Tag: interest

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How to Pay Off my Student Loans Faster

how to pay off my student loan faster

Student loans are a great investment in your future. By improving your level of education, you can increase your personal skills as well as your earning power. However, education doesn’t come cheap. Some sort of degree or diploma is now viewed as the new high school degree with regards to the educational entry level requirement for many jobs. More and more, a Master’s degree or further education is also required to differentiate yourself in your field. Having these degrees under your belt are valuable, but unless you’ve had the top-end of scholarship opportunities, you’re likely coming away from your graduation day with school debt.

The Realization

If you’re anything like me, you didn’t realize the full weight of your school debt until after you graduated. Your realization may have come when your bank or lender sent you a nice letter outlining what kind of payment they were expecting since you’ve graduated from school into the real world. That letter usually contains some surprisingly large monthly number for an even more surprisingly large number of years. Sure, we all understand that you’ll need to pay the money back eventually. But that first statement letter is a big wake-up call for adult realities.

Next Steps

First off, don’t panic. Although your student loans can be a big debt to carry, it has been a good investment. Compare it to credit card debt: instead of buying things that devalue very quickly, you bought an education that increases your personal value. Sure, perhaps you could have limited some of the loans, but overall, the investment in education is a good one. Now that you’re out in the real world, you can focus on how to pay down that loan as quickly as possible.

Read the Fine Print

It may have been a while since you reviewed your loan documents, so it’s time to put those college smarts to use and review them. What are the terms of your loan? Is there a penalty for paying it off too quickly? (I know it seems ridiculous to have that as a term, as well as an actual payment option, but it’s still very common.) When you understand the terms of your loan, you’ll have a better idea of how best to pay off your loan. Any particular terms or issues should be included in your pay-back plan.

how to pay off my student loan faster

Prioritize the Student Loan Payment

If you are serious about paying off your student loan quickly, you need to put its payments first. The most cost effective way to do so is to cut down your other monthly spending. Most people’s biggest monthly expenditure is rent. Imagine if you took 30 to 50 percent of your take-home income and instead of passing it on to your landlord, you put it on your student loan. That’s a lot of dollars that will make a significant dent in your loan, especially after one to three years. If you have family with whom you can stay for free or nearly-free, it is a highly recommended option. If you don’t have access to rent-free life, seek out your cheapest option. While you don’t want to live somewhere that requires new debt for a vehicle, a smaller, less HGTV-style apartment will cut your rent and increase the amount you put on your loan. If you’ve recently been a student, shared spaces with ‘character’ may be very familiar. Stick with this lifestyle and you’ll be in a much better place to afford a proper grown-up place of your own down the road.

Start Earning

Yep, it’s a simple task that’s more difficult to put into practice. If you’ve just graduated, it’s important to dig into your employment search. Put your skills to work and pull in that paycheque. If you have a job lined up, then you’re in a great spot. For a lot of people, though, graduating means hitting up those HR hotspots. Good job markets are competitive so don’t waste time getting started. With lots of applications, cover letters, LinkedIn connections, interviews, you’ll soon be bringing in cash to feed your hungry, hungry loan.

And Then Earn More to Pay More Than the Minimum

You read it right. To have the biggest impact on your debt, you need to pay as much as you reasonably can each month. Thankfully, there are so many ways to earn extra cash in-person and online. You can pick-up odd jobs on CraigsList, use your education to tutor local students or online, or freelance and get paid for your skills through sites like UpWork. Take that additional income and put it right on your monthly payment. This will help pay down the principal, which will save you money in the long-run by saving interest and will speed up your debt payment timeline.

Do Your Taxes

Yep, taxes can be helpful when you’re repaying your loan. You may be eligible for a tax deduction for the interest you pay on your student loan. If you meet the requirements, each year you can deduct $2,500 off your taxes. This deduction could put more cash in your pocket at tax time, which can be transferred, as always, to your loan payments.

Consider at Refinancing and Consolidating

Depending on the loan or loans you used to pay for school, you may want to consider refinancing and/or consolidating them. This means you re-work your loans to get a reduced interest rate, and one common way is to combine or consolidate multiple loans into a single larger loan. By paying less interest, you can focus on the principal and pay your loans off faster. An additional bonus is that it simplifies multiple loans, even a maxed out credit card debt, into one loan with one payment. All that fine print that you read on your loan will help you determine what is the best route for you. For many people, though, refinancing for lower interest rate and a simpler loan organization can make your life a lot easier.

Conclusion

Student loans are a good investment in your future. They can be a real-world wake-up call after graduation, but you can reduce the headache by taking a few key steps. Prioritizing your debt, reducing your spending, increasing your earning and reviewing your loan are all important steps. Use your new education to be strategic and smart to get ahead of your student debt.

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Why Student Loans Aren’t So Bad

If you believe everything that you read, you will be horrified by the numbers pertaining to the average amount of student loan debt, and the harm that it is causing to millions of people. The reality is, those who have student loans tend to have higher incomes, better credit scores (and therefore lower interest rates on their student loans, as well as any other loans that they get), and longer, better loan terms. This does help take the sting out of the high price tag for a college education.

College costs have risen significantly over the past couple of decades, and, while many may have been able to finance an education with a side job or some help from their parents, most college students are now using loans to finance their education, meaning that they eventually have to pay back a pretty large sum.

A Bad Rap

Student loans have been sensationalized over the past few years, and made to look pretty bad. Some reports have shown how nobody can get on their feet financially with the burden of student loans, other reports talk about all of the senior citizens who are facing student loans after retirement. An article in the New York Times recently reported that about two million senior citizens have student loans with an average balance of over $20,000.

This sounds like a huge problem, but, when you consider the actual numbers and what they mean, you may not be as horrified. This number of senior citizens is only about 3% of the people over the age of 60 years old. And, the amount that they owe is about the same as the average loan. Plenty of senior citizens have car loans, and nobody is carrying on about that.

The Standard

Fortunately, the average student loan payment has remained fairly stable over the past 20 years. The average college student can expect to pay 3-4% of their monthly income toward their student loans. Again, the amount may seem high, but the proportion to the average income has remained stable, and 3-4% is not too bad, when you consider that you got a college education out of the deal. Yes, you do have to pay it back for many years, but, it is an investment, after all, not designed for instant gratification.

The Real Problem

It is not only college grads who have to deal with paying back student loans, it is also the college dropouts who did not earn a degree. The college grads are more likely to land a job that will allow them a little more comfort when paying back their loans, but, sadly, those who do not complete a degree program will be expected to pay back the loan, as agreed, even if they only have a part time job and have to continue living with mom and dad.

This means that millions of borrowers end up defaulting on their student loans—and, this is the crisis that should be discussed. Not the loans of those who graduate, get good jobs and make their payments as agreed, which is about 80% of those who take on student loans in the first place.

The Discussion Gets Heated

There is certainly a long standing debate when it comes to whether or not student loans are worth it. Some fear getting a degree and never being able to repay their loans, arguing that they should avoid taking on any student loans in the first place. Still others will point out that the odds of landing a great job that pays well are far greater when you have a degree.

This is an issue that really does have two sides, but, unless you opt to enter a field known for low paying positions, then incurring a modest, or average amount of about $40,000 in student loans is not insurmountable once you graduate. Obviously, everyone can cite an example of someone they know about who graduated with $100,000 in loans and is struggling to repay them, even with a great job. But, perhaps this is a discussion better suited for “where” to attend college, not “if” you should attend.

Better Responsibility, Better Outcomes

If you go to college, and take on student loans, and then expect to graduate, buy a brand new sports car, travel and buy tons of stuff for a new house, then perhaps you shouldn’t wonder about why it is so difficult to make your monthly student loan payments. Part of being a borrower is being responsible. You agree to the terms of the loan long before you have to repay the loan, making it come as a bit of a shock when you get that first bill.

But, if you plan properly, work hard and spend responsibly—without getting yourself into other huge debt or living beyond your means—then student loans can be well worth it. For those with patience and discipline, it is often possible to eventually get the things you want, the things you think you deserve after working so hard!

Protect Your Credit!

Your student loan is a real loan. Failing to pay it as agreed will lead to a huge black mark on your credit report, and a low credit score. However, the flip side of this is, you can often qualify for a student loan with no credit. You can’t do this with other types of loans or credit cards. So, you can use your student loan to build credit and show responsibility.

When you make your student loan payments on time each month, you are going to show the credit bureaus that you are responsible. And, then, you will be able to get other loans—auto loans, credit cards, even mortgages. Just remember to protect your credit carefully with responsible spending!

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What You Need to Know About Credit Card APR

Annual percentage rate? What does that even mean? This is what APR stands for—most people don’t even know what the letters refer to, so consider yourself semi-educated already! But, there are some important things to understand about APR, so that you don’t find yourself in financial trouble.

It is not just a simple “interest rate,” there is more to the story. Let’s consider some of the finer points of APR, so that you can really consider yourself more of an expert, and you can make more intelligent and informed decisions when it comes to credit cards and all of your finances.

Why Your Credit Score Matters

When it comes to APR, the lower your credit score is, the higher your APR will be. This means that you will pay higher interest as a penalty for having a lower credit score. You can avoid paying any interest, in most cases, by paying off your balance in full each month before the due date, but few people manage to do this and are then subject to whatever the assigned APR happens to be. Keeping your credit score high and your balance low can minimize the effects of any APR on your finances!

It’s Not Always Clear Cut

For one card, there may be several different APRs that are applied, depending on the circumstances. For example, there may be one APR assigned to purchases, and another to balance transfers. Still another APR may be used if you use a convenience check, take a cash advance or make a late payment. Read the fine print to find out exactly how much interest you will be paying for the debt on your credit card, depending on what kind of debt it may be.

Many credit cards offer an introductory APR, often very low, or even 0%, but you should know exactly how long this lasts and how the interest will be calculated when the introductory period ends. For example, if you do not pay the balance in full by the end of the introductory period, will you be responsible for all accrued interest or just interest on the remaining balance? An important distinction, one that could cost you hundreds of dollars if you do not understand what you are getting into.

Don’t Forget About the Fees

Annual percentage rate only includes the interest that you will pay, spread out over the course of a year. If there are any annual fees, late fees, or balance transfer fees, then these are not figured into the APR, meaning you could be paying even more than you think over the course of the year to have the privilege of using the credit card. Be careful when you sign up—know what you are getting into.

APRs Can Change

An APR is usually a variable rate, one that depends on the current prime rate. So, the APR that lures you to a specific card may change, and you may get little or no notice of the change. You might end up paying more than you planned in interest rates. Certain legislation has made it more difficult for lenders to raise the rates without giving you adequate notice, but this can be difficult to enforce. Pay attention to your statement, and take notice if anything changes.

Avoiding APRs Entirely

One way to avoid having to truly understand APRs or have to deal with them is by paying off your balance in full each month, and not having to accrue any interest. This is definitely the smartest way to use a credit card, and what experts recommend that you do. And, when you are using a credit card with great perks or rewards, you are essentially going to get those perks for free!

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Tips to Help You Save Money When Purchasing a Car

Ready to buy a new car? The process can certainly be overwhelming. It seems like every step of the way you are hit with some hidden or unexpected cost, and that you either end up overspending or getting a lower quality vehicle than you planned on because you cannot ultimately afford what you wanted to get. Here are some ways that you can save money when purchasing a car, and get the best car for the money, without breaking your budget.

1. Analyze Your Finances and Set Your Budget

First things first – you have to know how much you can actually afford to spend on a new car. Some people decide what car they want, without ever thinking through how much they can spend. These people are often left disappointed, because the car of their dreams either breaks their budget and leaves them struggling, or they end up having to settle for something they didn’t really want. Once you set your budget, you get a great idea about what kinds of cars you can start to look at.

2. Do Some Homework

If you already own a car and are looking to upgrade, it is important that you know how much your current car is actually worth. You can get different estimates, depending on whether you plan to sell your current vehicle privately or whether you plan to trade it in. Do enough homework so that you know what your options are. When you trade in a vehicle, you can ultimately make your payments lower. But, if you stand to make a significantly larger amount by selling your car privately, you might be better off doing this and using the money to pay down your loan.

Part of doing your homework also involves searching the internet for the best deals. Not only do you need to know the value of your current vehicle, but you need to know the range you can expect to pay for the vehicle that you are hoping to buy.

3. Understand Financing and Insurance

When shopping for a new car, you need to decide whether or not you will be taking out a loan on the car or paying cash. Obviously, most newer cars will require a loan, as the average person does not have that kind of cash saved up. Plus, with the great interest rates available today, it makes sense to borrow the money and pay a low interest rate. Shop around for the best interest rates, too, just like you would shop for the best car prices.

Also, it is wise to contact your insurance agent and find out what the rates are going to be for your new vehicle, compared with the vehicle you currently own. Determine the coverage you will need, and make sure you can afford the insurance. This is an unpleasant surprise for many who opt for much newer cars than the ones they are used to driving!

4. Comparison Shop, and Negotiate!

Buying a new car (or newer used car) requires some negotiation skills. In almost every case, there is some wiggle room built into the price that you are offered. As you shop around, it is perfectly acceptable—and expected—that you are going to compare dealers and negotiate. One dealer may offer you a package of options as an incentive, another may offer a better interest rate. Go ahead and share the details that you have been offered, you will be surprised to learn how often you can get one dealer to match the offer of another, just to make the sale. This negotiation alone is where you can save thousands of dollars off of the sticker price! That is money that stays in your pocket!

5. Call in the Troops!

Don’t be afraid to bring along reinforcements when shopping for cars. Salespeople are trained negotiators, and they will definitely “sell” you. Having a trusted friend or family member along with you can help protect you from being swayed by a sweet-talking salesperson. Buying a car is a major purchase, and it can help to not only have some moral support, but also someone else listening in on the negotiations, to help you make sure you are getting a good deal.

6. Skip the Aftermarket Offers

One of the biggest ways that car dealers make money is by selling aftermarket add-ons, like extended warranties, rustproofing, a sunroof, or any other features or options that are not included in the standard package being offered. Weigh your options very carefully, as these aftermarket offers are typically very expensive. While an extended bumper-to-bumper warranty may be a wise purchase, there are others that will look fancy when flashed in your face, but will cost you megabucks in the long run.

Extra tip: Consider Charging Some of the Amount to Your Rewards Credit Card

Some dealerships will allow you to pay for a portion of the vehicle with your credit card. So if you’re needing to meet a spending requirement on a rewards credit card or just want to earn more rewards, consider charging a portion of the cost to your rewards card. For example, one of our team members recently charged $3,000 of the price of his new car to his Discover it® card (that was the amount the dealership allowed). Obviously, only do this if you can pay the balance off so that you don’t accrue unnecessary interest. Something to think about!

Bottom Line

Buying a new car is serious business, and you need to focus, do your homework, know what to expect, and be ready to negotiate hard in order to save money on your purchase. When you get a fair deal on a quality vehicle, you will feel great and enjoy driving your new car for years to come!

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The Top 5 Travel Rewards Cards with 0% APR

I’ve recently had a few people ask me what the best travel rewards cards are with a 0% intro APR. It’s a good question, since having no interest for 12 months or more is important to a lot of people. Whether you’re trying to consolidate debt (keep in mind balance transfer fees) or looking to make some large purchases soon, a rewards card with a 0% APR can help.

Bottom line: If you need to carry a balance for a time, a 0% APR card is a good idea. Just stay on top of when the intro period ends! You can do that with Card Watchdog (shameless plug).

Alright, below are our favorite travel rewards cards that offer a 0% introductory APR.

 

1. Barclaycard Arrival

There are two versions of the Barclaycard Arrival card: the annual fee version and the no annual fee version.

The no annual fee version offers no interest on purchases for the first 12 months of account opening. After that, it’s a variable APR of 14.99% or 18.99%, based on your creditworthiness. The intro APR doesn’t apply to balance transfers, so the variable APR will apply. There is a balance transfer fee of $10 or 4% (whichever is greater).

What we like about the Arrival:

First, the sign-up bonus of  $200 isn’t too shabby. We also like the simplicity of earning 2x or 1x for every dollar you spend. Since there are plenty of other cards that have category bonuses to think about, it’s nice to have one that’s just easy.

A new perk that we’re loving is the free credit score monitoring that Barclays is offering on this card (and several others). This is a handy tool, since it’s important to stay on top of your score when applying for cards.

Read our comparison review of the Barclaycard Arrival cards here.

Link: $200 in travel offer (no annual fee) –  Barclaycard ArrivalTM World MasterCard®

 

2. US Airways Premier World MasterCard

The US Airways Premier World MasterCard offers an introductory rate of 0% for the first 12 months, then it’s 15.99% or 24.99%. The introductory rate is for balance transfers. Good stuff.

What we like about the US Airways rewards card:

If you’re looking to make a balance transfer, this card is a good option since it allows you to earn up to 10,000 miles when transferred within 90 days of account opening (keep in mind the 3% balance transfer fee). We also like the annual companion certificate that comes with this card and the sign-up bonus of 30,000 miles isn’t bad.

FYI- Now is a good opportunity to grab the US Airways card if you don’t already have it, because it will most likely go away some time after the merger with AA is complete. Dividend miles will eventually be able to be used for OneWorld flights, so you might see it as a way to get some AAdvantage miles. Of course, you can still use Dividend miles for Star Alliance flights until March, 30, 2014, but finding space will be competitive and people are already seeing less award inventory.

Link: The US Airways Premier World MasterCard®

 

3. Lufthansa Premier Miles & More

The Lufthansa Miles & More card offers a 0% introductory APR on purchases and balance transfers for the first 12 billing cycles after the account is opened. After that, your APR will be 15.99% or 24.99%, based on your creditworthiness.

What we like about the Premier Miles and More card:

Well, we used to like the sign-up bonus of 50,000 miles, but that offer has been decreased to 20,000 after first purchase and 15,000 more after qualifying balance transfer. Still, the opportunity to earn up to 35,000 miles isn’t awful, and we like the chance to earn rewards on a balance transfer. The annual companion certificate is nice, too!

Link: Miles & More® Premier World MasterCard®

 

4. Chase Freedom

With the Freedom, you’ll get a 0% Intro APR for 15 months on purchases and balance transfers. For those looking to consolidate/eliminate debt, the 0% on balance transfers is helpful. There is still a balance transfer fee of 3% (pretty standard). After the intro period, the variable APR is 13.99%-22.99%.

What we like about the Freedom:

For starters, we like that Chase recently raised the sign-up bonus on this card from 10,000 points to 20,000 points. No, it’s not the best bonus in the world, but an increase is better than none, especially on a no annual fee card. And the Freedom definitely has its charm – like the 5x quarterly rotating categories. I earn a pretty 30,000 Ultimate Rewards points a year for taking advantage of the bonuses.

 

5. Capital One VentureOne

The VentureOne card comes with a 0% introductory APR on purchases until December 2014, then it jumps up to 11.9% – 19.9%, based on your creditworthiness. The same APR applies for balance transfers.

What we like about the Capital One VentureOne: 

The Capital One VentureOne is a solid no annual fee card, offering a $200 in travel singing bonus and 1.25 miles on every dollar spent. You really can’t complain about that. It also has no foreign transaction fees, making it good for – yep, you guessed it – travel.

 

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Citibank Secured Credit Card Review

The Citibank Secured card offers interest on your deposit.

If you’ve already looked into the Citi Secured MasterCard, you might be a bit confused, since there doesn’t seem to be any mention of it in the Citibank website. Your eyes aren’t fooling you – it isn’t there. In order to get the details on this card, you need to head to a Citibank branch and talk with someone about it in person. They won’t even tell you over the phone. Pretty lame. Here’s another (better) secured card you can apply for right now – First Progress Platinum Prestige MasterCard® Secured Credit Card. 

Luckily, we did that leg work for you! Here’s the low-down on this secretive card.

Applying

As you might guess, you have to apply in person, and then it can take up to four weeks for your application to be processed. That’s a long wait for a secured card.

On the bright side, we were assured this card is easy to qualify for. That’s not saying much for a fully secured card such as this one, and customers report varying experiences. What’s clear is that not everybody gets accepted. However, the manager we interviewed claimed that there are few reasons not to accept an applicant, since the account is fully secured. Most likely, you should not have any major financial snafus such as recent bankruptcy, and not request a credit line that is too big.

Security Deposit/Credit Line

This card is “fully secured,” which means that your credit line will exactly equal your security deposit. The Citi Secured card functions on a “name your deposit” principle, with a minimum deposit of $200. Interestingly, the Citi representative informed us that there is no formal upper limit on requested deposits, but that the bank won’t issue something ridiculous like “thousands of dollars” to someone with a very low credit score. Other sources claim that you should consider this card to carry a $5000 maximum on the deposit.

If you can afford it, choosing a larger deposit can be a good way to accelerate rebuilding your credit score. That’s because if you have a higher credit limit but your spending remains the same, you end up using a lower percentage of your available credit. In other words, you have a lower credit utilization ratio, which helps improve your credit score. If this strategy interests you, you could check out the Wells Fargo Secured card, which offers a higher maximum deposit but doesn’t pay interest.

The Citi Secured card, on the other hand, does pay interest. Once you open the account, your deposit is put into a 1-year CD carrying a 1.01% APR. That’s pretty solid! If you were to establish the account with a $5000 deposit, you would get $50 after a year.

Remember, a CD is a special kind of account that you can’t touch for a specified period of time, or else pay a penalty fee. In the case of the Citi Secured card, the CD has to remain untouched for at least one year, if you want to avoid paying the penalty fee. Since the CD is linked to your secured card, the deposit remains completely inaccessible to you until you close the account.

Graduation

There is no automatic graduation option for the Citi Secured card, but you are welcome to apply for a “real” credit card with Citi after some time. The Citibank manager we interviewed recommended waiting at least 18 months after opening the secured card to apply, keeping credit utilization below 50%, and always paying on time and in full for the best chances at getting accepted for a better card.

Unfortunately, if you do get accepted for a real card with Citi, there is no conversion option. That means that you will have to close the secured card account and open a new one for the new card. We prefer secured cards that allow you to simply convert the account into a non-secured version, because then you don’t affect the length of your credit history. (Having a longer credit history is good for your credit score.)

The Rest

The Citi Secured card carries a $29 annual fee and 18.24% APR. These numbers are average for a secured card from a major bank. Unfortunately, the benefits are sparse – this card doesn’t offer purchase protections, insurance, warranty extensions, etc. But to be fair, secured cards that do offer those benefits are few in number. (One that does is the Digital Federal Credit Union Secured card.)

The Citi Secured card isn’t perfect, but it offers the best interest rate we’ve seen from a secured card. If you have to put a big chunk of cash away for a while, it might as well be growing while you wait.

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Secured Credit Cards for Bad or No Credit

Bad credit or no credit, it can be hard to get an issuer to cut you some slack. Secured credit cards are a good option for those who ready to start building or re-building credit.

Think about it: if you have bad or no credit, lenders see you as a risk. With no credit history, there’s no evidence to show that you will repay your debt. Even worse is a bad credit history. Would you lend money to someone who has a record of not paying it back? Even close friends and family would have a hard time getting you to hand over that cash.

Now imagine if your uncle, who in the past hasn’t been paying his debts, comes to you for money. But first, he hands you a hundred dollars, then asks to borrow fifty dollars. You would probably agree, and leave fifty bucks richer.

That’s the basic idea of a secured credit card.

The Concept

In real life, nobody, uncle or otherwise, would do that because it doesn’t make a whole lot of sense. Why give your lender just as much or more money than you’re going to borrow, when you could just keep all your cash? Well, in the case of secured credit cards, the reason is right in the name. You are getting a genuine credit card when no one else will give you one.

Essentially, what you are doing is paying for the privilege to have a line of credit. In turn, your lender will report your credit activity to the major credit bureaus, which over time rebuilds your credit and raises your credit score. After some time passes, your credit will be high enough for you to graduate to a better, “real” credit card.

Some people disparage secured credit cards as being functionally like prepaid cards, in terms of cash in-flows/out-flows, and as you can see, this is sort of true. But that line of thinking misses the point. If your credit score has taken a beating, you shouldn’t be in the mindset of looking for more “real” credit. You should be taking hold of your finances, accumulating cash and security, and rebuilding your reputation with lenders.

Don’t be spooked away from credit cards just because you made mistakes in the past. Without a good credit score, you are going to be paying out the nose in interest rates on future loans such as mortgages, auto loans, etc. Not to mention that most hotels, airlines, and rental car agencies require a credit card to make reservations. Those who take debit cards usually require a deposit. Even many employers use credit scores to gauge potential employees for hire.

How It Works

Enough of theory. Let’s get down to specifics.

  • When you open a secured credit card, you put down some cash. Ever had to pay a security deposit when you signed a lease? It’s the same idea. In the case of an apartment, if you took care of the property and left it clean and undamaged, you got your deposit back. Otherwise, your landlord took some or all of your deposit to pay for the damage. It works the same way with a secured credit card. If you pay all your credit card bills on time, you will get your deposit back when you close the card.
  • Typically, your credit limit will be no higher than your deposit, and sometimes it will even be less. Some cards allow you to increase your credit limit by putting down more money into your deposit, while others will increase it after you’ve made consistent monthly payments for a certain period of time.
  • The card issuer usually won’t tap into your deposit after just one or two late payments. But if you fall seriously delinquent (think about 150 days), they will close your account and take the deposit. By that point, interest charges have likely caused your balance to exceed your deposit, so not only is your credit worse than before, but you have additional debt. This is not a pretty road. Don’t go down it.

Getting a Secured Credit Card

  • The most important thing when looking for a secured credit card is that the card issuer will report your credit activity to the major credit bureaus. Absolutely do not apply for any secured card that does not do this for you, because that’s the entire point. Reporting your activity is what will rebuild your credit.
  • Compare interest rates, fees, and all other costs. Secured cards are a market of their own, and good lenders will be competing with each other to secure your business. Since so many people with bad or no credit are feeling desperate, many card issuers take advantage of that by charging ridiculous fees and interest rates. Just say no to such schemes.
  • With that said, many will charge processing fees, application fees, and annual fees. You probably can’t avoid annual fees, but try to find one with no application fee.
  • Secured credit cards typically have higher APRs than normal cards.
  • Some secured cards will put your deposit into an interest-bearing account.
  • Check whether the card you’re interested in will allow you to convert it into a normal card after a certain period of time. This is a nice thing to have, but not necessary.
  • Credit unions often have the most favorable fee schedules for secured credit cards, so give your local one a look.
  • Sometimes secured cards can even come with a rewards system! This is a nice bonus, but it should be a low priority, since fees can easily undo rewards.

Obviously, it pays to compare and contrast many secured card options before making a decision. Here’s one we like to get you started, the Capital One Secured MasterCard. Good luck!

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Chase Slate Balance Transfer Credit Card Review

The Chase Slate credit card is changing the game in its particular market niche. Those of you who carry a balance — and/or maybe think it’s about time to transfer that balance — will definitely want to get a load of this.

Typically, cards with a 0% introductory offer for balance transfers still charge a balance transfer fee of (usually) 3%. This tends to still be a favorable offer, but it leaves the consumer with some calculations to do. If your current credit card balance has an APR of 18%, say, then that means it takes about two months for the balance to accrue 3% interest. So the question becomes: is it worth it to pay two months of interest upfront in order to secure 0% for over a year? How quickly could you pay it off otherwise? Whip out the calculators and spreadsheets…

Oh wait, except with the Chase Slate, you don’t have to worry about any of that at all, because there is no balance transfer fee. None. And there is still an introductory 0% APR on all purchases and balance transfers for the first 15 months.

Believe It, Transfer It

Sound too good to be true? It’s true-blue, in classic Chase style. Clearly, they know how to keep all levels of their cards competitive. There are some details to be aware of, though.

  • Balance transfers are free as long as you make them in the first 60 days. After that, it’s the usual 3%.
  • Remember that you can’t transfer balances between cards issued by the same bank. That means no transferring balances to the Slate from any other Chase card.
  • You can’t transfer balances that are higher than your credit limit.
  • And if you do accidentally go over your credit limit, or make a late payment, on ANY Chase account, you can kiss your introductory 0% APR goodbye, because you will be slapped with a 29.99% penalty APR. Yikes!

By the way, there’s also no annual fee, as to be expected. There is a foreign transaction fee, though. You can’t win them all.

Blueprint

There’s another reason that the Chase Slate is particularly suited to those who carry a balance. This card, along with a few other Chase cards, comes with a nifty tool called Blueprint that helps you track your expenses and set up payment plans. Directly from your browser, you can use create plans to pay certain purchases or categories of purchases off in full every month, set up payment plans for large purchases or even your whole balance, or simply track your spending. Your created payment plan then shows up on your statements alongside everything else.

Although… Let’s put our critical thinking caps on for a moment. Chase proudly advertises that with Blueprint’s Full Pay feature, you can “pay no interest on selected items,” …wow, pretty sweet!… “if you pay them off in full.” Wait, what? How is that any different from any credit purchase ever?

It’s not. Don’t be fooled — Blueprint does not give you any special interest rates on select items, or do anything really. It’s just a tool that you can use for your own planning. It does nothing that a calculator, spreadsheet, calendar, or notebook couldn’t do for you. Except it’s prettier and easier to use.

There is great value in obsessive budgeting! But our advice has been and continues to be that you should pay everything off as quickly as you can — it’s that simple. You don’t really have to break your balance down by categories; it doesn’t matter ‘which’ dollars you pay off. You have to pay the whole thing eventually anyways, and every dollar left unpaid will accumulate interest charges. The faster you pay, the less you pay.

Still, Blueprint is valuable for its psychological benefit. If you feel overwhelmed, it’s nice to have numbers broken down for you. A good mindset is a valuable intangible asset. Chase claims that customers who use Blueprint’s payment plan features tend to pay off their debts twice as fast. So clearly, it works for many people. Despite, you know, not actually doing anything. Hey, whatever lights a fire, right?

Perks

The Chase Slate comes with no rewards program. Boohoo. Don’t be surprised; that’s not what this card is about. It’s about becoming debt-free. Nobody who carries a balance should sign up for a rewards card, because rewards cards’ interest rates are much higher, certainly higher than the rewards.

But you do get $0 liability for fraudulent charges, as well as protection for your purchases against loss or damage for 60 days (up to $250).