Hate Credit Cards? There’s Still a Way to Build Credit & Avoid Debt

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If you want to build credit, don’t want to go into debt and don’t want to use a credit card, you’ve got a bit of a problem. You can definitely build credit without going into debt, but that generally requires using a credit card. There are plenty of ways to build credit without using a credit card, but they generally require going into debt. It’s frustrating, we know.

Things like utility payments and rent are sometimes reported to the credit bureaus and are factored into a few credit scoring models, but it’s far from the industry standard right now. There’s some good news, though: There’s a debt-free, low-maintenance, credit-building strategy you might not despise.

Step 1: Check Your Budget for a Recurring Bill

Most people have at least one consistent monthly expense. These are often subscriptions (like Netflix or a magazine) or small bills (like an insurance premium or a cell phone bill). Many of these can be set to automatic payments, and many of them can be paid with a credit card without an additional credit card processing fee. See if you can find one. Got it? OK, you’re not going to love this next step, but give it a chance before you freak out.

Step 2: Get a Credit Card (Wait, What?)

Yes, this strategy requires a credit card, but you hardly ever have to use it. You may never take it out of your wallet (and, really, you could probably just keep it locked up at home). If you don’t have a credit card, you’ll first want to check your credit score, which you can do for free on Credit.com, to see what you might be able to qualify for. There are credit cards for people with bad credit and no credit, but keep in mind that some credit cards carry annual fees or require a deposit in order to access a line of credit. Still, you can get a credit card for a relatively low cost (or for free), and if you pay off the balance on time every month, your purchases won’t accrue interest. (See? No debt.)

Step 3: Pay Your Small, Recurring Bill With Your Credit Card

Set up your automatic payment to hit your credit card.

Step 4: Pay Your Credit Card Bill

You can either manually pay your credit card bill as soon as the other bill payment hits, or you may want to set up another automatic payment, this time for your credit card. Make sure you’re paying it on time and in full each month, because that’s what’s going to build a positive credit history and keep you from going into debt.

Step 5: Check Your Progress

It’s easy to “set it and forget it,” and that’s sort of the idea here, but you don’t want to forget it and accidentally miss a payment because you haven’t updated your account or a payment didn’t go through as it was supposed to.

Some Extra Tips

When you’re deciding if this strategy is right for you (and it’s not for everyone), remember that part of what builds a good credit score is using as little of your available credit card limit as possible. So, if you have a very low credit limit on your credit card, the bill you choose to pay with it should be fairly inexpensive, if you want to get the most out of this strategy. Making sure this goes right requires attention to detail — it can backfire if you miss a credit card payment, max out the credit card or miss the bill payment and it ends up in collections — and it’s also a good idea to check your credit score regularly to make sure it’s having the effect you want it to.

Find the perfect credit card for you using our credit card finder tool.

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Report: 600,000 Veterans Could Go Without Health Insurance Next Year

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A new Urban Institute report predicts that more than 600,000 veterans will go without health insurance in 2017 unless there are policy changes to the Medicaid program. They point out that more than half of those veterans live in the 19 states that have not expanded Medicaid.

“If Medicaid expansion decisions do not change between now and 2017, we project that approximately 604,000 veterans will be uninsured in 2017 and that 54% will be living in states that have yet to expand Medicaid,” according to the report.

In May 2011, the Urban Institute, supported by the Robert Wood Johnson Foundation, began studying the effects the Patient Protection and Affordable Care Act of 2010 had on citizens. The findings in the September 2016 report are based off analysis of data from the 2011 – 2015 National Health Interview Survey (NHIS), 2013 – 2014 American Community Survey (ACS) and U.S. Census Bureau.

The report notes that, even with Medicaid expansion, thousands of veterans are going to be left without a way to pay for medical care, as they all aren’t eligible for care provided by the Department of Veterans Affairs. It estimates that 38% of veterans would become part of the “assistance gap,” meaning they are not in the low-income category that qualifies them for Medicaid, but are making too much money to qualify for federal Obamacare health insurance subsidies. (It’s important to note that Medicaid expansion doesn’t come without costs — states have to figure out a way to pay for it.)

The researchers predict that, while fewer than 1 in 10 uninsured veterans in certain states would qualify for Medicaid in 2017 based on current expansion plans, “a projected 47% would qualify if all 19 states chose to expand.”

How Medical Debt Can Affect You

Medical debt can become a major burden and may even damage your credit, no matter if you’re a veteran, on active duty or a civilian. This can complicate things when it comes time to get a mortgage, take out a loan for a car or even apply for a job (many employers look at a version of your credit report as part of the application process).

If you’re currently laden with medical debt, it’s a good idea to review your bills for any errors, like double charges or other incorrect entries, that may help that number come down. And, while it may be challenging, it’s important to remember that you need to make your bill payments on time to maintain good credit. (You can see how your medical debts are affecting your credit by taking a look at two of your free credit scores, updated every 14 days, on Credit.com and by getting copies of your free annual credit reports through AnnualCreditReport.com.) If you need assistance with paying these bills, consider talking with a professional to see what your options are.

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Help! Someone Keeps Giving My Phone Number to Debt Collectors

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Sometimes, your phone number gets associated with a loan you’ve never applied for. We can never be sure why it happens: Perhaps it was the debtor’s phone number before it was yours, or they invented what they thought was a fake number because they don’t own a phone, or maybe they’re just trying to hide their debts from the rest of their family because they’ve lost all of their money at a balloon-racing tournament.

So, they pluck any phone number for the application, or pen in the digits of their worst enemy, knowing that person will likely get harassed in the future. (We can all make up some pretty interesting fiction.) But what do you do if it’s your phone number that they’ve chosen, and your phone starts ringing for debts you don’t owe? (“No, really, it’s not my debt” might get a little redundant.)

We asked consumer attorney Troy Doucet of Doucet & Associates Co. in Columbus, Ohio, to weigh in on this one.

First, tell the debt collector that they’re calling the wrong number.

“If debt collectors are calling the wrong number, then they should stop upon notification,” said Doucet. But what if your phone doesn’t stop ringing and the same debt collector keeps calling you?

“If they do not stop calling, there is good argument under most state consumer protection laws that a violation has occurred,” said Doucet.

If you’re feeling so harassed that you want to contact a consumer lawyer, you might have a case, since continuing to dial your number could be a violation of The Fair Debt Collection Practices Act, said Doucet. However, it could be tricky to argue that claim in court.

“If the person being called was totally innocent and the debt collector was not trying to collect from the person on the other end of the phone (e.g., the collector was looking for Jane and it was Bob’s phone), then it may be difficult to classify the person being called as a ‘consumer’ or the call being classified as collecting a ‘debt’ under the technical definitions of the FDCPA,” Doucet said.

But that doesn’t mean you’re without recourse.

“There may also be common law claim for ‘invasion of privacy’ if the calls don’t stop in some states,” said Doucet.

If the problem persists, you may want to consult a consumer attorney about your best recourse.

In the interim, it would be prudent to check your credit report to see if the debts they’re calling about actually do exist in your name. This could happen if someone has stolen your identity — or because you had a bill go to collections that you weren’t aware of. You can view your free credit report once a year from AnnualCreditReport.com or see a free snapshot of your credit report, updated every 14 days, for free on Credit.com.

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‘Air Rage’ Is a Thing & It’s Happening More Often

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Tap! Tap! Tap!

Hear that? It’s the sound of the passenger behind you banging on your seat, and if you end up in an argument over their refusal to stop, you wouldn’t be alone. A new study by the International Air Transport Association (IATA), an airline industry body, found that “unruly passenger incidents,” as they were described in a recent press release, are on the rise.

In reviewing 10,854 incidents reported to IATA by airlines worldwide last year, they found the majority of disruptive behavior involved “verbal abuse, failure to follow lawful crew instructions and other forms of anti-social behavior.” A vast number (11%) of the reports detailed “physical aggression towards passengers or crew or damage to the aircraft,” while drug or alcohol intoxication, the majority of which were “consumed prior to boarding or from personal supply without knowledge of the crew,” affected about 23% of the cases, IATA said.

Alexandre de Juniac, IATA director general and CEO, called on airlines and airports to ratify the Montreal Protocol 2014, which he said aims to streamline the legalities of handling unruly passengers. “To date, six states have ratified the Provision needed in order to have a consistent global approach to this issue,” de Juniac said.

IATA also supports a code of practice that focuses on preventing passenger intoxication, especially excessive drinking, prior to boarding. Ideally, staff in airport bars and shops should be “trained to serve alcohol responsibly” and take steps to prevent binge drinking, IATA said.

Though we can’t guarantee that you’ll have a smooth flight, there are some ways to enhance the experience, at least from your wallet’s perspective. A good place to start: travel rewards cards. Not only do some of these bad boys waive irksome baggage fees, if you play your cards right and manage them responsibly, you may earn rewards to redeem for free flights and upgrades. Just remember, a good credit score is your golden ticket to the world of rewards, so if your credit’s not up to snuff, it’s time to start beefing it up. You can see where your finances currently stand by viewing a free snapshot of your credit report on Credit.com.

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The Casino Trap

Gambling marketing targets 50+ customers who turn to casinos for an escape from isolation, but soon find themselves in debt and out thousands in cash.
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What Is Credit Card Surfing?

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Twenty years ago, the phrase “surfing the web” became a popular way of describing how millions of Americans were starting to use the Internet by quickly browsing from one website to another. Today, this is pretty much how we all use our computers and even smartphones. Lately, the term “credit card surfing” is becoming a popular way to describe a different kind of behavior.

The Basics of Credit Card Surfing

It can be extremely difficult to pay off credit card debt, and as unsecured debt, your outstanding balances will likely incur a higher interest rate than mortgages, student loans or car loans. To avoid interest payments on their credit cards, some people turn to 0% annual percentage rate (APR) promotional financing offers from credit card issuers. These offers allow them to avoid interest charges by transferring a balance from one piece of plastic to another, typically for as little as six months and as long as 21 months.

With these promotional financing offers so commonly available, some cardholders attempt to take the next step towards avoiding interest charges by “surfing” from one offer to another. When an existing 0% APR balance transfer offer is about to expire, they will apply for a new credit card with another interest-free promotional balance transfer period. Furthermore, some credit card users hope to continue this practice indefinitely.

Reasons to Avoid Credit Card Surfing

Credit card surfing might seem like it could be a sustainable practice, but it has many potential problems. First, those who use 0% APR balance transfers will almost always have to pay a balance transfer fee equal to 3% to 5% of the amount transferred. And while this fee can be worth it to avoid paying a much higher amount in interest charges in the short-term, credit card surfers should never convince themselves that these promotional financing offers allow them to sustain their debts for free forever.

In addition, credit card surfers may be constantly utilizing a large percentage of their available credit limit as they continue to carry debt. Doing so will raise their debt-to-credit ratios, which could lower their credit score. Furthermore, their minimum payments will still be reported to the major credit bureaus, and that amount could impact the size of any new loans they might apply for, such as a mortgage. Each credit card application generally generates a hard inquiry on your credit report, which can ding your credit score, so applying for too many new balance-transfer credit cards in a short-time frame can damage your credit in that way as well.  (To see where you currently stand, you can view two of your credit scores, updated every 14 days, for free on Credit.com.)

Credit card surfing is also a risky strategy because it presumes that interest-free balance transfer offers will continue to be available in the future, and that the applicant will qualify for them. These offers are common now, but could easily go out of style next year, or become more heavily restricted to those with the best credit scores.

Finally, procrastinating is a questionable idea when it comes to paying off your debt. While you might be able to qualify for a new credit card with a 0% APR offer now, there’s no telling whether circumstances outside of your control such as illness or job loss could hurt your credit in the future, and put these offers beyond your reach. And credit card debt adds up quickly. (You can calculate the lifetime cost of your current debts here.)

The Best Ways to Use Promotional Financing Offers

Credit cards that offer 0% APR financing on balance transfers are a great way to save money on interest charges, but only when used strategically. The best way to leverage these offers is to use them as an incentive to pay off your existing balances sooner, not later. Consider the end of your card’s promotional financing period to be the finish line in your race to eliminate debt. (Keep in mind, too, some cards have caveats that make you liable for retroactive interest if you don’t pay the balance you transferred off in full by the time the offer expires.)

Each payment you make during your promotional financing offer will go 100% towards paying off your principle balance, not interest payments. And if you succeed in paying off your debt before interest is incurred, you can avoid increasing your balance by another 3% to 5% when you transfer it to another credit card.

Surfing can be tremendously fun when it occurs on the Internet or the ocean, but credit card surfing is a risky proposition. By taking a look at the bigger picture when it comes to your credit card debt, you can use an interest-free promotional financing offer to retire your debt, rather than perpetuate it.

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Does a Tuition Installment Plan Make Sense for You?

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If you’re a student who is short on cash, but you want to avoid student loans, you might be considering a tuition installment plan, but before you enroll, read the plan agreement and do a bit of math. In most cases, the tuition installment plan is a bad deal for you.

What is a tuition installment plan?

A tuition installment plan allows you to pay your tuition in monthly payments that last twelve months or less (sometimes as few as three installments). You can expect to pay an enrollment fee, but you won’t pay interest. Universities limit the amount of money you can pay through tuition installment plans, so the remainder of your tuition bill needs to be covered in cash or by student loans.

What are the installment plan fees?

Enrollment fees vary by university, but you can expect to pay anywhere from $25-$100 to enroll in a tuition payment plan. For example, Virginia Commonwealth University charges a nonrefundable $25 application fee to enroll in the tuition installment plan, while Howard University charges a $45 fee, and Rutgers charges a $60 fee for an annual plan or $50 per semester. If you pay your installment late or incompletely, you can expect to pay a late fee of $10-$35 per installment.

What happens if I don’t pay?

If you don’t pay your installment payments, the university will roll your payments into an “emergency” loan where interest begins accruing immediately, and payments are immediately due. You may be able to take out student loans to pay off the emergency loan, but you may be stuck with the loan going forward.

Once your tuition installment plan converts to a loan, creditors view it like any other loan. This means that failing to pay it will lead to credit problems. Additionally, your school may put a hold on your credentials or not allow you to enroll in classes until the loan is current.

Information about what happens if you don’t pay will be available in an agreement that you need to sign prior to enrollment. Read the agreement prior to enrolling in a tuition installment plan.

Will Tuition Installment Plans save you money?

You won’t save much money paying through a tuition installment plan compared with subsidized student loans. Sallie Mae offers a calculator that calculates the amount of interest you will accrue on a student loan if the loan goes completely unpaid. Compare the accrued interest to the the tuition installment plan enrollment fee to see if you have the potential to save money.

Tuition installment plans sound like interest free loans, but they tend to be a bad deal for students. You’re locked into payments during school, and you save little (or nothing) compared to subsidized student loans. Since enrolling in tuition installment plans requires filling out a FAFSA, you won’t save time enrolling in TIP(s) vs taking out loans.

When should I consider Tuition Installment Plans?

Tuition installment plans have a useful psychological value. If a required payment keeps you from wasting money or from taking on debt for lifestyle purchases, then you should consider it whether or not you save money compared to student loans. If you have a moral or religious objection to debt, installment plans allow you to cover a small gap without interest bearing debt (but be aware that if you fail to pay, you’re taking on a loan).

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9 Ways to Make a Small Kitchen Feel Bigger

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Here’s Where the Rich Are Donating Their Money

Some charities or causes seem to get more financial attention than others in terms of where wealthy people donate their money.

And now we have a bit more insight into where that is, thanks to this sneak peek of an extensive report from the U.S. Trust and the Indiana University Lilly Family School of Philanthropy called the 2016 U.S. Trust Study of High Net Worth Philanthropy, due out in full on Oct. 25.

The Method

The study was administered nationally, through a 70-question survey, to high net worth individuals (households with incomes $200,000 and/or net worth of more than $1,000,000 — excluding the monetary value of their homes) between May 2016 and September 2016. More than 1,500 responding households met the income and/or wealth criteria for this study. There was no reported margin of error for the full study.

“For the last decade, [the study] has been an important barometer for charitable engagement and perspectives. The latest study will once again offer valuable insights that help inform the strategies of nonprofit professionals, wealthy donors and charitable advisors alike,” Claire Costello, managing director and National Philanthropic Specialist for U.S. Trust, told Credit.com.

The Winner Is …

The biggest category wealthy donors gave to last year was to Basic Needs organizations, with 63% of the rich group giving to organizations that provide food and shelter and the basic necessities for human survival. Donations for religious causes came in second (50%), followed by education (45%), the environment (42%) and health (40%).

The Age Spread

Age also impacted how many groups benefit from their donations. For example, donors over 70 were more likely to spread out donations to 11 different organizations, baby boomers gave to an average of seven and donors age 50 and younger gave to five, on average. The total average of all age groups was eight different organizations.

Political Giving 

Politics was a good cause for the well-heeled set: One out of four (24%) wealthy donors gave financially to a political candidate, campaign or committee last year or said they plan to do so during the 2016 election season. The most generous of this category were donors over the age of 70 (40%) and LGBT individuals (38%), who were more likely to give to a political candidate or campaign. If you were to compare benefactors by political party: Democrats (36%) were more likely to give than Republicans (22%). By ideology: Liberals (43%) were more likely to vote with their dollars and give donations than conservatives (24%) and moderates (17%).

The main reasons those with deep pockets reported they decided to buoy a candidate or campaign with their dollars was to exercise their voice (56%); help the outcome of elections (49%; this category was owned by men more than women and donors over the age of 50); and because they believe the candidate can make a difference (46%).

Those who held back their donations did so because they reportedly felt their political contributions would have little to no impact when compared to corporate contributions (47%) and contributions from Political Action Committees (PACs) (26%). About a third (31%) believed their contributions wouldn’t make a difference, and more than a quarter (26%) didn’t have a particular candidate they would endorse (26%).

Creating a Positive Impact on Society

When asked what they believe has the greatest potential for positive impact on society, wealthy donors cited charitable giving (45%) and volunteering (31%) above all else. And many believe the giving is more effective if it comes from the masses. Twice as many wealthy donors believe that smaller donations from many donors have a greater likelihood of changing the world than do larger donations from the wealthiest Americans (35% compared to 18%); however, most respondents are unsure which will have a greater impact (47%), according to the study.

When giving to charity, it’s important to be careful with sharing your personal information. One way you can do this is to keep an eye on your credit scores, because any changes can tip you off if someone has stolen your personal information in the process. You can pull copies of your credit reports for free each year at AnnualCreditReport.com and view two of your credit scores, updated every 14 days, for free on Credit.com.

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