are at the top of the list to make this type of transition into the financial foray.  They already have their own loyalty cards, so why would it be a stretch to think that they could issue credit cards instant decision for their already steadfast customers?  When a customer shops with them they already get some type of reward so this will take it one step further.

These businesses can truly be a place for one stop shopping.  A home mortgage, insurance and a credit card all in one trusted place is what they are suggesting to their clientele.  There are statistics that show that since they have a relationship with the store they are more likely to pay off the credit card.  This makes any unpaid debt on the credit card less of a risk.

Tesco already has a credit card that has proven successful.  Customers have an incentive to pay their bills.   The cost to implement these financial services isn’t as pricey either.  They already have a huge customer base to tap into.  When a customer applies for a credit card or loan the store already has quite a good history on the people.

This keeps the marketing costs down and significantly lowers the risk.  This seems to be a formula for success.  As more and more stores ponder this idea it remains to be seen if it will actually take hold.  If it does, customers will get much more than groceries when they shop at the store.

Minimum Payment on Your Credit Cards

// July 28th, 2009 // No Comments » // credit cards

When we like something we buy that without thinking about the amount of money that he/she has to pay at the end of the month. Checking on buying habit is very tough. For this reason a huge amount of money may be in due on your credit cards. Now if someone does not have that much amount of money to pay then he decides to pay the minimum amount of the due, in hope that on the next month I will be able to pay the due.

This situation gets worst when this minimum payment is repeated again and again. A huge amount of debt on the credit card has to be faced by the owner. If you are not able to clear the debt then bank ceases your credit card and raise bankruptcy issue against you.

The compounding factor on minimum payment of card plays a huge role and the debt goes on increasing after every month. The actual rate of compounding was 2 to 2.5%. But, recently it has been raised to 5%. So now compounding is really very fast and the debt amount becomes huge within few months which may not be possible for the user to pay. So it is better to avoid minimum payment on the credit card.