Credit Cards

Why Are People Scared to Have Multiple Credit Cards?

In the recent world, banking business has provided new technological facilities that are making our lives easier than ever. Starting from online banking transactions to payouts through cards, transferring money from world’s one end to other has become a regular exercise. The two basic types of cards, Credit and Debit cards have made the transaction a simple process. However, some people are yet not used to the system and some are afraid of using it for various purposes. Here, we will talk about why people are afraid of using credit and debit cards and how can these issues be solved.

Reasons to be Afraid of Multiple Credit Cards

People usually use multiple credit cards to earn more credit points which can benefit them in getting a loan, reducing insurance rate and even get themselves a job. But not everyone is familiar with these advantages. They mostly fear using multiple credit cards because –

  • They don’t like using banks for money transfer. They fear banks might loot them instead of saving their money. They think using a credit card will increase the chances of a bank trapping them with debt.
  • The idea of taking or borrowing money from a bank makes people feel indebted towards the bank. They don’t prefer to have such a risk which can become a serious issue if there is any problem with transactions.
  • Everyone does not have a fixed monthly salary. While using a credit card, the amount taken from the bank will be charged from your account on a monthly basis. Usually, depending on the salary these allowances are given which is not applicable in some people’s cases.
  • They fear to spend too much through credit cards and end up going to jail for not being to pay the debt back.

How to Get Over the Fear

These above fears are likely to come in mind of a novice in bank dealings. If you are a regular you know there is nothing to worry about. But for that, you must keep a few things in mind –

  • Build credit history by transacting through credit cards for future loans and insurance benefits.
  • Stay alerted about fraudulent websites and try to keep a check on your payments and debt rate. Your payments on the card should never exceed your income.
  • Have an insurance and cash coverage for unexpected situations.
  • Know the law and try to follow it to avoid legal issues.

To Sign Or Not To Sign – Should you Sign the Back of Your Credit Card

A credit card is the most happening thing in the world of financial transaction. Gone are the days when long queues in banks would give jitters to its customers. With credit cards, there is a degree of financial freedom seldom seen in any other mode. It is also a security nightmare. Imagine, a card with your details falling into wrong hands. Apart from the monetary loss, the loss of identity to is a very big threat. As a result of which, every financial institution issuing a credit card has taken precautions to counter it.

That makes us come to a very pertinent question. Is it necessary to sign in the back of the credit card? Now for years, there has been a school of thought who followed the principle of either keeping the strip blank or mention the statement: “See ID”. However, that really does not make any sense. And the reason for this is that the signature at the back of the strip provides the card holder with an extra level of protection against fraud. You may ask how? When the teller or cashier at the counter provides you with the receipt slip you are supposed to sign, he gives a quick check to the signature done on the credit card. He or she does this to verify, whether the signature belongs to the same person.

More relevant that this is the violation you may be accused of for not signing the credit or debit card signature strip. The cardholder agreement very explicitly mentions the terms and conditions under which the card may be used. One of the conditions is signing at the back of the card.

However, the flip side to this is, many transactions do not require you to sign sales slips. And in a majority of credit or debit card transactions, the employees do not check the signatures. So basically the theory of an extra layer of protection falls flat.

The most foolproof method to keep your card safe is to follow a few rules:

  1. Do not, and I mean never, tell your PIN to anyone. It’s a recipe for disaster.
  2. Do not let any else use your card.
  3. Keep a tab on all the expenses on your credit card. This is the ideal way to find out any suspicious activity on your card.

Following these rules is far more important than deciding whether to sign or not to sign.

How Do I Get Credit

For the average job-holding, nine-to-five adult, the biggest question when it comes to credit is “Is mine good or bad?” But for many college students, the more pressing question is “Where do I even start?”

credit cards

The scene: Jason, a fresh-faced recent college graduate gets a new job and decides he probably will need a car to get to work. He finds an affordable, reliable vehicle but has to finance it because he does not have enough money saved to pay for it outright.

The problem: He’s rejected for financing not because he has bad credit, but because he has no credit.

This scenario plays out all too often for college students and many other young people taking their first few wobbly steps to financial independence, but there are several ways to prevent it.

Step 1: Know Where You Stand

Just because Jason had no credit doesn’t mean that every college student is stuck in the same conundrum. Many students may be making credit histories without even knowing it.

Ever had a student loan? The many college graduates drowning in student loan debt might have more credit to their names then the lucky few who graduate debt free. Basically, anything that requires monthly payments could build credit. Think back to loans, gym memberships, rent checks, and the like.

Everyone is granted one free credit report per year. Take advantage of this service by using a reputable credit-reporting bureau, such as Equifax, Experian, or TransUnion.

Step 2: Get a Credit Card

This part can be tricky. The credit conundrum can prevent people like Jason from getting credit cards simply because they have no credit. So how are they ever supposed to build their credit?

Most banks offer secured lines of credit to their customers. This means that account funds are used as collateral should credit holders fail to make payments.

Store credit cards often have more lenient requirements and lower credit limits, so they are also a good first step to establishing credit—as long as they’re handled responsibly!

Step 3: Take No-Interest Offers in Stores

Ever seen the “same as cash for 90 days” in-store offers on big-ticket items? It’s easy for them to sound like scams, but they’re not. Just be sure that you have the right amount of money, and sign up. This is, in essence a loan, and, if you make good, regular payments, it’s a no-extra-cost way to establish some credit.

Many of these offers have time limits set before you will have to start paying interest, so be sure to read the fine print with any of these offers to avoid getting in over your head.

Debit Card or Credit Card

For the average American credit and debit cards are a necessity, both allow an individual to make purchases at a variety of stores and online. There are many similarities between the two types of cards, but also some key differences. For the young fiscally responsible consumer it is important to understand these differences, to ensure that you have the best card for your own preferences and lifestyle.

credit card
Credit card or debit card?

Debit cards directly withdraw money from an your checking account while Credit cards are based on a credit system. An individual who uses their credit card is essentially taking a loan from their credit card company that they will pay back at a later date.

The biggest advantage of a debit card is somewhat obvious, by using a debit card you can never over extend your credit. Since the money used comes directly from your account, you will never be able to use more money than you actually have. Another perk of a debit card is that it can be used to withdraw cash from an ATM. Essentially the debit card acts as a more transportable mode of cash. A debit card can be used as a good tool to teach yourself about budgeting and monitoring your expenses.

The advantages of debit are also its weaknesses. Debit cards are often less protected than credit cards. Because debit cards have direct access to your account a thief has an easy way to quickly remove your money. Many debit cards do have fraud protection policies, which are always important to ask about. However, if your card is stolen and is used fraudulently the money is removed directly from your account. This means that you could be left without money for days or weeks before your bank acts on the problem and reimburses you.

Credit cards offer more protection than debit cards. Because credit cards loan you money instead of directly withdrawing money from your account fraudulent charges will not actually take away your money if you or your credit card company notices the charges in time. However, this system also has problems. Because credit cards loan you money you can easily use more money than you actually have. This may cause you to build up debt. Another aspect of credits cards that adds to the accumulation of debt is how the credit card bill is set up. Credit card bills do not have to be paid in full; it is possible to make a minimum payment on your credit card bills. Essentially this allows an individual to pay enough to keep the card active, but they will still need to pay off the rest of their debt at a later time. While this might be helpful during a time period when you need to stretch your money a little further, it is a dangerous cycle to get involved in, and it often does not end well for the credit card owner.

Debit cards and credit cards are both useful monetary tools. They both offer advantages and disadvantages. Debit cards offer more protection from yourself than credit cards do; however, credit cards more effectively protect you from the ill will of others. Depending on what type of a spender you are, and how much protection you want for your money you can easily decide the type of card that best suits you.

 

How do I Improve My Credit Score?

When it comes to the importance of improving your credit score, it is almost as important as losing weight!
Credit Score
Whether your credit is bad or relatively okay, you need to know your current position before you try to improve your credit score. Free credit reports can be obtained one every calendar year. If you haven’t gotten yours yet, now is the time to do so. Before proceeding with anything, make certain there are no mistakes on your credit report. If you find something fishy, be sure to report it, have it investigated and maybe even have it removed from your report.

If you want to improve your credit score, like we all do, then here are a few steps that will help you quickly improve your credit score:

1. Pay Down Your Current Cards – While it may not be at the top of your list, it is important to pay down your current credit cards. When you go into a bank for a loan, lenders want to see a significant difference between your available credit and the credit that you’ve used – or are currently using. Balances under 30% of your credit limit are great, but lower than 10% is fantastic! Start with the highest-rate credit card or the credit card that is closest to be being paid off.

2. Get a Credit Card – If you don’t already have a credit card or just have one, apply for a new credit card. You can build your credit by using your credit and then paying off the balance. If your credit happens to be too poor, get a secured credit card. These are similar to that of a pre-paid debit card, as you load money onto the card and that is your credit limit, except that these report to the credit bureaus. Make sure to get a secured card that reports to all three of the major credit bureaus in order to benefit the most.

3. Get an Installment Loan – Revolving, which is considered a credit card, and installment, which is a student loan, a mortgage and a personal loan, are known to be the best types of credit to improve your credit history and your credit score. Get an installment loan if you can – even if it’s a small personal loan.

4. Don’t Max Out Your Cards – There’s no reason to max out every single one of your credit cards. Regardless of whether you pay it back quickly or not, your credit score will not benefit from maxed out credit cards.

Most delinquencies will appear on your credit history for as many as seven years, so you can’t expect to rebuild your credit history and improve your credit score overnight. It is possible to improve your score, though, and it is worth the time and effort to do so. Follow the four steps above and you’ll be well on your way to improving your credit score!