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The Lowdown on Credit Cards Credit cards are seen as wallet staples these days. It’s hard to find someone who does not own at least one card. But we also know that plastic money has its own pitfalls. As we have stated in the first part of this report, debt is not a tool. It can do more harm than good, and can be disastrous if you let it go out of hand. That being said, most of us need credit cards in today’s economy. So in addition to preventing your balance from accumulating by not paying your dues on time, a crucial step that all potential card owners need to take is to try to get the right card for you. When we say “right card” we’re talking about the plastic that reduces your costs. To do that, you need to examine your spending habits. If you are the type who sees to it that all debts are paid on time, the annual percentage rate would be the least of your considerations. After all, you won’t carry a balance anyway. What you are after would be a card that is willing to waive the annual fee and has lengthy grace periods. A “rewards card” will also allow you to reap the benefits of your prompt payments. This can be in the form of frequent flyer miles or other freebies. However, if you are the type who would prefer the minimum payments—not really a good idea, though—then the interest rate matters big time. The lower it is the better. For those who have the tendency to go on a shopping spree when they have plastic in their hands, a secured card is better. With this card, the deposit you put in serves as your credit limit. So if you only have $500 there, then that’s all you have to spend. You also need to pay it off like a regular credit card and interest accrues if you don’t. This is also the recommended card for those who are trying to rebuild their credit. Don’t fall for every credit card offers that come your way. At the most, you should only have two cards with you. The others only serve to tempt you to buy things which in reality you cannot really afford. Habits to Nurture to Get Low Interest Rate Credit Cards When looking for credit cards that charge low interest rates, you want to make sure that you nurture certain habits. Before, it used to be so easy for banks to offer low rate plastic in a highly-competitive market. But the bankruptcy filings which have

increased over the years have also made them cautious and picky with those they give these cards to. So if you want to get the low rate cards, be sure to: 1. Show a history of punctual payment. Usually, they look at your bill paying habits in the last three to five years. If you have ever been late for one or two months (or more) in your bills, you’re lowering your chances of getting a lower interest rate. 2. Be employed for at least a year with your current employer. Aside from job stability, banks also want to see that you’ve been living in the same house for the same span of time (or longer) as well. 3. Show that you are not heavily in debt. They will look at your usage ratio or the ratio of your outstanding debt to your credit limits. The higher it is, the more difficult it will be to qualify. Instead of you having to put the merchants on your account and arranging for the deductions, you can instead have the merchant automatically deduct their charges direct from your account on a certain date each month. For example, you can arrange with your cellphone company to directly deduct your bill from your checking account each month and they will do that for you. Just make sure that you are dealing with a reputable merchant. You should also still do the necessary checks that the merchant has only deducted the exact amount from your account. Reports of some merchants directly levying additional charges have made a lot of individuals wary of this mode of payment. •

Trusted Envelope System

If you would rather pay for things in cash, then the time-trusted envelope system works best. Put all the expenses and amounts in appropriately-labeled envelopes. When the “dinners out” envelope starts getting low, you know it’s time to do more home-cooking.

Check out for more Information on Ways to Get Out of Debt. Other related info you might be interested in:

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The lowdown on credit cards  
The lowdown on credit cards