Before you head off on an international trip, give some thought to the method you are going to use to get cash and pay for things during your stay. Ways of avoiding ATM fees have been discussed in an earlier blog, but what about credit card fees?
In many cases, when you use your credit card while outside the country, you will be charged a foreign transaction fee, which is normally at least 3% of the purchase price. It’s not too difficult to find a card with no foreign transaction fees, but these usually charge you an annual fee. Remarkably, you can still find a few cards that don’t charge you either of those fees.
- Capital One is one of the most popular, since it has several cards which have no fees. Some of these also have cash back or travel rewards.
- Discover Card has some no fee cards also. However, it is not as widely accepted in foreign countries.
- Bank of America has a travel rewards card that doesn’t impose fees.
- Credit Unions – Many credit unions issue cards with no fees.
These are a few of the most known cards, although it doesn’t hurt to check with your local bank or your current card holder to see if they have any similar offers. Remember, also, to let your credit card company know when you are leaving town so they won’t withhold payment.
How many times have you bought something at a store, and the clerk asked you if you wanted to open a charge account and save 10 to 20% that day? It’s tempting isn’t it, particularly if you are purchasing a large number of items? But, stop and think before you say yes.
First, the interest rates on store credit cards are often higher than those from traditional sources such as banks. If you don’t pay off your card on time every month, you’ll lose the money you saved pretty quickly. Secondly, if you tend to apply for a lot of credit cards, your credit rating will suffer as a result. Lastly, do you really want all those cards to keep track of? Simplify your life, and only keep one or two.
Don’t have a bank account, but you still want to have a debit card for expenses? JP Morgan Chase just came out with a new product recently that might come in handy for a price. Their card is like a debit card, but you don’t need a bank account to get one. You just go to the bank, pay the $4.95 fee and load up the card with your own money. Then you can use it for a month anywhere you would use a Visa card in much the same way – stores, ATM’s, etc.
Many people don’t have enough money to open a no-fee bank account, so this might be a convenient alternative to carrying cash. If you want to use it for a second month, you pay the $4.95 fee again. You pay the fee every month as long as you have the card.
If you are in a situation where you need a debit card, this is an alternative as long as you have cash with which to “load” the card. All this comes at a price – $4.95 a month, and that fee adds up. Personally, I would rather save the $4.95.
My suggestion? Use something like this if you have to, but only for a month or two. Then, open up a savings account and get a regular debit card without the fee. Better yet? Don’t use a card at all. It is just too easy to spend money with one. Use cash instead, and when the cash is gone, stop spending.
Unfortunately, a lot of stores and companies have gone out of business due to the downturn in the economy. Even places that have been around for a long time and that you thought were safe have gone under.
If you are thinking of purchasing an appliance or other large item for which you need to make a deposit, it would be wise to choose the store carefully. If it files bankruptcy before you get your merchandise, you may never get your money back.
Making this kind of deposit is also one of the times when you should use your credit card instead of writing a check or paying in cash. If the store does go out of business and you contact your credit card company immediately, you might not be charged.
Last, but not least, never pay the whole amount of the item before you receive it. You may think that you can trust the store or salesman completely, but it pays to be cautious.
Most people probably don’t put much thought into choosing a credit card. Others accumulate them like pennies, constantly adding more to their collection. However, there are several things you should consider when applying for a card.
- First of all, don’t apply for more than one or two cards at a time, and limit the total amount of cards you have (excluding store cards) to one or two. Too many can impact your credit score.
- Don’t pay an annual fee. Sure, those perks of the fee cards look enticing, but for the average person, it’s not worth it.
- If you usually carry a balance, look for a card with a low interest rate.
- Check to see how long the grace period is. This is the amount of time you have before you are charged interest.
- Find out what your credit limit would be. Too small an amount may cause you to exceed your limit if you make a lot of large purchases, perhaps resulting in a fee and a higher interest rate. Too high an amount may affect your credit score.
- If you’re carrying a balance on a card with high interest, you may benefit by switching to a new card with a low interest rate for new balance transfers. Some also offer low introductory rates for a fixed period of time.
- If you pay off your credit balance every month, choose a rewards card that fits your needs. Cash rewards are the easiest, although some have limits on the amount you can accumulate in a year. If you travel a lot, you may prefer an airline card. Be sure to check to see when or if your points expire. Restaurant cards are convenient for those who like to eat out a lot.
Credit cards are a great convenience. However, they can also be a big problem for people who have trouble controlling their spending. If you pay off your balance every month, don’t have an annual fee, and get a rewards card, you will come out ahead.
Your credit card comes with a pin number, and can be used just like a debit card to withdraw cash from an ATM. However, this money is considered a loan or cash advance, and you will not only be assessed a fee by the credit card company, but you will be charged interest beginning the moment you withdraw it. In addition, the interest charged may be higher than your normal rate. Therefore, it’s not a good idea to use this method of getting cash unless absolutely necessary.
Another annoying practice that many credit card companies have is periodically sending out convenience checks to be used “just like cash”. Because these also are cash advances, they have the same high fees listed above. As soon as you use one, you begin paying interest – usually at a higher than normal rate. Quite often there is a fee tacked on as well. It’s not a bad idea to call your credit card company and ask that they stop sending you convenience checks. If they were delivered to the wrong address, or stolen from your mailbox, someone else may find them very convenient.
A prepaid credit card, also known as a secured credit card, is similar in concept to a debit card. Here’s how it works: you deposit money into an account. As you use the prepaid credit card, your money is automatically taken out of this account. No bills and no interest. However, you do have to pay a fee when setting up the account and additional fees every time you put money into it. If you have poor credit, it is regarded by some as a means of re-establishing good credit.
The best way to reduce your credit card debt is to control your money. First stop using your card except for emergencies (real emergencies such as a tow truck in the middle of the night.) If you don’t use your card, you will not be adding to the problem. You won’t be digging yourself in deeper. This is the first and most important step to get out and stay out of credit card debt.
After you have stopped using the card, you must begin paying your debt. You knew this day would come, and now it is time to bite the bullet and pay up. Every month make the minimum payment and some extra. The more you pay, the sooner you get out of debt and the less interest you will be paying. The less debt you have, the less interest you have to pay, and the easier it is to get to the $0 balance. It is a wonderful process if you can start and keep to it. When your debt starts getting lower, don’t get over-confident and start charging things again.
If you don’t have enough current income to make the minimum payments plus some extra, then you may have to reduce your lifestyle or take a second job. Still not enough? Take a little bit out of your savings account each month, borrow from your family, get a home equity loan or sell some of your belongings.
OK, all that assumes you have an income and the self-discipline to make your payments. What if you have no income or your total credit card payments are impossible. Try getting a credit counselor or try entering a debt management plan. Look here for how to get these: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre26.shtm
Also, the Federal Trade Commission has a lot of good information on getting out of debt here: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre19.shtm
The actual inventor of the first credit card is lost to history. However, there is a long and illustrious history beginning in Europe in the 1890’s. These first cards were somewhat like single store credit cards now in use.
In the United States such companies as hotels and oil companies began issuing cards to their customers in the 1920’s. The inventor of the first bank issued credit card was John Biggins of the Flatbush National Bank of Brooklyn in New York in 1946. Shortly after that, in 1950 Frank McNamara invented the Diners Club card intended to pay restaurant bills. American Express issued their first credit card in 1958 as did Bank of America. The rest is history.
You can get a prepaid credit card almost anywhere from your bank to Walmart to the corner convenience store or gas station. You give them money which is loaded onto the card. You can then use the card like a credit card until all the funds are used up. Then you have to load more money onto the card.
Be aware that you will be charged fees. Sometimes there are charges to put money onto the card, some may charge a monthly fee, and others may charge each time you use it. Some may charge all these fees. It is a good alternative for those unable to get a regular credit card. Because it is prepaid, they are readily available to almost anyone.