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5 Ways to Earn More Rewards Without Extra Spending

Rewards cards are the best, right?  We’d like to give whoever came up with the idea a big kiss on the lips. Ok, maybe just a hug. 

Our delight in rewards cards is for one big obvious reason: spending that we would do anyway now reaps rewards. We get rewarded for spending money! What an amazing concept.

But what we have to be careful of in all of this excitement is…dun, dun, dun…overspending to reap rewards. None of us are immune to it. The thought goes something like this: “I don’t really need this, but at least I’m earning points.” Or, “It costs a little more than I would normally spend, but I’ll get it back anyway with the extra points I earn.” Wrong.

You will get something back, but if you’re spending more than you can pay off, you’ll get debt with interest and fees on top of it, too.

But the thing is, you don’t have to spend more to reap the awesome rewards. If you can train your mind to resist the extra spending impulse, you can enjoy this beautiful thing called rewards cards and stay debt-free.

Here are some tips on reaping rewards without extra spending.

1. Use The Right Card

Obviously, you need to have and use the right cards. Rewards cards come in all different shapes and sizes, so first make sure you have the one that makes the most sense for your spending. Is your spending pretty evenly distributed, or do you tend to spend quite a bit on certain categories? Maybe you have a business card and spend a lot on office supplies. In this case, it would make a lot of sense to get a credit card that offers extra points for purchases made at office supply stores, like the 5x points you get with the Chase Ink Business Cards. Maybe you have 7 kids and your trips to the grocery store are as frequent as that awful Kesha song on the radio. In that case, you’d benefit from a card with a groceries category bonus, like the American Express Blu Card. This idea is pretty straightforward. And if you have multiple cards with different bonus categories, make sure you know what they are and that you’re using the right one. For instance, that Sapphire Preferred won’t do you much good at the grocery store (earning just 1 point), but it will on eating out (earning 2x points). Got it?

2. Make Large Purchases on Your Card

If you’re still writing checks or using bill pay through your online banking, there are many more rewards to be earned for you. Start running your larger purchases through your credit card instead of your checking account. While services like paypal charge you a fee, you can use Amazon Payments for payments of up to $1,000 for no fee! Want to earn points on your mortgage but don’t want to pay a fee? Bluebird by American Express is a good option. You can buy Vanilla reload cards to fund your Bluebird account and then pay your mortgage from there. You’ll earn points on the Vanilla cards that you purchase to fund the account. Pretty nifty. Other large payments you could make: car payments, school loan payments, insurance, medical bills, and some utilities.

3. Use Rewards Program Shopping Portals

If you’re a member of a rewards program, chances are they have an online shopping portal that offers you extra points for shopping through them. Sometimes these portals offer nice bonuses at certain stores for a limited time, so taking advantage of these offers can mean way more points than you would earn by shopping at the store directly. For example, if the Ultimate Rewards shopping mall is offering 10x points at Kohl’s, and you would shop there anyway, why not take advantage of the extra points? Plus, if you use your rewards card to pay, that’s even more points earned (especially if that card has a category bonus that includes the store you’re buying from). That’s what they call “double dipping” and we like it.

4. Pay For Your Friends

If you take trips with friends or family, this is the perfect chance to boost your points and still get your cash back. Pay for your friend’s hotel, airfare and other expenses using your credit card and have them reimburse you in cash. No extra expense to them and none to you. Or offer to pay for smaller purchases, like meals or movie tickets, and reap the rewards. This is a total win in our book, assuming your friends are trustworthy and will pay you back.

5. Pay Off Your Cards

Bottom Line: Any rewards you earn will be negated by debt, so don’t even mess with this rewards reaping lifestyle if you aren’t able to pay off your credit card bills in full at the end of each month. If you have a 0% introductory APR card that earns you rewards like the Discover it card, then you’ll be ok until that introductory period is up. But we suggest forming the habit of paying off your bills in full, and keeping it. If you tend to carry a balance, rewards cards aren’t for you.

 

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Discover it Card Review: over a year without interest stress

Discover what? Why, over a year with no interest, that’s what. Here’s our review of the Discover it rewards credit card.

 

Apply Now: Discover it®

 

The Discover it® credit card is brand new for 2014 and better than ever. If you are either a) trying to get out runaway credit card debt or b) looking to make a big purchase, then listen up because you’re going to love this. The Discover it card offers a 0% introductory APR on purchases and balance transfers for 14 months. That’s over a year of not having to worry about interest! Sure, the balance transfers still charge a 3% fee, but that is most likely way better than the high interest you would be paying on that otherwise. (If not, give us a call — we want to hop on that train!)

Also note that this card comes in an alternate version wherein you can get the introductory 0% APR on balance transfers for a whopping 18 months in exchange for dropping the time it’s applied to purchases down to 6 months.

The Skinny

After the lengthy 14 months is up, a variable APR kicks in that’s dependent on your credit score. This can dip as low 10.99%, quite a competitive rate. Not everybody likes the sound of a variable APR, but at least Discover won’t increase your rate when you pay late. The first late payment doesn’t even bring a fee. The Discover it card is very light on fees in general — you can expect no over-limit fee, no phone payment fee, no annual fee, and no foreign transaction fee.

Perks

Discover the warm embrace of security. This credit card automatically covers you for up to $500,000 in flight accident insurance. It also sports car rental insurance and many fraud protection services, including a guarantee that you won’t pay a single cent for unauthorized charges. On the retail side, you get a $500 protection for 90 days on qualifying purchases that covers theft, damage, price drops, or refused refunds. They will also top off the manufacturer’s warranty with an extra year. All this for free.

Plus, enjoy flexibility. You can pay either by phone or online right up until midnight on your due date, which you select. Confused? There is US-based customer service available 24/7. Desperate? They will even work with you if you experience job loss or other financial difficulty, lowering your rate or payments. Not to mention that this card prints the info on the back, leaving a pretty and sleek face.

While it is true that Discover isn’t as widely accepted as MasterCard or Visa, it’s been catching up. The brand is now accepted at over 8 million merchants nationwide, as well as 94% of the top 1,000 online retailers.

Rewards

What, you thought that with such a generous introductory APR, there surely wasn’t a rewards program to boot? Think again. That’s right, with the Discover it credit card you can recover from debt or pay off your big purchases and earn cash for it at the same time! Get 5% cash back on categories that revolve every quarter. There is a maximum on the 5% rate for each category (typically up to $1,500) and you do have to log in and sign up for each one, each quarter. Up for the rest of 2013 is gas stations and then “holiday shopping.” All other purchases, including the category purchases in excess of the max, earn a flat 1% cash back.

Get even more rewards — to the tune of 5% to 20% cash back — at Discover’s online shopping site, ShopDiscover. This portal covers basically all the major online retailers, but if you want to see for yourself, check out the exhaustive list here. You can redeem your rewards for merchandise, Amazon credit, or cash in the form of direct deposit or credits to your account in $50 increments. Another tantalizing option is gift cards, with many merchants offering double cash back value! Sweet.

Unfortunately, there is no sign up bonus — boo. If at any point you feel confused by all this, the card also comes with free access to Cashback Concierge, who will give you a 1-on-1 online tour to show you how to maximize your rewards for your spending.

Final Verdict

That 14 month introductory 0% APR is pretty tough to beat. This may just be the credit card you’ve been looking for. Enjoy a year without interest stress and get cash for it too. Discover shopping guilt-free again.

 

Apply Now: Discover it®

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5 Common Financial Mistakes You Might Be Making

Things are not always as they appear. In the often-confusing world of finance, this means a lot of well-meaning advice is followed because it seems logical enough. A lot of these pieces of wisdom, however, deserve a second look.

 

1. “Don’t use credit cards – you’ll be paying off that interest long after you’re tired of what you bought!”

If not under control, credit card debt can be quick to accumulate and slow to trim down. The easiest temptation to resist is the one that simply isn’t there. If you have trouble with the “pay it later” impulse, it might be best to stay away from the too-convenient cards, or at least make them a “sometimes treat.”

However, if you are careful with your money – and we suspect most of our readers are – using a credit card can bring benefits. Only charging what you can afford, you can easily build up your credit score. Not having to carry cash can also be very convenient. And since many cards now offer rewards programs that allow you to accumulate cash or other goodies for each qualifying purchase, you could actually get some return on your dollar by using credit cards. Putting your expenses on an airline rewards card, for example, could mean you rack up enough miles by the end of each year to take a free vacation! Just be careful not to fall into the trap of spending more than you can pay off just to accumulate rewards.

The keen budgeter would also enjoy those cards that offer end-of-year summaries, which allow you to track your spending through different categories. Again, you can enjoy the convenience of a credit card while getting rewards and building your credit score as long as the debt is kept in check.

 

2. “It’s more important to pay off debt than to save for retirement.”

At first blush, this seems like good advice even to the dedicated number-cruncher. If your credit card debt is accumulating interest at, say, 16%, while the market offers an average return of 8%, it seems wise to make paying off the card a higher priority. But when it comes to personal finance, it’s important to consider all the numbers.

401(k)’s and other tax-advantaged retirement plans come with tax breaks. These deductions usually equal the saver’s federal tax bracket. On top of that, if you happen to be either a) single with an adjusted gross income of up to $27,750, or b) married with adjusted gross incomes of up to $55,500, then you qualify for an additional tax break called the Savers Credit, worth 10% to 50% of your contribution. If your employer offers a match (typically something like 50% on the first 6% of your salary), then that represents an immediate 50% return for you.

But the greatest value here is in the years of tax-deferred growth. Einstein once called compound interest the greatest invention of all time. With compounded returns, your returns themselves earn returns, snowballing your wealth. However, this relies above all on time, and if your contributions are not there to begin with, nothing is going to get compounded. In other words, earlier is better. The longer you wait to contribute, the more you’ll have to contribute later. If you wait until 35 to begin saving, you might have to set aside 20% or more of your income just to retire at 65.

Prioritize your retirement, even if it means paying down debt more slowly, and definitely try to avoid taking money out of your retirement account to pay off debt, as in a 401(k) loan. You’ll be thankful you did.

 

3. “You should set aside 10% for retirement.”

The “10% rule” is often-quoted because it fits most people. But when it comes to personal finance, figuring out what is best for your particular situation is all-important. Here are some things to consider when figuring out how much to set aside:

  • What will my actual needs during retirement be? (If you expect circumstances to bring extra expenses, or if you simply have high expectations, you will likely need more than 10%.)
  • How much pension income am I expecting?
  • How large are my expected benefits from Social Security?

Use these answers to determine the right number for you.

 

4. “Buy a home and pay off the mortgage as quick as possible – it’s a great investment!”

Most people consider owning property to be a foolproof investment. The truth is that normally home prices increase at a rate barely above inflation. In addition, owning a home comes with a myriad of expenses, such as remodeling, inspections, insurance, (often not foreseen) repairs, and of course, property taxes. There are areas where people have seen considerable return on their homes, but there are also areas where people have lost money due to plummeting home prices. Buying a house is nowhere close to a sure thing in terms of investment, so make sure it’s a choice that is right for your family and circumstances.

If you have taken that plunge, paying off your mortgage as quickly as possible can seem like a no-brainer on paper. For a typical example, one extra payment a year on a $200,000 loan can save 6 years of payment and $56,000 in interest (based on a 30 year term at 6.5% interest)! However, you should also consider alternative ways that money could be spent:

  • Investing can bring a better return than the savings in interest payments
  • Growing your nest egg
  • Paying off other debt, which usually carries higher interest and unlike mortgages, is not tax-deductible
  • Insuring yourself by taking out better policies or simply building an emergency fund

 

5. “If you have a pulse, you need life insurance!”

Actually, the only people who need life insurance are those who are providing an income stream that is vital to someone else. In other words, if you don’t have anybody depending on you for support, then you don’t need it. Sometimes life insurance policies are marketed as investment products, but the truth is that there are better ways to invest. That is not the purpose of life insurance, rather it is to make sure your children or other dependents are covered in case the worst happens.

 

Bottom Line: If you want to maximize the power of your personal finance, it always pays to keep these two values in mind. First, opportunity cost: always consider all the alternatives when deciding where to spend your money. Second, tailoring: take into account your unique circumstances, and you will find the choice that is right for you.

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American Express Blue Cash: the preferred way to save everyday

The American Express Blue Cash credit card gives good cash back rewards.

 

Honestly, if you aren’t using a rewards card, like the Amex Blue Cash or Barclaycard Arrival™ World MasterCard®  you are literally missing out on free money. That’s because you can simply funnel all those purchases you are making anyway through a rewards card and reap the benefits. Consider how much cash goes into everyday expenses, such as gas, groceries, and clothing. If only there was a card that paid out especially large rewards for those really common purchases… but that would be too good to be true, right?

Nope! Enter the Blue Cash Everyday® Card from American Express, hero of the everyday American consumer.

The Blue Cash Everyday® Card from American Express doles out rewards for your most common buys as follows: earn 3% cash back on supermarket purchases, 2% cash back at gas stations and select department stores, and 1% cash back on everything else. These rewards, accumulated as “Reward Dollars,” can be exchanged for statement credit, gift cards, or merchandise starting at $25. It really is as simple as that — no expiration dates, rotating categories, or other tricks. There isn’t even an annual fee. Combine that with an introductory 0% APR for the first 12 months, as well as a bonus of 50 Reward Dollars when you spend just $1000 in the first 3 months, and it’s hard to see why you wouldn’t try this one out.

Oh yeah, and here’s a real kicker: a lot of supermarkets offer a wide variety of gift cards for other retailers. That means you can nab that sweet 3% rate on a ton of other purchases as well. Ka-ching!

Perks

Customers of the AmEx blue series enjoy access to their Blue Savings Program, which features special deals with select restaurants, hotels, and retailers. This card also comes with automatic insurance on certain qualifying purchases, including loss and damage insurance on car rentals, accident insurance on travel by any of the usual means, and extended warranties.

Items you buy also get purchase protection as well as return protection for 90 days for coverage up to $300 per item. In addition, American Express will help you resolve any disputes you may have with merchants, though favorable outcomes are not guaranteed. If you travel more than 100 miles from home, you’ll have access to a 24/7 Global Assist Hotline, where you can get help with common travel issues, such as problems with visa/customs, directories, or simply referrals to local businesses.

And even those that are staying closer to home can enjoy the 24/7 roadside assistance help. You will still have to pay for that tow truck or jumper, but they will call it for you. Finally, if you have friends that might benefit from this card as well, refer them and you receive a $25 reward. Or just ask for additional cards for your friends and family with no fees whatsoever.

Be cautious

If you are wondering what the catch is, the truth is there isn’t one — provided you do a little assessment of your life beforehand. Like any credit card, this one will trip you up if you fail to make your payments on time. After the first year, the APR kicks in, which, based on your credit score, ranges from 12.99% to 21.99%! Ouch! And if you don’t make the minimum payments for 3 billing cycles in a row, you can kiss your rewards for the whole year good-bye.

Consider if this card actually fits your lifestyle, particularly the merchants you are already shopping at. Like we said, the real benefit of rewards cards is that they pay you for purchases you are making anyway. Many merchants don’t even accept American Express. No rewards are given if the seller uses a mobile/wireless card reader or if you use a mobile/digital wallet. Also, the rewards only apply to purchases made in the US. If you are shopping abroad, not only will you miss out on the cash back, but you are also subject to a 2.7% foreign transaction fee.

So which stores qualify, anyway? Basically, for groceries and gas, that has to be the main thing they sell. Gas stations with convenience stores are okay, but gas being sold out of a supermarket will not count as a gas retailer. (But the supermarket rate is better anyway.) Similarly, specialty food stores such as cheese shops or butchers will not count as supermarkets. And watch out: all superstores such as Wal-Mart and Target as well as warehouse clubs such as CostCo or Sam’s Club do not count as either gas or supermarkets, netting only a 1% cash back rate. As for the 2% rate offered on select department stores, AmEx has kindly enumerated exactly which ones count:

•    Bealls
•    Belk
•    Bloomingdale’s
•    Bon Ton Stores
•    Boscov’s
•    Century 21 Department Stores
•    Dillard’s
•    J.C. Penney (JCP)
•    Kohl’s
•    Lord & Taylor
•    Macy’s
•    Neiman Marcus
•    Nordstrom
•    Saks Fifth Avenue
•    Sears
•    Stein Mar

Finally, be aware that the 3% rate on groceries only applies for the first $6000 spent in that category in a year. After that, the rewards come at the boring 1% rate. Large families might be affected by this cap, so be sure to count your spending.

Which card to Prefer?

But wait — before you grab the Blue Cash Everyday, you should know there’s another option for those who spend a little more. The Blue Cash Preferred® Card from American Express offers all the same perks, same introductory 0% APR for the first year, and basically the same rewards scheme, but it comes with an annual fee of $75. In return, you get increased rates for cash back: 3% from gas stations, 3% from those select department stores, and a whopping 6% from supermarkets. You also receive an increased referral bonus of $75 and increased sign-up bonus of 100 Reward Dollars when you spend $1000 in the first 3 months.

So which to pick? We did the math for you. The trick is to look at your supermarket spending, as that’s where the huge difference is between the cards. It turns out that a yearly grocery bill of $2500 is the point where you would break even between the two cards. That is, with spending $2500 a year in supermarkets, Blue Cash Everyday holders would be left with $75 in rewards, while Blue Cash Preferred® Card from American Express holders would have $150 in rewards and $75 in costs (the annual fee), leaving them with a net of $75 as well. In other words, if you are spending more than $2500 per year on groceries (that’s $208 per month), then the Blue Cash Preferred card is the better deal for you. We suspect that is the grand majority of our readers, especially when you factor in the bit about buying gift cards at supermarkets.

Of course, when checking your spending to decide on a card, don’t forget to account for other credit cards you might be using. If you are already allocating certain purchases to another card, don’t count them for the potential new one.

Final Verdict

If you live in the US, drive a car, buy clothes, and feed your household, get an American Express Blue Cash card! It might as well be cash in your pocket.

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Tips to Make Budgeting Easier

Have you ever felt that your paycheck comes and goes without notice? Do you ever wonder where it goes? Is budgeting even realistic?

Get real. Whether you like it or not, you’ll have to face what others fear most- budgeting. Well, you’ve got to face your fear eye-to-eye if you really want to know where your hard-earned cash has gone, why you were not able to save that much, or why you always seem to be out of cash. Being aware of where your paycheck goes can tell you how much available cash you can spend and how much you must save.

Ever heard of the 60/40 rule? If not, here’s what it is: You spend 60% of your income and save the remaining 40%. Say, you earn $5,000 per month. Sixty percent of this $5,000 ($3,000) is for necessary expenses like food, rent or mortgage, utilities, insurance, and health care. The 40% ($2,000) can be allotted as follows:

Retirement fund 10%

Debt pay-off/ emergency fund 10%

Short-term savings 10%

Life’s little luxuries 10%

Total = 40%

Stick to this budget no matter what. In case you’re tempted to veer away and heed the call of the sirens, here’s a thought: you’ll be able to retire gracefully without thinking of debts, have some cash to spend for vacations, car or home repairs, and even manage to buy some really cool gadgets or appliances that can make your life a whole lot easier. As they say, no pain = no gain. It’s better to save now while you still can, than worry about funds when you can no longer work.

 

Be wise before you swipe

As with everything else, there are good and bad debts that you can charge to your credit card. Diahann W. Lassus, a finance specialist based in New Providence, New Jersey, says that a “good debt” buys anything that maintains or increases its value over time, while a bad debt is something that you continue to pay for long after the benefit of the purchase is gone.

So before you swipe your credit card to pay for something that you really like, ask yourself, “Am I being wise? Do I really need this stuff? Will it be worth its monthly payments or will it be just another something that will join my other “flavor of the month” stuff that is now residing in my attic?

 

How can you save more?

Hit it where it hurts most. Your monthly bills are your weakest points, so it’s best to cut down on water, electricity, fuel, etc. You’ll be surprised at how much you can save if you start doing the following:

  • Collect rainwater and use it for watering plants on sunny days.
  • Do online shopping. You’ll save on fuel and car maintenance items like oil, tires, etc.
  • Have plants in and out of your home. Plants do not only beautify your home – they can also lower the temperature and give off beneficial oxygen as well.
  • Use LED or low-voltage lights. They may cost more initially, but the savings you’ll get on your electric bills will more than make up for it.
  • Pay your bills online. Again, you’ll save on fuel, car maintenance and stamps. Plus, of course, the convenience of paying your bills anytime, even when you’re still in your pajamas.

 

Is buying a house better than renting one?

For the most part, buying is still better than renting, but you must also consider the rent ratio in your area. You can get this ratio by dividing the actual price of the house by its annual rental price. Planet Money claims that if you get a rent ratio that is below 20, then, it’s time to buy.

 

When do you need a financial planner and how can you find one that you can trust?

Take an honest assessment of your spending habits. Can you keep track of your paycheck? Are you just paying the interest on your credit card because you can’t afford to pay the whole amount?  Do you have sound investments? Are you always borrowing money?

If answering these questions makes you cringe, then you really need help. Mismanagement, even of your own funds, is not a laughing matter. It means you have developed the habit of overspending, which has wrecked the lives of millions of people. To keep your financial condition on track, it would be best to hire a financial planner. A really good one can pinpoint where your problem lies and suggest changes in terms of your spending, saving, and investing habits to ensure that you are financially sound.

Where to find a good one? The National Association of Personal Financial Advisors (napfa.org) has financial advisers that charge per hour ($100-$300), so make each minute count.  List down all your goals – long and short term – before your first meeting.  He or she will suggest what you need to do and check up on you from time to time just to make sure that you’re doing okay.

 

 

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Chase Freedom: rewards like carnivals

The Chase Freedom® is hands down one of the best personal rewards credit cards out there.

Link: Chase Freedom®

Our readers are bargain hounds, often wondering which rewards program is the very tastiest. Here, the Chase Freedom credit card poses an interesting conundrum: sure, 5% cash back is just about the highest rewards rate out there, but it’s only offered on a couple categories that change every quarter, with all other purchases receiving 1%. By the way, the Discover it® card also offers 5% cash back on rotating categories.

Some argue that this means the card can be looked at as having a 2% cash back rate on those categories and 1% on everything else, since that’s what it averages out to over the course of the year. So, for the person looking for travel rewards, they might opt for the Barclaycard Arrival™ World MasterCard®, which earns 2 points per dollar on every purchase.

But there’s two problems with that logic. First, the categories are usually appropriate to the season — for example, a past category is theme parks. This bumps up the value, since it’s stuff you’re going to be paying for anyway at that time of year. Second, the fact that this card has no annual fee means you don’t have to worry about meeting a minimum spend to make up for it. In other words, you can enjoy cashing out at a chunky 5% on bonus categories only when they’re up, and allocating your spending the rest of the year on more generous rewards programs. Music to the ears? Here’s the nitty-gritty.

 

The Basics

Not only is there no annual fee for this credit card, but the Chase Freedom® card also offers an introductory 0% APR on all purchases and balance transfers for the first 15 months. That’s over a year that you don’t have to worry about interest. (Balance transfers do still get charged a 3% fee, which is fairly standard.) Plus, this card is relatively easy to qualify for, compared to the rewards it offers. Jump on it!

Or, maybe you won’t stop worrying about interest, because you are a credit control freak, like most of us at CWD. Well, this card comes with a shiny toy just for you. The Blueprint tool is a handy way to manage your purchases on the card. You can design plans to pay off big purchases — it shows you the monthly amount for your desired time frame, then sets it apart on your statements. Or you can designate certain categories to be paid off in full each month — also set apart. The spending trends feature shows you your monthly spending, split up into easy-to-understand categories. And if you don’t like what you see, you can set a monthly budget for those categories that you’ve got a weakness for. Your color-coded highlighters can finally take a break.

 

The Rewards Program

Again, the Chase Freedom credit card offers 5% cash back on rotating categories and 1% cash back on all other purchases. Up for the rest of 2013: theme parks, Kohl’s, Amazon.com, some department stores, and gas stations. Refreshingly, it looks like the card doesn’t put the usual limitations on gas stations such as excluding warehouse clubs: a vendor just needs to sell automotive gasoline. You do have to activate your rewards before the end of the quarter in order for the 5% bonus to take effect, but luckily if you wait until the end everything still gets applied retroactively. The activation process is a breeze, you can simply reply to their text or click a link in their email, whatever you choose. Though, why they make you activate at all is beyond us — who is going to say no to this? “I hate getting free money. It sucks.”

Get even more cash back when you shop through Chase’s Ultimate Rewards site, which links to online retailers with increased points bonuses sometimes reaching 8x! (Not to mention occasionally scoring perks such as free shipping.) As far as redeeming, rest assured there are no limits and no expiration dates on your points. If you want cash (in at least $20 increments), you can opt for a statement credit, direct deposit, or paper check. Other redemption options include gift cards, travel, merchandise, or exclusive cool experiences. Oh, and don’t forget you can always transfer Ultimate Rewards points to your Chase Sapphire Preferred card for amazing flexibility and value in travel options.

 

Final Verdict

With no annual fee, there is no reason not to get this card. 5% cash back is tough to beat — well, unless you’re getting even more through the Ultimate Rewards mall. Talk about a win-win. Don’t let the rotating categories spook you. Carnivals come and go too, but we still enjoy them.

Apply Now: Chase Freedom®

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Practical Steps for Eliminating Credit Card Debt

An issue that has been a nationwide concern is credit card debt. Maybe it’s because an average American family that uses credit cards has a debt of approximately $7,400. And that’s just the average. To have a solid financial stance requires reducing that number – whatever it is – as much as possible. So if you fall into this category, and chances are that you just might, check out the tips below to help minimize your credit card debt.

Improve Your Interest Rate

This is one of the key tips to lowering credit card debt, and it entails negotiating for the lowest possible interest rate. Shaving off one or two percentage points from the rate results in a savings of hundreds when paying off the debt. You’d be surprised how many credit card companies are willing to work with you if you just ask. And hey, what’s the worst that can happen? Right. Go ahead and make the call.

Formulate a Budget

Formulation of a budget is another tip worth noting. Yeah, yeah, you’ve heard this one before. But that’s because it’s essential to face reality, and that’s what it makes you do. The key to creating a successful budget is getting rid of unnecessary expenses. While it can be extremely challenging and seemingly unrealistic to make a dramatic change in one’s lifestyle, little changes can lead to huge savings. Doing things such as taking a lunch to work, and making coffee at home rather than buying it at Starbucks or wherever, can add up to a lot of savings. And sometimes you’ll find that it’s easier than you think when you realize you’re not even using services you’re paying for – like cable or that gym membership.

Use a Debit Card

Using a debit card is another strategy that may go a long way in reducing credit card debt. Most people have the tendency of pulling out their credit cards every time they run out of cash. But we all know this is a habit that eventually results in the accumulation of massive debt. Using a debit card will simply help you live within your means. It’s like an accountability partner.

Use One Credit Card

Using one credit card at a time is another sure way of ensuring you’re keeping good track of your spending, which in turn reduces credit card debt. Maintaining different balances running at the same time can be more to manage and make the debt elimination process more challenging. Instead, try keeping a single card – probably the one that has the best terms and interest rate.

Use Peer-To-Peer Lenders

Ideally, people should pay their credit card balance in full, to avoid the problem of debt. However, the reality is that some are unable to do so for one or more reasons. So something else to consider is securing loans from peer-to-peer lenders. These are secure online sites that provide loans with rates of interests that are fixed. These rates can be much lower than those of credit cards, so you could save a lot in terms of interest on your credit card debt. A loan request of, say, $25,000 can be made by people with stable jobs and good credit scores.

Alternative Tips to Avoid Credit Card Debt

Maybe you’ve succeeded in clearing your debt in the past and want to ensure you won’t fall into the trap again. Some ways to avoid credit card debt include:

  • Using Prepaid Credit Cards

These function somewhat like a debit card, since you pre-pay to create your available spending limit, but they aren’t tied to your bank account. Thus, they help you manage your spending like a debit card would. But since they are a credit card, they report your payments and good standing, which will help your credit score.

  • Sticking to a Budget that Ensures Saving

More often than not, people turn to the use of credit cards during emergencies that could easily be addressed by using savings. For this reason, it is recommended to budget so that you’re always adding to savings. So come up with an amount that makes sense and stick to it.

  • Choosing a Fixed Loan Instead of a Credit Line

For certain larger purchases, a loan may be a better idea than using your card. Unlike a credit card, a loan is for a specific purpose, has a fixed amount, and a fixed rate of interest.

 

Following the above tips can serve as a starting point to minimizing your credit card debt. Always pay off your credit card with the highest interest rate first, and then move on to the next.

 

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Discover It for Students: a class act

Link: Discover it® for Students

Between all-night cram sessions and finding new ways to dress up ramen, most college students need a credit card that is simple to understand and, let’s face it, a little forgiving. Luckily, the Discover It for Students card offers all that plus a fairly generous rewards system. This makes it a perfect choice for a first credit card. Don’t shy away from applying if you’re living on student loans — that still counts as income. And yes, you do have to be currently enrolled in college to get this card.

 

Cut and dry

With no annual fee and an introductory APR of 0% for the first 6 months, you can get started right away! Watch out though — that intro rate doesn’t apply to balance transfers, which still get charged interest. If anything seems confusing, there’s a real live customer service rep available 24/7, just a phone call away. The five design choices let you express yourself, and the lack of any foreign transaction fee means you can even take this card on any study abroad adventures. Plus there’s no need to worry if any purchases go wrong. The Discover It for Students card comes with automatic theft/damage/return protection for 90 days (up to $500 per purchase), zero liability for fraudulent charges, and an additional year of warranty on some items.

 

Easy to manage

Let’s say that for some reason you might have gotten mixed up about what day it is. Too much time “studying”, we’re sure. Well, not to worry — the first late payment on this card doesn’t bring a fee. Even better, paying late will never increase your APR. There are also no fees for charging over the limit or paying by phone. In fact, you can pay all the way up to midnight (ET) on a due date that you select. Whew.

 

Sweet, sweet rewards

Rack up rewards with every purchase. Discover rotates special categories every quarter that earn you 5% cash back, usually including things like restaurants, movies, department stores, etc. Unfortunately, you do have to sign up for these, and although Discover claims it’s quick and easy, we think they’re taking advantage of the average college student’s laziness. Don’t miss out! For everything else, there’s a baseline 1% cash back rate. In addition, you can access your favorite online retailers through Discover’s special website ShopDiscover to nab even sweeter rates, which range between 5% and 20%. These get added *on top* of the usual 1%/5% cash back.

Rewards can be redeemed starting at $25, though if you want the cash in the form of a balance credit, it needs to be in $50 increments. Otherwise, you can get gift cards, merchandise, a deposit to your bank account, or credit to an amazon account — a favorite stop for textbooks. And don’t worry if you forget — these rewards have no expiration dates and no limits. If all of this sounds confusing, Discover even offers a Cashback Concierge who conducts a 1-on-1 online tour to help you get the most out of the rewards program.

It’s not all daises over here, though. The Discover It for Students card doesn’t offer any kind of sign-up bonus. We at CWD find that truly disappointing. Plus, if you don’t fork over the minimum payment on your balance for 2 billing cycles in a row, you lose absolutely all the rewards you’ve accumulated. Bummer!

 

Final Verdict

For those just starting down the credit road, it doesn’t get much better than the Discover It for Students card. Get rewarded for your spending, enjoy a somewhat lenient payment system, and don’t worry about having to decipher all the mumbo-jumbo. Party on! Ahem, that is… get back to work.

Link: Discover it® for Students

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The Difference Between a Charge Card and a Credit Card

Learn the difference between a charge card and credit card.
Yes, there is a difference between a charge card and a credit card. If you’re more of a visual person:

Charge card = Credit card  ;  Credit card ≠ Charge card

A charge card is, in fact, a type of credit card, but one that requires you to pay off your balance in full every month (or billing cycle). With a charge card, you can’t make payments over several months as you would with a credit card. So the main difference is that with a credit card, you have the option of a revolving balance that is payed over time, and with a charge card, you don’t. Got it? Good. Because there are other differences, too. Let’s look at them.

Approval Rate

Charge cards can be more difficult to come by than credit cards. You’ll need to have excellent credit to get your hands on one, while it’s a bit easier to be approved for a credit card, since there are so many out there catering to a variety of credit worthiness.

Credit Limit

While most credit cards will give you a limit of what you can spend and then charge you a penalty for exceeding that limit (such as higher interest rates and/or over the limit fees), some charge cards won’t limit you. That means you can charge to your heart’s content, as long as you’re prepared to pay it off at the end of the billing cycle.

Interest & Late Payment Fees

Since you aren’t allowed to carry a balance on a charge card, you won’t pay interest like you would on a credit card balance. However, you will be charged interest if you pay late (past the grace period). Credit cards also have late payment fees, but you only have to make a minimum payment on a credit card, as opposed to a full payment with a charge card. Additionally, credit cards have an interest rate, which is hugely important, as the percentage directly determines how much you will pay each month your balance isn’t payed in full. Of course, paying interest on a credit card can be avoided by not keeping a revolving balance/paying it off.

Annual Fees

Charge cards typically have annual fees attached to them, though this fee will often be waived the first year. Many credit cards also have fees, but it is easy to find one that doesn’t if that is something you’re wanting to avoid.

Purchase Limitations

Unlike credit cards, you typically can’t transfer balances or make cash advances with a charge card.

Perks

Both charge cards and credit cards come in a variety of shapes and sizes (ok, not really, but you get what we’re saying). Some of both kinds of cards will offer benefits that make the annual fee worth paying. These perks vary from card to card, but it’s important to compare them when deciding on either a charge card or credit card.

 

 

 

 

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Capital One Secured: a credit lifesaver

The Capital One Secured credit card is a good choice for those with bad or no credit.

Maybe you’re recovering from some poor decisions. Or maybe you don’t have much of a credit history at all. Either way, don’t despair — the only way to get more credit is to use what you’ve got. And you do want to improve your credit score, because a low one will haunt you when you try to get a loan, mortgage, etc. The Capital One Secured card is a CWD favorite for folks with low credit scores because it doesn’t charge outrageous fees and rates.

For someone trying to get back on track, that’s probably the last thing you need. This card comes with no application or processing fees, so feel free. Plus it’s easy to get approved, though your income does have to exceed your rent/mortgage payments. We sure hope it does. This is all great news for the credit-seeker, because getting denied only serves to hurt your score even more. And if you improve your credit score you will eventually be able to apply for rewards cards with great sign-up bonuses like the Barclaycard Arrival PlusTM World Elite MasterCard® which comes with $400 bonus.

 

What do you mean, “secured”?

A secured card is one that is backed up by a security deposit. In order to use this card, you have to pay a certain minimum deposit of $49, $99, or $200, depending on your score. “Hey, I thought you said it was free to sign up!” We sure did and we weren’t lying. The security deposit that you pay is fully refundable once you close out the account down the road. In that way it’s very similar to a security deposit for a home lease. The bank simply needs it for collateral. Unfortunately, that deposit doesn’t earn any interest during that time, but you can’t win ‘em all.

Once you make the minimum security deposit, you receive a credit line of $200. If this isn’t enough for your needs, you can add to your deposit and get more credit. Each additional dollar deposited adds one dollar to your credit line, up to your maximum approved amount. (The highest this card will go is $3000.) There is some nice flexibility around making the security deposit, too. You can pay by phone or online, and you can even pay it in installments of $20 or more, provided you pay off the whole minimum deposit within 80 days of getting approved.

Don’t be fooled — this might sound like a prepaid card, but it’s not. Unlike a prepaid card, the Capital One Secured card builds your credit. The deposit is totally separate from anything else — you still need to pay off every penny of your balance on time.

 

What you get

This card is throwing you a bone with its annual fee of $29. Having to pay to keep this card might seem like a bummer, but that fee is actually quite low compared to most other secured cards. But hey, that’s why you’re trying to build your credit — to get access to better options. The Capital One Secured card knows that, so it offers tasty options for doing so. They report your activity to all 3 major credit bureaus regularly, and after you’ve been showing off your responsibility for a while, you can qualify for an increase in the credit line with no additional deposit! Plus, you’ll never feel overwhelmed again with the free membership to CreditInform, a special program that gives you access to a credit score plus tools and information to help you understand credit.

Another place where we happily see a lack of fees is in balance transfers. Transferring a balance will not cost you an extra fee, but be aware that transferred balances are still subject to the APR. Speaking of, the APR for this card is a little high at a variable 22.9%, but that’s to be expected given its category. You will be the only one to know that you have a secured credit card — it doesn’t say it anywhere on the actual card. In fact, you can make it pretty, as Capital One lets you customize it with an image of your choice. Snazzy.

 

Final Verdict

For those in a credit pickle, the Capital One Secured credit card is a lifesaver. With no application, processing, or transfer fees, you’re good to go from the very beginning. It even affords you a bit of time to make that security deposit. You can breathe a sigh of relief. Everyone makes mistakes — who doesn’t believe in second chances?