Financial Warnings

Looking for a Credit Card for Christmas Shopping? Before you submit a credit card application, first review the main points which will help you choose the right credit card for your needs.

What Charges You'll Make - If you're going to use the credit card mainly for booking airline reservations and hotels, it might be best for you to get a travel credit card that offers sky miles and hotel points or cashback. If this will be an emergency credit card only, then your main concern may be for a low interest rate credit card with low fees.

When You'll Repay Charges - Will you pay off credit card charges in full every month, or will you carry a balance month to month? If you're going to carry a balance, you want the lowest possible interest rate as well as a low introductory rate. But if you'll payoff balances in full every month, then interest rate really doesn't matter so no annual fee and/or a long grace period would be a bigger concern. If you're going to carry a balance, be concerned about how the finance charge is calculated. The most common method is the Average Daily Balance, which means that the daily balances are added together and then divided by the number of days in the billing cycle. Stay away from credit cards that compute the balance using two billing cycles, as this method costs more money in financing fees.

What Amount You'll Charge - If you're going to use the credit card for all your monthly expenses, then you need a card that has a high credit limit and a high cashback percentage.

More info about Interest Rates, Credit Limits, Incentives, Fees and Penalties

Interest Rates - The interest rate (Annual Percentage Rate) APR can either be a fixed rate or a variable rate that is tied to another financial indicator, most commonly the prime rate. With a fixed rate credit card you know what the interest rate will be every month, whereas a card with a variable rate can fluctuate. Of course, even the interest of a fixed rate card can change based on certain events, such as paying your credit card bill late, exceeding your limit, or simply because the credit card issuer decides to change it after providing you ample advance notice.

Credit Limit - This is the amount of money the credit card company will let you charge to the card. This amount varies depending upon the card offer and your credit history. Be sure to get a credit card with an ample limit, because getting close to your max can hurt your credit score. Just remember that you don't have to max out your limit just because it's available.

Incentives - To compete for and to gain customers, many credit card companies offer rewards. Even if you normally use cash, why not use your credit card and then use the cash to make the payment during the grace period? You still won't pay interest and meanwhile you'll rack-up rewards. A credit card with 5% cashback will earn you $5 for every $100 charged. If your total bills come to $2,000 per month, you'll earn a free $100 every month. Look for a rewards program that you'll use and which offers flexibility, such as cashback or travel.

Fees and Penalties - Compare common charges such as late fees, overlimit fees, balance transfers, cash advances, and for making payments by telephone. Regarding balance transfers, look for credit card offers with no transaction fees and zero percent interest for at least 12 months.

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Financial Warnings

By Credit Federal | Published 02/16/2006

Here is a list of Credit Federal's Top Ten Financial Warning Signs. Are you in financial danger? See if any of these apply to you:

Free Personal Finance Software - Create your household personal budget to easily itemize and track expenses so you know where you spend your money most. Desktop software makes it easy to balance checkbook entries, or use the software as an electronic checkbook register.

You do not balance your checkbook: If you do not balance your checkbook against your monthly bank statement, you risk bounced check fees or overdraft fees.

You frequently receive late bill payment notices in your mail box.

You dread the ringing of your phone, fearing it may be a collection agency.

You do not have a personal household budget, or you fail to follow it.

You frequently use a credit card to make bill payments or to buy essentials such as food, because you are short of cash between pay periods.

You often make the minimum monthly payments on your credit card.

You borrow money from friends and family on a regular basis.

You need to spend most of your tax refund just to get caught up on bills.

You do not properly maintain your auto (rotate tires, change oil, get a tuneup) because you cannot afford the expense.

You do not have adequate insurance (life, home, auto, medical, dental) because you cannot afford the premiums.

If you are having difficulty with financial management, here are possible solutions:

- Consider getting professional help from a credit counselor.

- Consider using the equity in your home or auto as a low interest loan to payoff higher interest debts.

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Financial Warnings - by <a href=http://creditfederal.com>CreditFederal.com</a> Here is a list of Credit Federal's Top Ten Financial Warning Signs. Are you in financial danger? See if any of these apply to you: Free Personal Finance Software - Create your household <a href="http://creditfederal.com/personal-budget.html">personal budget</a> to easily itemize and <a href="http://creditfederal.com/track-expenses.html">track expenses</a> so you know where you spend your money most. Desktop software makes it easy to <a href="http://creditfederal.com/balance-checkbook.html">balance checkbook</a> entries, or use the software as an electronic <a href="http://creditfederal.com/checkbook-register.html">checkbook register</a>. You do not balance your checkbook: If you do not balance your checkbook against your monthly bank statement, you risk bounced check fees or overdraft fees. You frequently receive late bill payment notices in your mail box. You dread the ringing of your phone, fearing it may be a collection agency. You do not have a personal household budget, or you fail to follow it. You frequently use a credit card to make bill payments or to buy essentials such as food, because you are short of cash between pay periods. You often make the minimum monthly payments on your credit card. You borrow money from friends and family on a regular basis. You need to spend most of your tax refund just to get caught up on bills. You do not properly maintain your auto (rotate tires, change oil, get a tuneup) because you cannot afford the expense. You do not have adequate insurance (life, home, auto, medical, dental) because you cannot afford the premiums. If you are having difficulty with financial management, here are possible solutions: - Consider getting professional help from a credit counselor. - Consider using the equity in your home or auto as a low interest loan to payoff higher interest debts. This article provided courtesy of <a href=http://creditfederal.com target=_new>www.CreditFederal.com</a>, a personal credit resource of good or bad credit credit cards and loans.

Credit Tip: Need a high limit for Christmas credit card charges? If you have bad credit, consider a personal loan by refinancing your mortgage. Even if you have cash to buy Christmas presents, we recommend using a prepaid card to make purchases because it's safer than carrying cash.