5 Reasons Why a Credit Card Is Better Than Cash or Debit Cards

In all of my years in the credit industry I’ve never heard anyone use the word “love” to describe a financial services product. That is until I heard someone use the word to describe his feelings toward his debit card. I felt bad popping his bubble when I explained why a credit card is so much better than exclusively using a debit card or, even worse, cash. Here are five big reasons why a credit card is better than cash or debit cards.

1. Try traveling efficiently with a debit card or cash.

The next time you check into a hotel ask the check in agent how much they’ll pre-authorize on your debit card? Most hotels will hold the entire amount of your stay plus more for incidentals. That means the held amount will not be available to cover other transactions. The pre-authorization of funds also applies when you rent a car as well. If you’re paying with cash you better have the entire amount of your stay available to immediately hand over to the check in agent. Point being, credit cards make it easier to travel.

2. What happens if you lose it?

When you lose your cash, either because of theft or an accident, who are you going to call to replace it? There is no one to call.  But, if you were to lose a credit card all it would take is a call to your credit card issuer and it’s very likely a replacement will show up by the next business day. In most cases card issuers will “FedEx” or “UPS” a new card so you don’t skip a beat.

3. What happens if your credit card is stolen?

Credit Card Fraud is all too common and the perception is that it can leave a sinkhole in your bank account.  Thankfully that’s not true at all.  If your credit card is stolen or otherwise compromised you’re not going to lose one penny. The Fair Credit Billing Act caps your liability on credit card fraud to no more than $50, but you’re unlikely to even pay that much. All four or the major credit card networks (Amex, Visa, MasterCard and Discover) have zero fraud liability policies, which means you’re not going to have to pay anything if someone steals your card.

4. What if you want to build or rebuild your credit scores?

If you think cash or debit cards are going to help you build solid credit reports and credit scores, you’re sorely mistaken. Debit Card Transactions are not reported to the credit bureaus because they do not represent extensions of credit. This applies to prepaid debit cards as well—they have no credit building value, at all. Credit cards are the easiest way to build your credit, and you don’t have to take on any debt in order to do so. Using a credit card for garden variety purchases (gas, groceries, dry cleaning) and paying them off either before the due date or the statement closing date is a cheap and easy way to leverage the credit card’s convenience while building credit at no cost.

5. What else in your wallet is worth $30,000?

Have you ever heard the terms “portable capacity?” Portable capacity is a fancy way of saying high value, low drag. It’s not unheard of for credit card credit limits to hit or exceed $30,000. That’s a lot of buying power in plastic form. No way your debit card or prepaid debit card will ever have that kind of buying power. And, carrying around that amount of cash is, well…I don’t even need to finish that sentence.

The bottom line is this; the only value a debit card or cash offers is budgetary control. And if you’re responsible enough that you don’t need budgetary controls (because you can control your own budget) then debit cards and cash are an across the board loser. And while many attempt to vilify credit cards as being evil, a notion that always makes me laugh, there really is no better alternative considering the buying power, fraud protections, credit building benefits and convenience.

For the best prepaid debit cards, credit cards, Checking, Savings & Secured Credit Cards to build your credit, please visit: http://www.FreeDebitCardStore.com

Credit Card Fees: How to Avoid the Fee Traps and Save Money

When does a $5 purchase cost you $30 or more? If this has happened to you, it’s probably when you put in on a credit card and went over your limit or paid late. Paying credit card fees, though, is entirely up to you. If you want to avoid the fees and keep more money in your pocket, check out these tips.

1. Only Buy What You Can Pay in Full

The argument against this is obvious: “If I could pay in full, I would have just paid cash.” However, there are benefits to using a credit card and circumstances where a credit card is necessary, but in each of these scenarios the potential fees outweigh the benefits if the card is not paid off completely and on time. Remember, typically interest is only waived when new purchases are paid off. Cash Advances and balance transfers will still accrue interest that will need to be paid off to avoid a revolving balance.  So, quickly find out your statement date and make sure you pay off your purchase the day before your statement date so your balance does not show on your credit report for that month. 

Remember to keep your balance at only 20% or less, not 20.1% in order to keep your “A” Grade when FICO figures your score for the month.  Anything between 20% - 29.99% is considered a “B”, which isn’t bad, but when you charge 30% or more of your credit limit, you look like you’re having money problems and potential lenders will pass on extending credit to you or will only offer you high interest loans and credit cards.

2. Don’t Break the Rules

Paying late and charging more than your credit limit will not only hurt your credit score, they will hurt your pocketbook. Credit card companies play hardball with these fees and it doesn’t matter if you only charged a 47-cent stamp, if you’re over your limit, that stamp could end up costing you $40.47. Use tracking software or apps like Mint or Pageonce to have your limit and balance monitored as well as to receive reminders about when to pay your bill.

3. Be Aware of Transaction Fees

Credit cards come with offers like balance transfers and cash advances. These offers come with substantial fees. Read the terms carefully to see if interest saved on a balance transfer will outweigh the cost of the fee. As for cash advances, a good reason to use one of these doesn’t come to mind—the exorbitant APRs attached to the fees make these a foolish bet. However, if you insist on taking out cash advances, try to limit yourself to one large advance instead of several smaller ones to avoid extra cost.

Taking charge of your credit card payments is the only way to benefit from the card instead of letting the fees bleed you dry.

How Do You Know if Your Identity Has Been Stolen?

How Do You Know If Your Identity Has Been Stolen?

Identity theft was likely the number one complaint to the Federal Trade Commission in 2012. I can state that with some conviction because identity theft has been the number one complaint to the FTC for the prior 11 years. The question most of us wrestle with is this…how do I know my identity has been stolen?

Ground Zero…Your Credit Report

The only reason you’d be the target of an identity thief is because you have an identity.  That’s your “value” to a thief and to them it’s as good as currency. And because identity theft is a financial crime, money or access to capital is the crook’s end goal.

We all have the ability to apply for credit. Add over 10,000 creditors in the U.S to the fact that most of us have average to above average credit reports and credit scores and you’ll see that access to easy credit isn’t terribly difficult. That’s not a secret and the fraudsters know this. That’s why your credit identity is always in the cross-hair of an identity thief.

Thankfully the credit reporting system is set up in such a way that consumers can immediately see if their identity has been used to apply for credit on behalf of another person. And while credit reports are not “real time” in their reporting of account information, they are in their reporting of changes to your identification information and credit related inquiries. This makes credit monitoring an effective tool to notify you when fraud has possibly occurred.

What Changes On My Credit Report Could Be Indicative of Fraud?

While it is certainly possible that changes to your credit reports does not indicate fraud, it’s in your best interest to be cognizant of any substantive change to your personal information.  Changes to any of following areas could mean identity theft:

Address Information:

If a new address hits your credit reports it could mean that a fraudster has applied for credit in your name but with a different address. Addresses are updated on credit files when new applications for credit are submitted. This is the reason monitoring the address section of your credit report is so important.

Inquiry Information:

An inquiry is a record of someone or some company pulling your credit report, and the date on which the access occurred. If a fraudster applies for credit in your name and the lender accesses your credit report a record of the access will hit your credit report immediately and trigger an alert from a credit monitoring service.

Account Information:

If a fraudster is successful opening a new account in your name then it’s very likely that account will be reported by the creditor to one, two, or all three of the national credit reporting agencies; Equifax, Experian and TransUnion. Again, the new account will trigger credit-monitoring alerts.

New Collections:

If a fraudster opens a new account in your name he or she is unlikely to make payments, which could result in the loan going into default and to a collection agency. And while the fraudster probably didn’t give the lender your telephone number, collectors have very effective ways of acquiring that contact information. If you start getting calls from collection agents attempting to collect a debt that you don’t recognize, it could be the result of fraud. At this point your problems are significant because you’ll be telling the collection agent the same thing that legitimate debtors in default are telling them…”that’s not my account.”

If you’re worried about becoming a victim of identity theft, you should at the very least check your credit reports on a regular basis. There are also free resources like CreditKarma.com & CreditSesame.com, where you can get your free credit report and free credit monitoring to help you pinpoint any unauthorized inquiries or new account openings that are often the first signs of identity theft.

10 Ways to Minimize Your Exposure to Identity Theft

10 Ways to Minimize Your Exposure to Identity Theft

You don’t help burglars break into your house by leaving the doors unlocked or hand over your car keys to an auto thief. Yet, every day, Americans share sensitive information that can be used for identity theft – an offense that is much more widespread and costly than property theft.

According to the most recent data available, 16.6 million victims of identity theft reported a total of $24.7 billion in direct and indirect losses in 2012. Those damages were far greater than the $14 billion lost from all other property crimes (burglary, motor vehicle theft, and genera theft) that year.

That data comes from the Department of Justice in its Victims of Identity Theft, 2012, report published in December. It found that identity theft losses were more than four times greater than losses due to stolen money and property in burglaries ($5.2 billion), and eight times the total losses associated with motor vehicle theft ($3.1 billion).

What’s more, this data is from 2012 – the most recent data available from the Department of Justice. We won’t know 2013’s numbers for another year, but considering the massive data breaches that targeted several large retailers just four months ago, these numbers will likely be even higher.

With these facts in mind, here are ten measures you should be taking right now to protect your personal information and provide your best defense against identity theft:

1. Shred important documents

Identity thieves love waste baskets and dumpsters. These receptacles can be a great resource for fraud, so it’s important to destroy all of your important documents with a crosscut shredder, which slices and dices, to ensure they’re completely obliterated.

2. Watch your cards

This means actively monitoring your credit and debit card accounts to check for any unauthorized charges or transactions. Don’t wait until your statement arrives to check for unusual activity or unauthorized charges. If you spot any unauthorized or unusual charges, contact your bank or credit card issuer immediately.

3. Check your credit reports

Your credit report is often the first place you’re likely to identify potential signs of identity theft. By law, you’re entitled to a free copy of your credit report from each of the three credit reporting agencies once every twelve months. The Fair Credit Reporting Act gives you this federally mandated right, and if you’re not taking advantage of it – you should be.

4. Monitor your credit

Checking your credit report once a year is a given, but monitoring it regularly is one of the most effective ways of catching the first signs of identity theft. Think of your credit as the canary in the coalmine. By keeping an eye on it with regular monitoring, you can quickly spot the sorts of discrepancies that signal identity theft. Most monitoring services provide real-time alerts to help you pinpoint possible signs of fraud before they cause major damage to your credit reports and scores. And while most credit monitoring services will cost you a small monthly fee, by taking advantage of free resources like CreditSesame or CreditKarma, it doesn’t have to cost you a dime. 

Our choice for a paid credit monitoring service with alerts has always been: www.PrivacyGuard.com.  For $1 initial introductory price (14 day trial), you can download and view your tri-merged credit reports.  If you decide to continue your service, it’s only $14.95 per month and well worth the small investment.

5. Use strong passwords

Make sure you protect all of your important hardware and sensitive accounts by using a strong password. Experts suggest you create passwords by mixing uppercase and lowercase letters with numbers and symbols. It’s also a good idea to change passwords regularly and never use the same password on all your accounts.  It may be convenient for you to use the same password containing the name of your cat and the numbers of your house, but anyone that knows personal information about you could quickly figure out your password and be tempted to help themselves to your credit.

6. Don’t take the bait

Never respond to phishing emails, or unsolicited emails of any kind, asking for personal data or information, and never click a link in those kinds of communications. If there is an offer you would like to pursue, conduct your own Internet search before doing so and follow the links you find from it.

7. No card carrying

You’d be surprised by how many people carry their social security card around with them in a purse or wallet. This presents a tremendous opportunity for identity theft. A social security number can be used to apply for credit cards, open a bank account or get a loan. Obviously, you don’t want yours out in public unless it needs to be. Find a safe place for your social security card and keep it there.

8. Lock and block

If you are going to send sensitive information over the Internet, make sure to use encryption software that scrambles the data and keeps it safe from prying eyes. You should also make sure to look for the “lock” icon in the status bar of your browser when sending data. This is an indication that you have a secure connection with the recipient.

9. Don’t be too social

Everyone loves to talk and share news about themselves on social media. But too much information isn’t just an annoying catch-phrase. It can also be a problem. An identity thief can learn enough about your life to answer challenge questions on accounts and get access to money and other personal data. Never post your full name, date of birth, address, phone number, Social Security number or account numbers on any publicly accessible site, and be sure to limit access to your networking pages.

10. Recognize security differences

A secure website is not the same thing as a secure network. An encrypted website only protects data you send to that site. Don’t mistake a secure website for an unsecured network. This is especially important when using a wireless network or free Wi-Fi in a coffee shop, airport or other public space, which are prime targets for identity theft.

6 Ways to Earn More Cash Back Rewards

6 Ways to Earn More Cash Back Rewards

When it comes to saving money, you have to be shrewd. In addition to clipping coupons, refinancing your home loan, and holding off on buying a new car, why not make your purchases work for you by scoring cash back whenever you shop? Most credit cards have cash back programs in place, but it’s easy to miss out on rewards if you’re not paying attention. Here are six ways to get more cash back.

1. Use the Right Credit Card

Make sure you’re using the right credit card to earn cash back for all of your purchases.  The Chase Freedom Card and the Discover it Card feature rotating categories with 5% cash back (and no annual fee). Educate yourself on the details and plan your purchases accordingly.

The American Express Blue Cash Preferred Card comes with 6% cash back on groceries (capped at $6,000 per year), and 3% cash back on gasoline. There is a $75 annual fee, so do the math to make sure the rewards are worth the expense.

2. Sign Up for Cash Back Websites

If you’ve never heard of Ebates or FatWallet, check them out. Both have cash back programs that provide a rebate whenever you use their links for making online purchases. If you shop a lot online, the cash back can really add up.

3. Download Smartphone Apps

Download the Wallaby app to determine which of your credit cards is the best to use on any given purchase. This ensures you’re always getting the best cash back reward, simplifying the reward-management system if you’re juggling multiple cards.

You can also earn money by using other apps. For instance, download the GymPact app, set up a workout schedule, and earn up to 75 cents every time you exercise. If you shop a lot, try the Shopkick app. Every time you enter a participating store or make a purchase, you receive “kicks” which can be redeemed for gift cards.

4. Pay Your Bills With Credit Cards

Many monthly service providers offer customers the option to automatically pay monthly bills with a credit card. By putting $5,000 worth of monthly bills on a credit card over the course of a year, you could earn at least $50, assuming your card offers a 1% or greater cash back reward. Just make sure you’re paying off your balances each month – if not, the added interest payments could eclipse any cash back bonus.

5. Apply for New Cards

If you have a vacation coming up, sign up for the Chase Sapphire Preferred Card. It offers $500 worth of travel rewards after you spend just $3,000 on the card in the first three months. Similarly, the Citi Thank You Premier Card offers $200 worth of gift cards after you make $2,000 worth of purchases in the first three months.

Just don’t sign up for too many new credit cards in a short period of time – that could hurt your credit score – and do pay attention to your cards’ annual fees. For instance, the Chase Sapphire Preferred Card has a $95 annual fee after the first year, while the Citi Thank You Premier Card has a $125 annual fee after the first year. Only sign up for cards with rewards programs aligned with your spending habits – you want to be in a position to earn more rewards than the cost of the annual fee.

6. Pay for Everything With Credit

The more you spend on your credit cards, the more cash back you can earn. But once again, this only works if you’re paying off your balance each month. As long as you’re living within your means, by paying with credit, you’re racking up those cash back rewards.

If you have the option to apply your cash back rewards in different ways, such as gift cards, travel rewards, or statement credits, always opt to use them as statement credits. You usually get a better return on your rewards, and if you’re paying for everything with your credit cards, your cash back essentially helps pay for your current purchases.

Sign up for a secured card to help rebuild your credit by clicking on one of our links on the right.  A great website to shop for credit cards is: www.FreeDebitCardStore.com.

Two Great Financial Tools To Start Rebuilding Your Credit Now