Credit Cards with Authorized User Bonuses

Credit cards are a super convenient financial tool, but they can often be confusing.

[Disclosure: Cards from our partners are reviewed below.]

Adding an authorized user to your credit card account comes with a few advantages. You can share your account with a trusted loved one, help them build credit, and even reap rewards as they use your card.

Some credit cards offer additional incentives in the form of authorized user bonuses—and here are our top three picks.

  1. Chase Sapphire Preferred

Rewards: Two points per dollar spent on dining and travel; one point per dollar on all other purchases.
Sign-Up Bonus:
50,000 bonus points if you spend $4,000 in the first three months.
Annual Fee:
$0 the first year, then $95.

Annual Percentage Rate (APR): Variable 16.99% to 23.99% APR on purchases and balance transfers.

Why We Picked It: Cardholders can rack up travel points by adding an authorized user.

For Authorized Users: If you add an authorized user and make a purchase in the first three months, you’ll earn 5,000 bonus points. That’s up to $62.50 in redemptions when you book travel through Chase Ultimate Rewards.
Drawbacks: If you don’t travel often, this card won’t hold as much value.

  1. Chase Freedom Unlimited

Rewards: 1.5% cash back on all purchases.

Sign-Up Bonus: $150 bonus if you spend $500 in the first three months.

Annual Fee: $0
APR:
0% for 15 months on purchases and balance transfers, then variable 15.99% to 24.74% APR.

Why We Picked It: Cash back enthusiasts get an extra boost when they add an authorized user.

For Authorized Users: If you add an authorized user and make a purchase in the first three months, you’ll get a $25 cash back bonus.

Drawbacks: There are higher cash back rates available elsewhere.

  1. Virgin Atlantic World Elite Mastercard

Rewards: Three miles per dollar on Virgin Atlantic purchases; 1.5 miles per dollar on all other purchases.

Sign-Up Bonus: 20,000 bonus miles when you make your first purchase.

Annual Fee: $90

APR: Variable 13.24% to 20.24% APR on purchases and balance transfers.
Why We Picked It:
Virgin Atlantic customers get a solid incentive for adding users to their card.
For Authorized Users: You’ll earn 2,500 miles per authorized user for the first two users you add to your card. Miles can be redeemed for Virgin Atlantic flights, cabin upgrades, and much more through Virgin’s partner network.

Drawbacks: If you have another preferred airline, you should keep looking.

How to Choose a Card with an Authorized User Bonus

In most scenarios, you should consider your own credit card needs over those of potential authorized users. Choose a card that reflects your spending habits and provides rewards—such as cash back or travel redemptions—that are valuable to you.

Furthermore, adding an authorized user to your account should not be taken lightly. As the primary account holder, you are responsible for your credit card’s balance and activity. If an authorized user uses your card irresponsibly, you are liable for the ensuing balance and your credit could suffer. You should add an authorized user only if you consider them trustworthy and financially responsible.

With any card, closely evaluate the related fees and APR to ensure it’s a good fit for you and your authorized user. For example, if your authorized user frequently travels out of the country, you should avoid cards that charge foreign transaction fees.

What Credit Is Required for a Card with an Authorized User Bonus?

Rewards cards with authorized user bonuses usually require excellent credit. As the primary applicant, you—not the potential authorized user—will be evaluated. Before applying, you should check your credit score to verify you meet the card’s credit requirements. You can check your credit report for free at Credit.com.

At publishing time, the Chase Sapphire Preferred and Chase Freedom Unlimited cards are offered through Credit.com product pages, and Credit.com is compensated if our users apply for and ultimately sign up for any of these cards. However, this relationship does not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved, or otherwise endorsed by the issuer(s).

Note: It’s important to remember that interest rates, fees, and terms for credit cards, loans, and other financial products frequently change. As a result, rates, fees, and terms for credit cards, loans, and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees, and terms with credit card issuers, banks, or other financial institutions directly.

 

Image: Peopleimages

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10 Best 5% Cash Back Credit Cards for November 2017

Cash Back Credit Cards for 2016

Updated April 3, 2017

Credit card reward programs come in so many varieties that it can be difficult find the best cards for your spending habits. A basic, flat-rate card that earns you a certain percentage cash back on all purchases is probably the simplest bet out there. Typically, rates range from 1-2%. Not shabby, especially if you use that card exclusively. But it’s not exactly something to call home about either.

There are even better cash back rewards offerings out there, some as high as 5%. But with these high rewards cards, there’s almost always a catch. Most of the cards don’t offer 5% cash back across the board. Every few months, they pick a few select shopping categories that can earn 5% cash back. Once those few months are up, the categories change. For example, a card could offer 5% cash back on groceries, gas and airfare from January to March, then switch those categories to whole sale stores, restaurants and gyms from April to June.

Additionally, there are sometimes caps on how much of your spending can qualify for the 5% reward. So if the cap is $1,500, for example, everything past that amount won’t qualify.

The key to maximizing these great cash back card offers is to find the cards that offer cash back in categories you use the most. We can help there.

We dug around and found 10 cards that offer at least 5% cash back in the three most common spending categories: gas, groceries and entertainment.

Chase Freedom®: Access to a Special Option 5% Category

How it works: The Chase Freedom® card offers 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. This translates to a maximum return of $75 per quarter on the 5% bonus category. You earn an unlimited 1% cash back on all other purchases outside of the bonus categories. You can also earn a $150 Bonus after spending $500 on purchases in your first 3 months from account opening.

The 5% category changes every quarter.

Another area where the Chase Freedom shines is in how it allows customers to redeem their rewards. The cash you’ve earned converts into Ultimate Rewards points. Every $1 equals 100 points. You can easily use the cash and apply it to your monthly statement. Or you can convert them into points and use them on travel, gift cards, merchandise, and other services through the Chase Freedom® rewards dashboard.

They make it super simple to redeem points on the go through the Chase Freedom® Mobile app. While you’re shopping, you can pick the merchant from the list on of eligible merchants on your app (popular ones include Nike, Regal Cinemas, Lowe’s, Starbucks and Best Buy). Then tell the app how much cash you want to use.  You’ll get a custom e-gift card that you can present at checkout to pay for your purchases.

chasefreedommobileapp

Plus, you can stack the points earned on your Chase Freedom card with your points on other Chase rewards cards, like the Chase Sapphire. That just increases the spending power of your points.

The Fine Print: You can’t beat 5% cash back for your spending, especially with no annual fee. The downside is you have to remember to activate the category each quarter by subscribing to the program. But, if you set a reminder to do so, you can earn money without too much effort.

Chase Freedom<sup>®</sup>

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on Chase’s secure website

Discover it® Cashback Match™: [DiscoverCashbackCategoryBonus]The Original 5% Cash Back Card[/DiscoverCashbackCategoryBonus]

How it works: With the Discover it® Cashback Match™ you can [DiscoverCashbackCategoryBonus]earn 5% cash back in rotating categories on up to the quarterly maximum ($1,500 of spend). You need to activate every quarter to get the 5% cash back rate. All other purchases get 1% cash back[/DiscoverCashbackCategoryBonus].

[DiscoverCashbackCategoryBonus]Earn 5% cash back in these categories through the end of 2017:[/DiscoverCashbackCategoryBonus]

  • [DiscoverCashbackCategoryBonus]January to March: Gas stations, ground transportation, and wholesale clubs.
  • April to June: Home improvement stores and wholesale clubs.
  • July to September: Restaurants.
  • October to December: Amazon.com and Target[/DiscoverCashbackCategoryBonus]

Using your rewards: Cash back from the Discover it is tracked in dollars and cents. You can immediately apply your cash back earnings to your bank account or as a statement credit toward your bill (note: your minimum payment will still be due).There’s also no minimum rewards value if you want to redeem them for charitable donations.

The fine print: You can only [DiscoverCashbackCategoryBonus]earn 5% cash back on up to $1,500 of spend each quarter you activate. Once you’ve hit that cap, you’ll earn 1% on the rest of your purchases[/DiscoverCashbackCategoryBonus]. This adds up to a $75 maximum return on your rotating bonus categories. [DiscoverCashbackAnnualFee]There is no annual fee[/DiscoverCashbackAnnualFee].

Extra perks:  On your one-year anniversary, [DiscoverCashbackCompliance]Discover give you a dollar-for-dollar match of all the cash back you’ve earned during your first year[/DiscoverCashbackCompliance]. The match happens automatically, and is only available to new cardmembers during their first year.

Discover it® - Cashback Match<sup>TM</sup>

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on Discover’s secure website

Nusenda Visa Platinum Cash Rewards: Best for Gas and Restaurants in 2017

How it works: The Nusenda Visa Platinum Cash Rewards card gives 5% in revolving categories up to $1,500 and 1% on all other purchases. Notably, it offers both gas and restaurants in two quarters. As a bonus in the first 90 days, new cardholders will earn 2% instead of just 1% on purchases outside of the 5% category.

Earn 5% cash back in these categories through the end of 2017:

  • January to March: Groceries and gas expenses.
  • April to June: Movies, restaurants and home improvement.
  • July to September: Gas and education expenses.
  • October to December: Restaurants, hotels, and airfares.

Using your rewards: This offer stands out as a decent companion card for maximizing cash back. When coupled with the Chase Freedom or Discover it, you can maximize cash back in different areas during one quarter.

For an example, you can turn to the Nusenda Visa Platinum Cash Rewards card for 5% on gas and school expenses in Q3. Then pull out the Discover it for home improvement purchases for another 5% the same quarter.

The Fine Print: Once again, you’ll need to monitor your spending habits to get the most cash back from a revolving category card. If you choose to use this card along with another one, a good practice would be labeling the cards in your wallet to ensure you use the right one for the right purchases in a given quarter.

One final caveat: While there is no annual fee, Nusenda is a credit union, so you will have to go through the process of applying for membership.

Cash Rewards Card from Nusenda CU

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on Nusenda ’s secure website

U.S. Bank Cash+ Visa Signature: Pick Your Own Cash Back Categories

How it works: The U.S Bank Cash+ card has a revolving cash back program that’s unique in comparison to the others above because you get options.

Earning cash back: You can earn 5% cash back in two categories of your choosing each quarter limited to the first $2,000 of spend. Then you can choose another category with no cap to earn 2% cash back. On all other purchases, you earn 1% cash back.

The categories for an unlimited 2% cash back (choose one each quarter) are:

  • Gas stations
  • Restaurants
  • Grocery stores

The categories for 5% cash back up to $2,000 (choose two each quarter) are:

  • Select clothing stores
  • Cell phones
  • Electronic stores
  • Gyms and fitness centers
  • Bookstores
  • Fast food restaurants
  • Charities
  • Sporting goods stores
  • Department stores
  • Furniture stores
  • Movie theaters

Using your rewards: You can redeem cash back for gift cards, statement credit or a deposit into a U.S. Bank Savings, Checking or Money Market account. The first time you redeem $100 in cash back in a single transaction, you get a $25 Cash+ Bonus.

The Fine Print: Same opt-in revolving category spiel applies here except you must also remember to choose your categories. There is no annual fee. The U.S. Bank Cash+ is another good example of a card you may want to couple with another that gives you higher cash back for necessities i.e. groceries. But, for diverse spenders who can benefit from the 5% category options, the U.S. Bank Cash+ is worth considering.

U.S. Bank Cash+™ Visa Signature® Credit Card

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on US Bank’s secure website

SimplyCash Plus Business Card from Amex: Ideal for Typical Business Expenses

How it works: The SimplyCash Plus Business Card gives 5% cash back on office supply and wireless telephone provider services. You also get 3% cash back on the category of your choice from a list of eight, including:

  • Airfare purchased directly from airlines
  • Hotel rooms purchased directly from hotels
  • Car rentals purchased from select car rental companies
  • U.S. gas stations
  • U.S. restaurants
  • U.S. purchases for advertising in select media
  • U.S. purchases for shipping
  • U.S. computer hardware, software, and cloud computing purchases made directly from select providers

Earning cash back: You have to choose your 3% category within two months of signing. If you don’t choose one, the default is gas stations. The combined annual cap for the 5% and 3% categories is $50,000. On all other purchases, you get 1% cash back.

Using your rewards: Cash back will appear as a credit automatically on your statement. This American Express card has no annual fee, so you’ll earn cash back with a generous cap at no cost.

The Fine Print: You must remember to choose your 3% cash back category every year. If you select one this year and forget to do so next year, you’ll be locked into the same 3% category for another 12 months until you make a switch. There is no annual fee.

SimplyCash® Plus Business Credit Card from American Express

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Amazon Prime Rewards Visa Signature Card: 5% Cash Back for the Amazon Prime Enthusiast

How it works: The Amazon Prime Rewards Visa Signature Card is open to Amazon Prime Members, so it’s somewhat exclusive. The perks of this card is 5% cash back on eligible purchases made on Amazon.com. Buying items on other merchant websites that have the Amazon Prime Rewards Visa Signature Card payment option enabled will not earn you 5% cash back.

Using your rewards: The cash back you rack up will apply as a credit to your statement.

Do the math: If you’re not already an Amazon Prime Member, it’s probably not worth signing up to become one just for the card unless you intend to spend big bucks on the site. You need to spend $1,980 per year at Amazon.com for the 5% cash back to cover the $99 annual membership fee.

The Fine Print: The fine print of what you can and can’t buy to earn 5% is the only gotcha here. But, if you shop on Amazon.com often and stick to the rules, you’ll see a nice return from this card. There’s not an annual fee for the card, but you must be an Amazon Prime member, which costs $99 a year.

Amazon Prime Rewards Visa® Signature Card

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REDcard: Only a Good Fit for the Regular Target Shopper

How it works: For Target shoppers, there’s the REDcard. It gives you a 5% discount on your purchases at Target (minus any other discounts or promotions). Purchases that won’t earn 5% cash back include:

  • Target eye exams
  • Target gift cards and prepaid cards
  • Previous purchases
  • Target credit account payments, Target Debit Card cash back and cash advances on the Target MasterCard
  • Gift wrap and shipping and handling on Target.com purchases
  • Wireless protection program purchases and deposits required by mobile carrier

Earning and using rewards: The program is pretty simple as far as how Target gives you money back. Your 5% will apply to eligible purchases in your shopping cart at checkout. In addition to 5% cash back, this program includes free shipping from Target.com and 30 extra days for returns.

The Fine Print: No red flags with the REDcard other than watching out for the purchases excluded from cash back listed above. For faithful Target shoppers, this no annual fee card with the 5% discount may be a no brainer.

REDcard from Target

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Fort Knox Visa Platinum Card: Most Straightforward 5% Rewards Card Just for Gas

How it works: The Visa Platinum Card from the Fort Knox Credit Union makes our list with the most straightforward, no cap rewards program. You can earn an unlimited 5% cash back on gas and 1% cash back on all other purchases.

Using your rewards: Cash back will appear on your statement as a credit.

The Fine Print: This rewards program is offered by a credit union in Kentucky. You’ll have to take a few extra steps to qualify for membership. If you don’t live in Kentucky or have family in Kentucky, membership is open to anyone that joins the American Consumer Council. There is no annual fee for the card, but you will need to become a member of the credit union.

Fort Knox Federal Credit Union Visa® Platinum Card

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on Fort Knox Federal’s secure website

Blue Cash Preferred from Amex: 6% Cash Back for the Heavy Grocery Shopper

How it works: The Blue Cash Preferred® is our top pick for cardholders that want to maximize cash back on groceries. With this card, you get 6% cash back at US supermarkets excluding superstores and warehouses up to $6,000 per year. You also earn 3% cash back at US gas stations and select US department stores and 1% cash back on everything else.

Bonus offer: In addition to the recurring cash back program, if you spend $1,000 within the first three months of signing up for the card you’ll get $200 cash back.

Using cash back: Cash back builds as Rewards Dollars you can redeem for statement credit in increments of $25.

The Fine Print: There is an annual fee of $95 per year.

Blue Cash Preferred® Card from American Express

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USAA Cashback Rewards Plus Amex: Only Advantageous for Military Service Members Living On-Base

How it works: The USAA Cashback Rewards Plus Amex gives 5% cash back on gas and military base purchases including commissaries, exchanges, and shopettes. The cap for the 5% category is $3,000 per year.

Earning cash back: In addition to the 5% back on gas and military base purchases, you’ll also earn 2% cash back on groceries up to $3,000 annually. On everything else, there’s 1% cash back. You can redeem cash back in increments of $1 through the USAA Rewards Service Center online or over the phone.

The Fine Print: The USAA Cashback Rewards Plus Amex card is light on the fine print. Just remember, the 5% category cap is $3,000 for combined gas and military base purchases per year and not per quarter. There is no annual fee.

Cashback Rewards Plus American Express® Card from USAA

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on USAA’s secure website

The Key to Earning from Any Cash Back Card

In closing, regardless of which cash back card you choose, be sure to pay off your bill in full each month. That’s one underlying trap of any card rewards program. If you carry a balance over time, adding interest into the equation means you may end up paying the credit card company more than what you’re making in cash back.

The post 10 Best 5% Cash Back Credit Cards for November 2017 appeared first on MagnifyMoney.

What Happens When You Miss a Credit Card Payment

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Your phone rings — and rings, and rings some more. You know who’s calling. You know what the caller wants, too, but you can’t afford to give the money you owe on your credit cards. So, you let the debt collector leave a voicemail you have no intention of returning.

That’s the wrong way to deal with delinquent credit card debt, says Michaela Harper, debt counselor and director of the Community Education for Credit Advisors Foundation in Omaha, Neb.

“Don’t be afraid to talk to your creditor,” says Harper. “Avoiding them makes the problem worse because it sends it onto the next division” and brings your debt closer to being charged-off, which Harper says consumers with past-due debt should do their best to avoid. (More on that later.)

Credit card debts — or most debts for that matter — become delinquent the moment you miss a first payment. The events that follow the missed payment depend on how long the past-due debt goes unpaid. It begins with friendly reminder calls from the bank to pay your credit card bill, and can culminate in losing up to 25 percent of your annual income to wage garnishment.

The portion of consumers missing credit card payments has been on the rise since the lowest levels of delinquent credit card debt ever recorded were reached two years ago. About 2.47 percent of credit card loans made by commercial banks were delinquent in the second quarter of 2017, according to Aug. 23 figures from the Federal Reserve Economic Database.

Below is a timeline chronicling what happens when you miss a credit card payment, as well as tips from debt management experts on what you can do to mitigate the situation at each point. (You can jump to a specific time period by clicking on the milestones below.)

Zero to 30 days past due: Missed a payment

After you miss your first payment, your debt is delinquent and the clock starts ticking. Your bank should begin to contact you to remind you to make a payment. You are also likely to incur a late fee.

The first 30 days will sound more like courtesy calls, says Randy Williams, president and CEO of A Debt Coach. In reality, the bank is trying to verify your address and personal information to update the system in case your debt becomes more delinquent. (Williams used to work as a bill collector before switching over to debt consulting.)

What you can do

At this point, the bank’s agents may be more willing to provide customer service, so you can ask for an extension or create a payment arrangement to address the past-due debt before the missed payment begins to impact your credit report, which can be as early as 30 days past due. You may also try your luck at asking if the bank could waive any late fees already incurred, although the creditor is not obligated to extend this courtesy.

There’s only so much leeway a bank will give you, says Gordon Oliver, a certified debt management professional at Cambridge Credit Counseling. If you’ve asked for a late payment or interest charge to be waived in the past, you won’t have much leverage.

“There will be different reasons why a creditor may not extend those benefits at the time, but usually those terms are for borrowers who are in better standing,” Oliver adds.

30 to 90 days past due: Collection calls begin

Over the 30- to 60-day delinquency period, the bank will attempt to reach you to collect the past-due amount on your credit card bill.

“This is when they are trying to figure out what’s wrong. They are trying to collect the money,” says Williams.

“At this point it’s starting to affect your credit,” says Williams. He says the robo-collection calls may come as often as every 15 minutes. Borrowers with higher credit scores are likely to see a bigger drop than borrowers with lower scores. According to FICO data, for example, a 30-day late payment could bring a 680 credit score down 10 to 30 points and a 780 score down 25 to 45 points.

In addition to seeing your credit score drop, you will be charged late fees on the past-due account. After you have owed debt for two payment cycles, the CARD Act allows creditors to flag you in their system as a “high-risk” borrower, which means the interest you currently pay will rise to whatever the bank charges for customers at a high-risk status. That number varies from bank to bank but in some cases can get as high as 29.99 percent. The rate will stay that high at least until you have made six consecutive on-time payments, at which point the bank is required by law to reset the rate.

However, “the law doesn’t say they have to do it on their own,” says Harper. So, you will likely need to request a reset. You can find the APR charged to high-risk borrowers in your credit card terms.

What you can do

Harper says if you respond at this point, the bank may ask you to negotiate a payment arrangement.

“Never make a promise to pay that you can’t keep just to get someone off the phone,” says Harper. “If you are silent, you agree to the payment.”

Missing promised payments also gives the bank more leverage if the bill eventually goes to court, says Harper. “If they walk into court and they can point to all of the promised payments, it undermines your credibility.”

Harper advises debtors to be very clear if they cannot meet the bank’s proposed payment arrangements. You need to specifically tell them you cannot make the payments. If possible, take a look at your budget. If you find you are able to send them a small amount every month, tell them.

“That’s a valuable thing because it goes back to when the account charges off. You can slow down your progression toward charge-off by making the partial payments,” says Harper.

A charge-off happens when a creditor believes there is no chance of collecting your past-due debt, so the debt’s considered a loss. The debt gets written off the creditor’s financial statements as a bad debt and sold or transferred to a third-party collection agency or a debt buyer.

“If they feel like it’s a tough situation [you] are going through they will refer [you] to a credit counselor” around the 60- to 90-day mark, says Williams. Again, that benefit may not be extended to all consumers facing financial hardship.

90 to 120 days past due: Bank requests balance in full

After your bill is 90 days overdue, the bank will turn collection over to its internal recovery department to engage in more aggressive collection attempts. Williams says the bank will now be calling for the balance in full, not only the past-due amount.

The bank’s collectors will continue to call, but they may also send you multiple letters every day, or may attempt to reach you via social media, emails or emergency contacts.

Harper says the account may stay with the bank’s internal collections for another 90 days (180 days past due), but it’s important to note that at the 120-day past-due mark, your debt is at risk of getting charged off and being sold to a third-party collection agency.

That’s because the CARD Act states the past-due amount needs to be the equivalent of six months’ worth of your credit card’s minimum payment in order for the debt to be charged off. Including late fees and the amount added in higher interest payments, consumers may reach that figure in as little as four calendar months.

What you can do

If you can’t give them the entire past-due amount or balance in full, take a serious look at your budget. See if there is any room to make even a small payment. If you can find a few dollars, you may be able to enter a repayment plan with the bank, which will at least pause the collection calls. Don’t forget to leverage the collector’s insider knowledge. Explain your situation and ask if you can negotiate a solution with the bank.

“You want to pay off the debt, they want to pay off the debt. They may have solutions they can offer you that you don’t know about,” says Harper.

Once you’ve got an active repayment plan in place, the bank will pull you out of the collection list, Harper says.

120 to 150 days past due: Hardcore collection attempts

Watch your credit report carefully after your account becomes 120 days past due, as it may be charged off at any point. At this point, the collectors will continue to try every channel available to them to get in touch with you and collect on the debt. The attempts may get closer together and collectors may try more aggressive tactics to scare you into paying up.

“One hundred and twenty to 150 days, it is hardcore. Now they are going to offer you a settlement. They will do whatever they want to try and get to you to pay the debt off. It’s basically motivation to get you to pay now,” says Williams.

Debt collectors at this point may also take time to remind you of your rights under the CARD Act and Fair Debt Collection Practices Act as well as their right to collect on the past-due debt.

The bank’s collectors may not directly say they will proceed with legal action or wage garnishment if they do not intend to, as that is illegal under the FDCPA, but they may remind you of those possibilities if you do not pay and emphasize the bank’s right to collect on the debt owed to them, Williams says.

Williams adds, “They never say they are going to sue you; they say, ‘We have the right to protect our asset.’”

What you can do

Williams says at this point the debtor essentially has three options. Bring the account current by paying the entire past-due amount, arrange a debt settlement plan with the bank or try going to a credit counselor to create a debt consolidation plan.

“Near 120 days past due, they need to get some form of help to remedy the account before it goes to a charge off,” says Oliver, who adds that the timing the charge off will be difficult to predict.

For those who may be behind on several bills, Oliver also recommends getting some form of financial counseling to create a plan that addresses all your financial issues.

150 to 180 days past due: Last chance

At 150 days, collections efforts will remain aggressive and may even increase in frequency as the bank is now concerned about losing the debt to a charge-off.

Once your credit card payment is 150 days past due, you may start to hear the bank’s agents’ tactics shift as they may make a last-ditch effort to recover the debt, according to Williams.

What you can do

You will still have the options to pay the balance in full or reach a settlement with the bank, but you may have an additional option: Re-age your debt.

When your account is past due and you enter a re-age program, the late payments and collection activity are removed from your account. As a result, “your credit score may improve by 10 to 15 points if not growing every month from there,” according to Williams.

You will generally be asked to make at least three on-time payments on the debt before your account is re-aged. For example, the bank could ask you to pay $100 each month for three months before bringing your account back up to a current standing, but the bank will add the interest and fees you’ve already incurred to the total amount you owe. After the account is re-aged, you’ll go back to making minimum payments on the total amount of debt outstanding. Re-aging the account may also remove the “high-risk” stain from the account so your interest rate drops to to whatever it was before.

Williams says a re-age can be seen as a win-win for both parties: You are able to catch up on your delinquent debt and — in some cases — have its impact removed from your credit report, and the bank is able to recover the interest and fees that have accumulated since your account became delinquent.

Of course, the credit card company doesn’t have to allow you to re-age the debt and may not offer the option to you, but there is a possibility it will do so if you ask. Keep in mind you are only allowed to re-age an account once in 12 months and twice within five years, per federal policy, and re-aging is only an option on accounts that have been open for nine months or longer. Credit card issuers are allowed to set more strict re-aging rules for its accounts, as well.

After 180 days: Charged off to a third party

When you are about six months past due, it is extremely likely the bank will charge off your account and sell the debt to a third-party collection agency. If the bank does not charge off your account, it may take the matter to court.

If it goes to collection, third-party debt collectors may employ some of the same tactics the bank’s collectors did. Most collection agencies will push hard for the first 90 days, then at the end of that point in time they may decide to sue you, Harper says. Or they may sell your debt to another collections agency.

The third-party collectors will attempt to contact you using every channel available to them for the next 90 days or so, before they must decide to either charge off the debt or sue you. The collectors will likely demand you pay the full balance or ask you pay the balance in thirds, says Harper. If they can’t get a hold of you or get you to arrange a payment plan in that time, they may decide to turn it over to an attorney.

What you can do

You should try the same tactics that you would have used with the bank’s internal collections agency with the third-party agency, negotiating the price down and reaching a settlement with the third-party collector. If you don’t respond to the collection requests, you may be sued.

You may not be sued for some time. Companies can only sue you for unpaid debts within a certain period of time, called a statute of limitations — anywhere within three to 10 years, according to your state’s law. Your debt may be sold and resold several times before that happens. Check with the office of consumer protection at your state’s attorney general to find out what the rules are in your state.

If you are served with a lawsuit, you should check the letterhead to make sure the attorney or company filing the suit on behalf of the collections agency is licensed to practice law in your jurisdiction, says Harper, as you cannot legally be sued for credit card debt by an attorney outside your jurisdiction.

You should also be sure to respond to the lawsuit. If you don’t, you’ll likely lose. The court can automatically side with the lender if you don’t show up in court, also known as a default judgment. That may result in getting your wages or federal benefits garnished to pay the debt, not to mention the credit damage a judgment causes. Federal law states a creditor can garnish no more than 25 percent of your disposable income, or the amount that your income exceeds 30 times the federal minimum wage, whichever is less.

If you can’t afford to settle

If, given your current financial situation, the debt is unmanageable for you and you are not able to settle the account, you may want to consider bankruptcy. But you will have to file before a judgment is entered against you in court, which may be tricky to time, Harper says.

Given the difficulty in timing when the creditor will take your account to suit, you shouldn’t wait if you think bankruptcy is an option for you. Read here for more information on how and when to file for bankruptcy.

The post What Happens When You Miss a Credit Card Payment appeared first on MagnifyMoney.

Best Cash Back Credit Cards for Gas – November 2017

Gas in car_lg

Whether you’re hit by high gas prices in your area or you’re a heavy commuter, finding a credit card that offers a high rewards rate on gas purchases will definitely come in handy. There are cards that can earn you up to 5% cash back on eligible gas purchases, which can take the sting out of a stop to top off the tank.

Here are our top picks for gas credit cards.

Fort Knox Credit Union Visa® Platinum

The Fort Knox Credit Union Visa® Platinum card offers unlimited 5% cash back on gas purchases. This is a great rate that can earn you significant rewards. There is also no annual fee. Since Fort Knox is a credit union, you will have to join in order to obtain this card. Anyone can join for $15, of which $5 represents one share in the credit union; the remaining $10 covers your one-time membership fee. This card is great for big spenders in gas who don’t mind working with a credit union.

Fort Knox Federal Credit Union Visa® Platinum Card

APPLY NOW Secured

on Fort Knox Federal’s secure website

Costco Anywhere Visa® Card by Citi

The Costco Anywhere Visa® Card by Citi offers 4% cash back on eligible gas worldwide, (including Costco) for the first $7,000 per year, and 1% thereafter. Most gas credit cards limit you to only U.S. gas purchases and often exclude wholesale gas purchases, but not this card. In addition, you’ll earn 3% cash back on restaurant and eligible travel purchases worldwide, 2% on all other purchases at Costco and at costco.com, and 1% on everything else. There is no annual fee for this card, but you need to have a Costco membership (currently $60). The main catch with this card is it’s not simple to redeem rewards — cash back will be provided as an annual certificate in February billing statements, redeemable for cash or merchandise at US Costco Warehouses.

Costco Anywhere Visa® Card by Citi

APPLY NOW Secured

on Citibank’s secure website

Wells Fargo Propel American Express® Card

The Wells Fargo Propel American Express® Card earns 3X points at U.S. gas stations. There is no limit to the amount of rewards you can earn at this rate. In addition, earn 2X points at U.S. restaurants and 1X points on all other purchases. Points can be redeemed for cash by applying them to your qualifying Wells Fargo account or requesting a paper check. Keep in mind: Points expire after five years. You’ll also earn 20,000 bonus points after spending $1,000 in the first three months. Wells Fargo offers an annual relationship bonus of 10% on nonbonus rewards points if you maintain a qualifying consumer Wells Fargo checking or savings account, or Portfolio by Wells Fargo® product suite account.

Wells Fargo Propel American Express® Card

APPLY NOW Secured

on Wells Fargo’s secure website

Bank of America® Cash Rewards Credit Card

The Bank of America® Cash Rewards card offers a good cashback rate for gas purchases. You’ll earn 3% on gas purchases and 2% at grocery stores and wholesale clubs for the first $2,500 in combined grocery/wholesale club/gas purchases purchases each quarter. All other spending will earn 1%. There is no annual fee and if you redeem your cash back into a Bank of America checking or saving account you can receive a 10% bonus. Cardholders who will have the most benefit are Bank of America Preferred Rewards clients. As a Preferred Rewards client, you can increase your bonus to 25-75%, making your gas cash back an effective 3.75%-5.25%. There’s a sign-up bonus that can kickstart your rewards: If you apply online and spend $500 in the first 90 days of your account opening, you also receive a $150 cash rewards bonus.

Bank of America® Cash Rewards Credit Card

APPLY NOW Secured

on Bank Of America’s secure website

 

Which card is the right fit for me?

Since there are many credit cards for you to maximize your rewards from gas purchases, it can be confusing to choose a card. There are cards that offer high rates without caps. Others come with additional bonus categories to consider.

The table below breaks down which gas card may be a good fit for you when factoring annual gas spending, cashback rate and annual fee. (Sign-on bonuses are not reflected.) Keep in mind: This only factors in spending on gas purchases and doesn’t consider if you spend in other categories or at the other cashback rates.

Here are several key takeaways:

  • The Bank of America® Cash Rewards Credit Card will earn you the most cash back ONLY if you’re a Preferred Rewards member with at least $100,000 in a BofA checking/savings account. Otherwise, the Fort Knox Credit Union Visa® Platinum will earn you the most cash back.
  • Although the Costco Anywhere Visa® Card by Citi doesn’t earn you the most cash back, it may be a better fit for Costco shoppers due to the other high-cashback categories
  • The Wells Fargo Propel American Express® Card earns you subpar cash back compared with the others we reviewed.
  • You won’t earn the best cashback rate with the Bank of America® Cash Rewards Credit Card unless you’re a Bank of America Preferred Rewards client with $100,000 in a checking or savings account — allowing you to benefit from a 75% redemption bonus
  

Card

Fort Knox Credit Union Visa® Platinum

Costco Anywhere Visa® Card by Citi

Wells Fargo Propel American Express® Card

Bank of America® Cash Rewards Credit Card: without a BofA checking/savings

Bank of America® Cash Rewards Credit Card: with $100,000 in a BofA checking/savings

Spending

$1,000

$50

$40

$30

$30

$53

$2,000

$100

$80

$60

$60

$105

$3,000

$150

$120

$90

$90

$158

$4,000

$200

$160

$120

$120

$210

$5,000

$250

$200

$150

$150

$263

$6,000

$300

$240

$180

$180

$315

$7,000

$350

$280

$210

$210

$368

$8,000

$400

$290

$240

$240

$420

$9,000

$450

$300

$270

$270

$473

$10,000

$500

$310

$300

$300

$525

The post Best Cash Back Credit Cards for Gas – November 2017 appeared first on MagnifyMoney.

Fingerhut FreshStart: Could This Program Jump-Start Your Credit?

Photo of a young couple going through financial problems

Are you trying to rebuild your credit? Fingerhut, an online mail-order retailer, says it wants to help you with its FreshStart program. It’s a new twist on the catalog card or magazine offers of yesteryear.

The program, which involves a special credit card used to shop from Fingerhut’s online product catalog, is designed for customers who don’t have the best credit. If that’s you, FreshStart could give you a second shot at proving your creditworthiness and qualifying for a regular credit card.

But does FreshStart deliver on its claims? First, here’s an overview of the program:

  • Good credit isn’t required. Do you have poor credit? With lenient application requirements, FreshStart could be a way to regain some credit traction.
  • You pay low payments and no annual fee. Unlike many credit cards, FreshStart has no annual fee and the payments tend to be low.
  • You may pay a high interest rate and other costs. If you don’t make your payments on time or don’t pay off the balance in full, you could be subject to FreshStart’s 25.90% annual percentage rate and other costs.
  • Your shopping power is limited. FreshStart lets you shop from Fingerhut’s catalog of products only; you can’t use it anywhere else. And you may be approved for only a small credit limit.
  • It’s not a traditional credit account. Although FreshStart lets you “graduate” to a traditional credit account after you pay off your balance, you don’t build credit with the major reporting agencies while you’re in the program.

How the FreshStart Program Works

How does FreshStart work, exactly? Fingerhut splits the program into three steps: order, pay off, and graduate. Once you’re approved for FreshStart, you place an order from the Fingerhut catalog for an item that costs at least $50 and at most your approved credit limit. You also have to make a $30 down payment. Once Fingerhut processes the order, your item is shipped.

For the next few months (the exact time depends on your program approval), you make payments toward the total balance on your account. Miss any payments and you risk paying late fees (up to $38 per incident) and interest—and you may not be eligible for a regular credit account.

If you adhere to FreshStart rules and pay off your balance, you’ll graduate to a traditional credit card account with WebBank/Fingerhut Advantage. This account lets you shop more often, build credit with the major monitoring agencies, and potentially qualify for credit line increases and other perks.

FreshStart resembles a more legitimate version of “catalog card” programs that are marketed as credit cards for rebuilding credit but can only be used to shop from the issuer’s catalogs. With those offers, the merchandise is often severely overpriced, and customers usually don’t benefit from these programs much because their credit scores scarcely change.

Fingerhut, on the other hand, has a popular catalog dating back to 1952. The catalog currently comprises over 700,000 items, including big brands like Sony, Dell, and KitchenAid. With its focus on issuing small credit limits to buy products, Fingerhut’s FreshStart program is often great for customers who have been turned down for the company’s Fingerhut Advantage credit card. From the company’s standpoint, it’s a brilliant move—shoppers with poor credit aren’t immediately turned away and Fingerhut gains a paying customer.

The Downsides of the FreshStart Program

Now for the costs. We’re concerned that some customers may focus on only the small down payment and monthly payments and lose track of how much they’ve spent in the long run. If you don’t pay off the balance within the set limits, you could pay high interest amounts. You’ll also pay up to $38 for late or returned payments.

Instead of saving money by purchasing an on-sale item, you could end up paying more than the item’s value by the time you pay off the balance. And with a 25.90% APR—which, honestly, is not unusual for a retail card or credit card if your credit is on the lower side—the potential costs could be higher than cards with the average rate of about 13% to 14%.

What’s more, you may not be able to get out of paying at least some interest on purchases. While Fingerhut says you can pay off your balance faster, the terms and conditions include this warning:

However, if you elect to pay your entire balance due at the same time as your down payment, then this will cancel your Loan and you may not be eligible to be considered for a WebBank/Fingerhut Advantage Credit Account. You may not be eligible to be considered for a WebBank/Fingerhut Advantage Credit Account if you die, file for bankruptcy, enter a consumer credit counseling service program, make any past due payments, or have any payments returned unpaid, or if you enter any other negative credit status.

Also, if you don’t read the offer carefully, you might miss the fact that you don’t build credit with any institution other than Fingerhut when using the FreshStart program. You must pay off purchases on time under this program before (possibly) graduating to a regular credit card. FreshStart isn’t designed as a way to build your credit with the major credit reporting agencies but as a way to build credibility with Fingerhut.

FreshStart Program Reviews

What do customers think about the Fingerhut FreshStart program? Unfortunately, when we searched for customer reviews, Fingerhut didn’t return stellar ratings. The FreshStart program has plenty of detractors online. We found several reviews that matched the tone of this one:

I opened a fresh start account. My credit increased due to opening a new account. Great! After paying off my items with every payment being 10 days early they closed and reopened a new fresh start account. Closing accounts decreased my credit by more points than the opening of a new account in the first place.

And this one:

Husband and I both have accounts, I pay at same time with one check and both payment stubs enclosed in envelope. They call me every time I use one check to make payment and say I didn’t make my payment, then charge late charge. Clearly it is marked on the check and both payment stubs are included. I do not always have the extra check that month to send, but regardless it is paid every month, I can’t wait till all accounts are paid and I will be DONE with this company!

Fingerhut also got into some trouble for its habit of using robocalls to solicit customers. A 2014 class action lawsuit against the company claimed that Fingerhut “negligently places multiple calls to consumers’ cell phones using autodialed robocalls, without prior express consent.”

So what’s our final take? If you love the idea of shopping from Fingerhut’s catalog and you can’t qualify for a traditional credit card, you may want to try the Fingerhut FreshStart program as a way to start building credit. It’s a good idea to limit yourself to a small purchase—perhaps something you’d buy anyway—and pay off the balance exactly on the program’s terms. Then Fingerhut may offer you its Advantage credit card that will help you build your credit with the major reporting companies.

If you’re really serious about getting a credit card to rebuild your credit, we recommend you get a secured credit card and pay the balance in full each month. To track your progress over time, you can get your free credit report summary every month on Credit.com.

Image: istock

The post Fingerhut FreshStart: Could This Program Jump-Start Your Credit? appeared first on Credit.com.

How New Discover it Card Customers Can Supercharge Their Cash Back This Quarter

Credit cards are a super convenient financial tool, but they can often be confusing.

[Disclosure: Cards from our partners are reviewed below.]

If you have the Discover it – 18 Month Balance Transfer Card in your wallet, you already know you can earn great cash back rates with a rotating carousel of merchants all year round. But this quarter, Discover is offering new cardholders the opportunity to close out the year with a cash back bang.

Discover’s fourth-quarter bonus category, combined with its cash back matching offer, significantly boosts the card’s value for anyone who’s held the card for under a year. First-year customers can save on goods, earn rewards, and even double their cash back value as they shop.

Here’s how new cardholders can take advantage of the Q4 bonus category and cash back match to supercharge the Discover it Card’s value.

The Q4 Cash Back Bonus Category

Discover offers 5% cash back in bonus spending categories that rotate every quarter. For instance, 2017’s first quarter offered 5% cash back at gas stations, for ground transportation, and at wholesale clubs. Even if you aren’t excited about a quarter’s bonus category, you can ride it out for three months and earn 1% cash back on all other purchases in the meantime.

Cash back can be redeemed for bank account deposits, statement credits, gift cards, charitable donations, and more.

For 2017’s last quarter (October through December), cardholders will earn 5% cash back on all eligible Amazon.com and Target purchases. This bonus category is especially valuable for a few reasons:

  • Holiday shoppers can earn 5% cash back when gift shopping at Amazon.com and Target.
  • com and Target carry an enormous variety of goods, so qualifying purchases abound.
  • Eligible Amazon.com purchases include its inventory of physical products, downloads, Amazon gift cards, Amazon Prime subscriptions, and goods sold by third-party merchants on Amazon.com.
  • Online Target purchases qualify, so you don’t even need a nearby Target to benefit.

This bonus category is solid on its own, but new cardholders can see even greater value with Discover’s first-year cash back match.

The First-Year Cash Back Match

Discover currently matches all cash back earned in the first year of the card, with no cap on the potential earnings. After your account is open 12 consecutive billing periods, Discover will match the cash back you’ve earned up to that point and apply the bonus to your account in a month or two.

This essentially doubles the cash back you earn, giving new customers a potential 10% cash back in bonus categories (with limitations) and 2% cash back on all other purchases for a full year.

The Limitations

There are a few limitations. The 5% cash back category applies only to the first $1,500 in purchases per quarter—any bonus category purchases beyond the cap will earn 1% cash back. You must also remember to activate your bonus category each quarter, and any purchases made before activation won’t earn the 5% cash back rate.

The cash back matching offer is available only to new Discover customers.

Taking Advantage of the Q4 Bonus Category

If you’re a first-year cardholder, you should take advantage of this bonus category while it lasts.

Make sure to activate your bonus category immediately if you haven’t already (bonus categories can be activated online). To get your 5% cash back, try to prioritize purchases at Amazon.com and Target—any time you need to make a purchase, it can pay off to check with those merchants first.

Remember, 5% to 10% cash back won’t make up for large price discrepancies. If a competitor offers an identical good much cheaper, it may be better to go for the savings. Your 5% cash back is good for only $1,500 in purchases each quarter, so feel free to shop around once you hit that limit.

Before you apply for any credit card, you should check your credit score and submit an application only if you feel reasonably confident that you will be approved—a hard credit inquiry can negatively affect your credit score. Review your credit report for free at Credit.com.

Image: Peopleimages

At publishing time, the Discover it card is offered through Credit.com product pages, and Credit.com is compensated if our users apply for and ultimately sign up for this card. However, this relationship does not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved, or otherwise endorsed by the issuer(s).

Note: It’s important to remember that interest rates, fees, and terms for credit cards, loans, and other financial products frequently change. As a result, rates, fees, and terms for credit cards, loans, and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees, and terms with credit card issuers, banks, or other financial institutions directly.

The post How New Discover it Card Customers Can Supercharge Their Cash Back This Quarter appeared first on Credit.com.

Can You Pay a Credit Card With a Credit Card?

Female buying something on internet with computer and credit card. Garden blur background

[Update: Some offers mentioned below have expired. For current terms and conditions, please see card agreements. Disclosure: Cards from our partners are mentioned below.]

Store credit cards from retailers like Lowe’s, Best Buy, and Target can be enticing to sign up for. Once you are approved, the cashier is often empowered to offer you an immediate discount on the merchandise you’re buying.

There are additional bonuses as you continue to use the card, like special introductory offers 0% APR for a limited time, advance intel on in-store deals, extra discounts, and—with certain cards like the Costco Anywhere Visa Card by Citi and the Amazon Prime Rewards Visa Signature Card—the ability to use the card anywhere and earn cash back almost everywhere you shop.

While there are a lot of upsides, the downside of using store credit cards is the high annual percentage rate (APR), which can be as high as 26.99% in the case of the Lowe’s credit card and 26.24% for the Best Buy credit card. If you get a card that has a substantial APR, you could end up owing a lot of interest on top of your existing debt.

Ideally, these cards should be paid in full every month. But what if you can’t make that happen, or you get carried away and are now sitting on a pile of debt? What can you do to pay down the balance of your high-APR card and avoid accruing interest? You may be tempted to pay off your debt with another credit card, but there are a few things you need to know first.

Can I Pay My Credit Card with Another Credit Card?

Unfortunately, none of the major card issuers we queried (including those offering store credit cards) will let you pay your bill directly by credit card.

As a consumer, you may think that it would make sense to pay off one credit card bill with another credit card, thereby maximizing the benefits of one while paying the other. But it’s actually not that surprising that credit card companies won’t allow you to do so. If your card issuer accepted another credit card for payment, it would have to pay the merchant fee—which could be 2% to 2.5% or more of the payment amount. That means, essentially, it wouldn’t get the full payment from you.

In addition, card associations may impose other restrictions on this practice. Andrew Gerlt, director of Global Brand & Product Communications for Visa, noted in an email that “Visa rules do not allow the payment of credit card debt with a credit card. We do allow for debt repayment with a debit card, however.”

6 Other Ways to Pay Your Credit Card Bill   

If you really need to “charge” your next payment, there are workarounds. Here are six other ways to pay your credit card bill without charging it to another credit card.

1. Pay Your Credit Card Using a Personal Loan

A personal loan is a good option for managing your high-interest credit card debt and for consolidating debt as well. Personal finance expert Andrea Woroch, who is working with Marcus by Goldman Sachs, says, “Instead of paying separate credit card bills, people should consider a loan that offers lower interest rates. One loan can make payments easier to manage as well.”

For more information on personal loans, visit our Personal Loan Learning Center.

2. Pay Your Credit Card with a Cash Advance

As long as you have enough available credit, you should be able to use a credit card to get a cash advance and then use that money to pay another credit card bill. You can obtain a cash advance at most banks or credit unions, or at an ATM if you have a PIN for your card.

But do your homework before you take this option. The interest rate on cash advances is often higher than the rate for purchases. David Reiling, CEO of Sunrise Banks, says, “Advances generally start accruing interest immediately, and, depending on your credit card terms and conditions, could be at a rate higher than you think. Call your credit card company and ask before advancing cash, or, if willing and able, read your terms and conditions.”

Before you decide to use a credit card cash advance, review what that entails.

3. Transfer Your Balance

If one of your card issuers offers a balance transfer, you can use that to pay down or pay off your other card. If you have already received convenience checks in the mail, you can use one of those to make a payment on another card (though you can’t use a convenience check to make a payment on the same account). Or you can deposit that check into your checking account and use those funds to make a payment. If you haven’t received one of these offers in the mail, check with your card issuer online or by phone to see if you are eligible.

If your credit scores are strong, you may be eligible for a low-rate balance transfer card. Just keep in mind that these offers almost always charge fees ranging from 2% to 4% of the amount transferred. It’s hard to find a credit card that offers a 0% APR balance transfer with no fee, but they do exist.

For more information, review our expert guide on credit cards with balance transfers.

4. Pay Your Credit Card with a Home Equity Loan

If you own a home, you may be able to use equity to help pay your credit card bills. Bobbi Rebell, financial expert and author of How to Be a Financial Grownup, says, “If you have credit card debt, you can often shift that debt to a home equity line of credit and get a double benefit. First, you will get a much lower interest rate. Credit cards often charge upwards of 20%! A home equity line of credit could be a quarter of that or less. The other big bonus is that in many cases, home equity debt can be deductible on your tax return.”

To learn more about home loans, review our guide to finding the right loan.

5. Sell Your Stuff to Pay Your Credit Card

Rebell also suggests selling off things that you don’t need. “Raise money to pay the debt,” she says. “Go through and actually sell stuff you don’t use—or can do without. Do you need the second car? Do you need the gym equipment sitting in the garage? What about that baby stroller? You’d be surprised how much value you can discover in your home.”

For more tips and tricks on getting your personal finances in order, visit our Personal Finance Learning Center and review other ways to make more money.

6. Use the RPTPP Method to Pay Your Credit Card

If cash flow is the main reason you want to use a credit card to pay another credit card, try the “Robbing Peter to Pay Paul” method. Use your credit card for everyday spending in order to free up as much cash as you can to pay your credit card bill. It’s not ideal, or even recommended, but it can be an option in a cash crunch.

If you’re finding it necessary to use the RPTPP method, it’s probably time to review your finances and budgets.

Proceed with Caution

None of these approaches will help you earn reward points, so that option is likely off the table. And if your cash flow problems are anything but truly temporary, these methods may simply help you dig a deeper hole.

In addition, moving your debt around may not help your credit scores in the long run. Debt is one of the main factors most scoring models consider when calculating credit scores. If your debt is bringing down your scores (you can find out if that’s the case by getting your credit report for free at Credit.com), then paying it down is one of the best ways to build stronger credit.

Image: Ingram Publishing

Note: It’s important to remember that interest rates, fees, and terms for credit cards, loans, and other financial products frequently change. As a result, rates, fees, and terms for credit cards, loans, and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees, and terms with credit card issuers, banks, or other financial institutions directly.

The post Can You Pay a Credit Card With a Credit Card? appeared first on Credit.com.

I Got My First Credit Card One Year Ago – Here’s How I Already Have a Good FICO Score

iStock

When I moved to the U.S. from my hometown, Hangzhou, an eastern Chinese city, in 2012 to pursue my undergraduate degree, the thought of establishing a credit history wasn’t even on my radar. I was, after all, an international student from China, where day-to-day credit card use has only recently caught on.  

It wasn’t until I returned to the U.S. a few years later to pursue my master’s in Chicago that I realized I’d need to establish credit if I planned to launch my career in the States.  

It’s been only a year since I opened my first card last September, and I already have a solid FICO score – 720, the last time I checked.  That’s not a perfect score by any means, but it lands me safely in the “good” credit range, meaning I probably won’t have trouble getting approved for new credit in the future. I still have work to do if I want to get into the “very good” credit category, which starts at 740, according to MyFICO, but for a credit card newbie I’m not disappointed in my progress so far. 

Here’s how I did it:  

I selected the right card for my needs
 

I wish I could say I diligently researched credit cards to choose the best offer and best terms, but honestly, I just got lucky: 

Shortly before graduate school started, I visited friends in Iowa. When we were about to split the bill after dinner at a Japanese restaurant, I noticed that all my friends had a Discover card with a shimmering pink or blue cover. The Discover it for Students card was known for its high approval rate for student applicants, and had been popular among international students. 

I thought, “Oh, maybe I should get this one, too.”  

One of the friends sent me a referral link that very night. I applied and got approved quickly. We both received a $50 cash-back bonus after I made my first purchase — an iPhone — using the card through Discover’s special rewards program. I even received 5 percent cash back from the purchase.  

Besides imposing no annual fee, the card has other perks, like rewarding me with a $20 cash-back bonus when I reported a good GPA, letting me earn 5 percent cash back on purchases in rotating categories, and matching the cash-back bonus I earned over the first 12 months with my account. For me, it was a great starter card, but there are plenty of other options out there.

Check out our guide on the best credit cards for students. 

I also could have explored other options of establishing credit, like opening a secured card, for example, which would have been a smart option if I hadn’t been able to qualify for the Discover it student card.

I never missed a payment

Despite my very limited financial literacy at the time, I attribute my current stellar credit score to the old, deeply ingrained Chinese mentality about saving and not owing. 

I never missed payments, and I always paid off my balance in full each month, instead of just making the $35 minimum payment. I didn’t want to pay a penny of interest. 

Credit cards carry high interest rates across the board, but student credit cards generally have some of the highest APRs. This is because lenders see students like me — consumers without much credit history — to be risky borrowers, and they charge a higher interest rate to offset that  risk. 

Best Student Credit Cards October 2017 

It wasn’t until much later when I learned that payment history is critical to credit establishment. In fact, it is the biggest factor there is. It accounts for as much as 35 percent of my FICO score. Naturally, I felt like I dodged a bullet! 

A Guide to Getting Your Free Credit Score 

I was careful not to use too much of my available credit

My friends with more experience advised me to use as little of my available credit as possible. They warned me that overuse had hurt their credit scores in the past. This didn’t much sense to me, but I followed their advice, for the most part diligently.. 

I later learned this is almost as important as paying bills on time each month. Your utilization rate is another 30 percent of the FICO score. Credit experts urge cardholders to keep their credit utilization ratio below 30 percent.  

That means if you have three credit cards with a total available limit of $10,000, you should try never to carry a total balance exceeding about $3,000. 

A Guide to Build and Maintain Healthy Credit 

I beefed up my score with on-time rent payment 

Keeping in mind the importance of not maxing out my credit card, I never considered paying my rent with the card. In fact, some landlords charge credit card fees for tenants who try to pay with plastic.  

But I did find a way to establish credit by paying rent using my checking account. 

I paid rent to my Chicago landlord through RentPayment, an online service. RentPayment gave me the option of having my payments reported to TransUnion, one of the three major credit-reporting agencies. Because I knew I’d always pay bills on time, I signed up for the program.  

This likely helped me improve my credit mix, another key factor influencing one’s credit score. The more types of accounts you show on your report, the better your score can be — providing you make all your payments on time.  

Yes, I made mistakes. This was my biggest one.

My first foray into the world of credit wasn’t completely blip-free.  

The only thing that hurt my credit, besides my short credit history, was that I had tried signing up for a Chase credit card and other ways to finance my iPhone just a few days before I applied for my Discover card.  

None of the other banks approved my applications, and my score went down from the very beginning due to the number of “hard inquiries” against my report. Hard inquiries occur when lenders check your credit report before they make lending decisions, and having too many inquiries in a short period of time can result in several dings to your credit score. 

I’ve learned my lesson, though. And I haven’t applied for a new credit card since. Today, as I said, my FICO score is a healthy 720, and I am on the lookout for a second credit card now that I’ve graduated and gotten a job. 

The post I Got My First Credit Card One Year Ago – Here’s How I Already Have a Good FICO Score appeared first on MagnifyMoney.

Capital One Balance Transfer Offer

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Balance transfer offers on credit cards can be an excellent way to reduce the cost of expensive credit card debt, helping you can get out of debt faster. Capital One only offers one card with a balance transfer intro period. Balance transfers are usually offered only to people with excellent credit, however you may qualify if you have good credit. It’s always a good idea to check if you’re prequalified before submitting an application.

In this article, we will:

  • Review the balance transfer offer from Capital One
  • Provide details on who can be approved for the offer
  • Decode the fine print, so that you know how to avoid tricks and traps that could cost you

Note: If you are looking to get out of debt, you should consider downloading our free Debt Free Guide. It will show you how to slash your interest rates, boost your credit score, negotiate hard with creditors and become debt-free fast and forever. Balance transfers can be a great tool in your debt-free strategy, but everyone should have a strategy. And this guide can help you build one.

Offer Review

Capital One® Quicksilver® Cash Rewards Credit Card

Quicksilver from Capital One

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on Capital One’s secure website

The Capital One® Quicksilver® Cash Rewards Credit Card is best known for having no annual fee, and providing unlimited 1.5% cash back on all of your spend. Unlike many cash back credit cards, there are no rotating categories, no caps, and no minimums for getting your cash back. They really raised the bar on cash back credit cards, until Citibank created the Citi® Double Cash Card which does the same thing, except you earn unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.

Capital One® Quicksilver® Cash Rewards Credit Card offers 0% for 9 months on balance transfers, with a 3% fee. When compared to the rest of the market, this is a mediocre intro period. You can find cards with intro periods of 15, 21 and 24 months. We list all of the balance transfer options here.

Approval Criteria

Capital One markets this card for people with excellent credit. On their website, excellent credit is defined as someone who:

  • Has never declared bankruptcy or defaulted on a loan
  • Hasn’t been more than 60 days late on any credit card, medical bill, or loan in the last year
  • Has had a loan or credit card for 3 years or more with a credit limit above $5,000

If your credit score isn’t excellent, your options are much more limited. In fact, we recommend considering a personal loan to get a lower rate on your debt, where you will have a better chance of getting a higher loan amount.

 Fine Print Alert

Balance transfers can save you a lot of money. However, there are certain traps out there, and if you fall for those traps it could end up costing you a lot of money. Make sure you do the following:

  • If you are approved for your balance transfer credit card, complete the balance transfer right away. The 0% promotional offer begins the day your account is open.
  • Set up automatic payments so that you are never late. Even being late by one day can result in a steep late fee. And, if you are late by 60 days or more, you can see a big spike in your interest rate.
  • Don’t spend on the credit card. Although Capital One does offer 0% on purchases, they do that as a temptation. They want you to spend, so that you don’t use the promotional period to pay down your debt. If you are using a balance transfer, you should be doing it to get out of debt faster.

To learn more about balance transfers, you can visit our learning center.

Balance transfers, when used properly, can take years off your debt repayment. With proper credit behavior, the Capital One® Quicksilver® Cash Rewards Credit Card can save you money and help rid you of debt.

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What’s the Difference Between a Charge Card and a Credit Card?

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If you’re shopping around for your next credit card, chances are you might come across a charge card. It can sometimes be difficult to know the difference unless you know the telltale signs. And if you choose the wrong kind and don’t use it correctly, you could end up in a world of financial trouble.

Charge cards aren’t too much different from credit cards, but there are a few key things you need to know.

What is a charge card?

As with a credit card, you use a charge card to make purchases and pay the balance off later. Here’s the biggest difference: Unlike credit cards, which let you keep a revolving balance from month to month, a charge card requires you to pay off the balance in full by your bill’s due date. You cannot make a big purchase and pay it off over time.

Charge cards also have no preset spending limit. This doesn’t mean that it has no spending limit. Rather, your actual spending limit can change quite often depending on how much you’re using the card, if you have any late payments on your record, etc.

At MagnifyMoney, we recommend you always pay off your credit card statement balance in full each month. If that’s something you already do, you’d find using a charge card is pretty much the same as using a credit card. However, there are a few differences that might make you want to choose one type of card over the other.

Pros and cons of using a charge card

Pro: You’re required to pay off the balance in full

One of the biggest advantages of a charge card is that you are required to pay it off in full each month. If you’re the type of person who has a hard time maintaining the discipline to do this normally, using a charge card might force you to develop this good habit. And because you will pay off the balance in full each month, you’ll never pay any interest charges and you won’t rack up any debt.

Con: You’re required to pay off the balance in full

Paying off your bill in full each month is a huge advantage, but it can also be a disadvantage. Yes, it’ll keep you out of debt, and you won’t have to pay interest charges, but if you’re relying on the card as a source of emergency funds, you’ll be better served with a credit card that’ll let you carry a balance from month to month if a very expensive emergency pops up.

Pro: Many charge cards come with a smokin’ hot rewards program

For example, as of this writing, the Platinum Card® from American Express gives you $15 in Uber credits each month (plus a $20 bonus in December), a $200 airline credit each calendar year, and a 60,000-point sign-up bonus if you spend $5,000 within the first three months, among numerous other perks. There are, of course, credit cards that offer similarly attractive rewards.

Con: Charge cards often carry high fees

Again, we’ll use the Platinum Card® from American Express as an example: It carries a $550 annual fee. The cheapest card from Amex is the American Express® Green Card that has a $95 annual fee, though Amex waives it the first year. And if you make a late payment or fail to pay your bill in full? You could be slapped with a late fee of (up to $38 on the aforementioned Platinum Card), and it’ll go down as a negative mark on your credit report.

Con: There aren’t a lot of charge-card options

You may be sensing a trend — American Express is among the last major credit card issuers to offer charge cards. That means your choices of charge cards are already limited — you can choose from just three cards: American Express® Green Card, the Premier Rewards Gold Card from American Express, and the Platinum Card® from American Express. American Express isn’t as widely accepted as Visa or Mastercard, so you’ll want to make sure you have a backup when you’re out shopping, just in case it isn’t accepted.

Pro: A charge card helps you build credit

Charge cards can also help you build credit, and you don’t need to go into debt to do it. As long as you pay on time, the account will be listed on your credit report as an example of your positive payment history — the most important aspect of your credit score. And for newer scoring models, charge cards won’t affect your credit utilization ratio — the second most important factor in determining your credit score. That’s because American Express reports its charge cards as “open” lines of credit, as opposed to a revolving line of credit, and FICO does not factor open lines of credit into its credit utilization calculation.

But that’s not always the case. Rod Griffin, the director of public education at Experian (one of the major credit reporting agencies), said some credit scores treat open credit lines like revolving accounts. “Newer scoring systems are more likely to differentiate between the two than older credit scoring systems,” he said. “Your credit report almost certainly will not show a zero balance for the charge card if you use it and could affect your utilization rate.”

With newer scoring models that don’t factor open credit lines into your credit utilization ratio, that means making a big purchase (and paying it off at the end of the month) won’t have any effect on your credit score, nor will it lower your credit utilization ratio if you have other credit card debt. (A credit card also helps you build credit, but you may find yourself tempted to carry a balance.) Checking your credit score regularly will help you understand how your charge card use affects your credit standing.

Con: A changing spending limit can be bothersome

If you want to make a big purchase or it’s getting toward the end of the month, the only way to know for sure if you have any credit left is to log in to your account and check. Still, you shouldn’t be using your charge card willy-nilly to buy Learjets and mansions anyway, so as long as you keep your spending under control, it’s unlikely you’ll go over your limit.

The bottom line

Charge cards do have their quirks. But as long as you keep your spending within a reasonable range for your lifestyle and pay off your bill in full each month (as you should do with a normal credit card anyway), a charge card can be a useful tool in your financial arsenal.

The post What’s the Difference Between a Charge Card and a Credit Card? appeared first on MagnifyMoney.