7 Mistakes We All Make When We Have Credit Card Debt

Let’s just come right out and say it: We all make mistakes.

Accidentally dyed your whites a startling shade of pink in the washing machine? Check. Set off the fire alarm when you attempted your first home-cooked meal? Of course. Said “thank you” to a waiter when they told you to enjoy your meal? Find us one person who hasn’t done that.

And when it comes to money, particularly credit card debt, we’ve all had our fair share of missteps.

In fact, it seems like we’re all making the same mistakes over and over, a la “Groundhog Day.” But the time has come to break that cycle.

7 Mistakes We All Make When We Have Credit Card Debt

If you find yourself dealing with credit card debt and worry you’re not handling it in the best way possible, don’t worry. We’re all in the same boat.

1. Overpaying for Interest (and Never Questioning It)

A woman looks in her empty wallet.

When you think about how much debt you have, you might feel a little anxious.

That’s where a company like Fiona can be helpful. It can help you find personalized lending options to refinance or consolidate your debt to potentially save thousands dollars in interest.

Fiona will show you all the lenders willing to help you pay off your credit card and eliminate the headache of paying bills by allowing you to make one payment each month.

You can borrow up to $ 100,000 (no collateral needed) and compare interest rates, which start at 4.99%. The idea is to secure a loan at a lower interest rate, potentially helping you save thousands. Repayment plans range from 24 to 84 months.

Take, for example, Katherine, who faced $ 12,000 in credit-card debt. Holding her back? The 15.24% interest rate. By refinancing with a 5%-interest, seven-year personal loan, she saved $ 12,000 in interest.

If she’d kept on the same road, she would have paid something like $ 14,000 in interest alone over 25 years. Yikes.

So even if you’re simply curious about what’s out there, checking rates on Fiona won’t hurt your credit score — and can probably save you in interest.

2. Sticking to a Budget That Doesn’t Work For You

So, you decided you were going to tackle that credit card debt. The best place to start is making a budget, right?

You did some research, picked out a budget method and have followed it to a T — or tried to at least, because we all know budgeting hiccups are inevitable. So why, even though you did the so-called adult thing and made a budget, are you still feeling overwhelmed by looming credit card debt?

It’s pretty simple, actually: There isn’t one magical, cure-all budget. Everyone’s financial situation is different, so it’s important you find a method that actually fits your lifestyle. You want to control your budget, not the other way around.

Don’t just think about numbers such as income and debt when creating a budget. Consider outside factors that could make your planned budget destined for failure.

How much time and energy are you willing to devote? Are you a schedule-follower by nature, or more go-with-the-flow? Are there any obstacles conflicting with your budget, such as an irregular pay schedule?

Finding a budget that works for you will make you feel more in control of your finances, including that pesky credit card debt.

3. Overpaying for Other Monthly Bills

A notebook with a paged labeled budget sits on a bed with some pens.

You’ve made a budget, you’ve checked it twice — so why are you still wondering where the heck your money is going?

It’s time to dive deep and figure out which bills are taking more than their fair share. Instead of manually sorting through every single credit charge, let someone else do it for you… or something, really.

First, download TrueBill, an app that’ll negotiate your bills, cancel unwanted subscriptions and refund your bank fees. And yes, that includes the Barnes and Noble membership you’ve had since 2009 — even though you haven’t set foot in a brick-and-mortar bookstore in roughly five years. Tsk tsk.

Another bill that makes your eyes involuntarily widen every single month? You guessed it: Insurance.

Insurance bills can be hard to swallow, but the mere thought of shopping around for new rates is arguably worse. Fortunately, Gabi will do the leg work for you.

And the best part? You don’t even have to fill out any forms. Simply link your insurance account and provide your driver’s license number, and Gabi will go to work..

The service will compare major insurers’ rates for your same level of coverage, and even help you switch on the spot if it finds you a better rate.

Once you trim some of your monthly bills, you’ll have a bit more breathing room for paying off that credit card debt!

4. Overpaying for, Well, Everything Else

A woman sits on her couch and uses her laptop.

Dealing with credit card debt doesn’t mean you can just stop spending money. And a major part of life is shopping, whether it’s at the grocery store for necessities or at the mall for a treat yo’self day.

Luckily, there are services that can help you feel a little less guilty every time your swipe that card. How, you ask? By ensuring you’re getting the best deal possible, one way or another.

First up we’ve got Paribus, a tool that gets you money back for your online purchases. It’s free to sign up, and once you do, it will scan your email for any receipts. If it discovers you’ve purchased something from one of its monitored retailers, it will track the item’s price and help you get a refund when there’s a price drop.

For once, it’s a good thing to not clear out your inbox.

Another way to avoid overpaying while shopping online? Ebates, a cash-back shopping site that rewards you simply for buying something online! You can earn 1% to 25% on purchases from more than 2,500 online retailers.

There’s no charge, and Ebates even offers you a $ 10 Walmart gift card as a sign-up bonus.

Disclosure: Paribus compensates us when you sign up using the links we provide.

5. Letting Bills Fall Behind

It’s no secret that falling behind on payments is basically the opposite of what you want to do when dealing with credit card debt or any kind of debt, for that matter. What we all need in this situation is a little incentive to stay on track.

That’s where MoneyLion comes in This app offers rewards to help you develop healthy financial habits and will literally pay you for logging onto the app.

You connect it to your bank accounts, credit cards and other financial accounts. Based on your income and spending patterns, it offers personalized advice to help you save money, reduce your debt and improve your credit.

The app’s reward program will give you points for being financially responsible. Make a loan payment on time? Boom, 200 points right there. You can redeem them for gift cards to more than 15,000 retailers, including places like Walmart, Applebee’s and Amazon.

Let MoneyLion help you stay on top of those credit card bills, and handle them like a boss.

6. Thinking You Can’t Afford to Save

A man looks at the cash in his wallet.

Sure, you want to pay off your credit card debt as quickly as possible. But that doesn’t mean you shouldn’t still be devoting some money to your savings.

What if you get hit with an unexpected expense, such as a busted water heater or a trip to the emergency room? Without ample savings to help you out, you’ll only add to your debt anxiety.

We know saving money can be tough, but what if you could do it without even thinking about it?

No, we’re not talking about sorcery, we’re talking about Digit, an innovative app that will automate your savings.

All you have to do is link your bank account, then Digit uses an algorithm to calculate how much money you can safely set aside each day. It will put that money into a FDIC-insured savings account.

The out of sight, out of mind strategy takes the stress and legwork out of saving. One Penny Hoarder, a self-proclaimed “bad saver,” managed to tuck away $ 4,300 using the app.

Digit is free to use for the first 30 days, then it’s $ 2.99 per month afterward.

7. Letting Your Debt Take All the Fun out of Life

Listen, we understand that credit card debt is always at the back of your mind, popping up uninvited, trying to stress you out. We’ve all been there.

But here is a money mantra we stick with and want you to give a try, too: My debt does not control me.

You can be responsible, make budgets and stick to them; pay your bills on time; and save on expenses when possible. And all the while, you can live your life without sacrificing all of the fun stuff. Your financial health is important, but so is your physical and mental health!

Constantly be on the lookout for sneaky ways to save while still enjoying your social life, like hosting happy hour at your house instead of going out. And if you’ve got the time, consider finding a side gig that not only lets you earn some extra income, but is just flat out fun.

Might we suggest dog-walking with Rover? I mean, come on: Getting paid to hang out with dogs? Sounds like a slam dunk.

In short, your credit card debt is obviously important, but don’t let it stop you from living your best — but still financially responsible — life!

Kaitlyn Blount is a staff writer at The Penny Hoarder. She’s made her fair share of money mistakes on her debt journey. Do you have five, maybe six hours to spare to hear about them?

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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How Many End Credit Scenes Are in Spider-Man: Into the Spider-Verse?

With the reviews now in for Spider-Man: Into the Spider-Verse, we can reveal whether there are any end- or post-credit scenes in the Sony-Marvel film and, if so, how many.

Turn away now if you don’t want to know!

Still here? OK then…

There isn’t really a mid-credits scene in Spider-Man: Into the Spider-Verse, but there is a nice and touching tribute to Spider-Man creators Stan Lee and Steve Ditko.

The post-credits surprise, on the other hand, is a full-fledged scene.

Again, spoilers follow!

The scene features the surprise arrival of Spider-Man 2099, the Spider-Man of the future. The man under the mask is Miguel O’Hara, voiced by Oscar Isaac (a.k.a. Poe Dameron). His appearance leads to a fun retro-trip to the old Spidey cartoon from the 1960s.

Continue reading…

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Don’t panic, but the Labor Department might access your credit report

Dear John: I recently reviewed my TransUnion credit report and learned Labor Secretary Alex Acosta had accessed my credit reports. Since I don’t work for Labor and I’ve not applied for credit from Labor or its federal credit union, it is alarming to me that Acosta and his staff would access my credit reports. I…
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central bank official.


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She Ditched Her Debt Collectors — and Raised Her Credit Score Nearly 200 Points

Tabatha Pankop spends long days on her feet. She waits tables, sometimes working double shifts for 15 hours at a time. Like most hardworking Americans, she has dreams of financial stability and homeownership.

There was just one problem.

“I just never thought having a low credit score would really impact your everyday life,” the 31-year-old Tampa server says.

Some old, and apparently unpaid, bills had hurt her credit. They included an old cell phone bill and an old power bill, among others.

“I guess a deposit or some type of rent that I thought I paid off, but I didn’t,” she says.

With her credit score dropping into the low 500s, she and her boyfriend were living in an older apartment, because that’s all her credit would allow. Pankop dreamed of buying her own townhouse, but that looked out of reach.

The aggressive phone calls from debt collectors didn’t help, either.

“Debt collectors — ah, man, they just literally harass you,” Pankop says. “They will say things that are inappropriate, and sometimes they can make you cry because they will say things that are very rude.”

That’s when a co-worker told her about Collection Shield 360, a credit repair service that helps people clean up their credit reports and deal with collection agencies.

Quick Results: ‘My Credit Skyrocketed.’

She decided to give it a shot and signed up. She quickly saw a dramatic difference in her credit score.

“Within a few weeks — maybe three months at the most — my credit skyrocketed,” she says. “Before I started with Collection Shield, I was at [about] 520, 530. Now I’m almost at 700. It’s just amazing.”

Collection Shield 360 offers two membership options:

  • Basic membership provides free credit-repair services with no cost to sign up.
  • Premium membership provides faster results and includes automatic monthly updates of your TransUnion credit score and collection accounts. You can sign up for premium for $ 1 for a two-month trial; then it’s $ 9.48 a month.

Here’s what it does:

  • Contacts your debt collectors to have negative marks on your credit report removed.
  • Provides you with credit bureau dispute letters that can help scrub your credit report.
  • Connects you with consumer attorneys who provide free legal services to help you remove negative items from your credit reports.

In Pankop’s case, it helped her deal with lingering bills from T-Mobile, Bright House Networks and Verizon.

Now, Pankop has just signed a lease on a new apartment she never imagined she could get into. Next, she’ll start looking for a nice little townhouse to buy.

Then she’ll go to nursing school.

“With having great credit, I’m able to get student loans with a lower interest rate,” she says. “I plan on getting my RN within the next few years.”

For her, it’s like a breath of fresh air.

“This has put me in a position where I’m becoming an adult, instead of that young girl figuring out her life.”

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. He knows what it’s like to get calls from debt collectors.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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Here’s How The New FICO Credit Scoring Will Help Your Credit

Have you checked your credit score lately? Well, a new FICO credit scoring system is expected to debut in early 2019—and it may lead to a favorable boost in your credit if your bank activity is in line with standards.

The Fair Isaac Corp., the originators of the coveted FICO Score, is planning to create a more holistic credit scoring method. Traditionally, a borrower’s credit-worthiness has been calculated based on payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%). Now, Fair Isaac Corp. will factor in a person’s ability to manage liquid assets such as checking, savings, and money-market accounts.

This new credit metric, the UltraFICO Score, is FICO’s solution to broadening lending eligibility. Experts believe this shift in credit scoring will increase access to credit products by leveraging consumer-driven bank information to assess an individual’s financial management capabilities. Lenders will now see an enhanced view of financial behavior that can impact lending outcomes and approval ratings.

Credit scores are synonymous to the report cards you get in school. It shows how well you’ve performed in a variety of financial areas to determine how likely you are to repay a loan. These scores are used by a variety of lenders to assess your credit personality and risk profile.

FICO estimates the UltraFICO Score scoring will improve credit access for the majority of Americans, especially those with credit scores ranging from the upper 500s to lower 600s and individuals with limited credit history or financially distressed individuals who are regaining their wind.

Most FICO scores range from 300 to 850, and the highest scores get access to the best interest rates in the market. According to FICO, the average FICO in the U.S. as of September 2018 was 704, rising approximately 15 points higher than average scores a decade ago when the recession was near its peak.

If you’re hoping the new credit scoring will work in your favor, pay close attention to the additional data points that will be taken into consideration and create a plan that will give you optimal results.

 

The post Here’s How The New FICO Credit Scoring Will Help Your Credit appeared first on Black Enterprise.

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A New Way To Score Credit Might Help You

YOU JOIN US THIS MORNING WITH CREDIT SCORE NEWS. WHAT DO YOU HAVE FOR US THIS MORNING?

An interesting story broke last week that could benefit some of our listeners with below average credit. Fair Isaac Corporation, the company responsible for the widely used FICO credit score, announced it would soon be testing a new score that takes a borrower’s bank account balances and cash management practices into account to supplement that traditional credit score metrics.

The goal of this new score is to provide a new path for people with borderline credit to qualify for loans or credit cards. Fair Isaac will partner with Experian, one of the big credit reporting bureaus, to test the new formula next year.

 \HOW WILL THIS NEW SCORE WORK?

The current system of calculating a FICO credit score – the three-digit number that lenders use to evaluate a borrower’s ability to repay a loan – are based primarily on a borrower’s history of repaying mortgages, loans and credit card balances.

The new score, which Fair Isaac is calling UltraFICO, would into account factors like how long accounts have been open, the frequency of activity and evidence of saving.

IF THEY ARE CONSIDERING ACCOUNT ACTIVITY, DOES THAT MEAN THEY HAVE ACCESS TO YOUR BANK STATEMENT?

A great question, Tom. Obviously, it would make many people nervous to let Fair Isaac or any company have access to your account details. Instead, UltraFICO would be offered to customers who were not otherwise able to qualify for credit or a loan with their traditional FICO score.

Lenders would then have to get a borrower’s sign off to collect information about their cash management habits and create an UltraFico score. Specifics like where you are spending money are currently not expected to be tested.

WHO WOULD BENEFIT?

Fair Isaac Corporation has said the UltraFICO would likely be most helpful for  people with credit scores in the high 500s to the low 600s, or those with scores just outside of a lender’s cutoff. A

dditionally, people who have limited credit history, like young people, and those who had a financial rough patch and are restoring their credit would likely benefit too. The company said that those who opt for UltraFICO could see their score jump 20 points if their banking behavior is deemed positive.

THIS IS AN INTERESTING PROPOSAL, BUT CAN YOU REMIND US HOW TO BOOST OUR REGULAR CREDIT SCORES?

It’s about the fundamentals. First, pay your bills on time. Because credit scores are designed to give lenders an idea of how reliable you are, the best thing you can do is be consistent. If you often forget the date or pay late, I would recommend signing up for automatic payments.

You also want to pay close attention to your credit cards. First, you want to keep your credit card balances as low as possible, if not at zero. High balances and high credit usage – the ratio of credit used to credit available – will be noted.

You also want to avoid having balances across a number of cards. Finally, review your credit reports regularly. With increased hacking and scammer activity, you want to be vigilant for false activity on your credit report.

 


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Identity Theft Concerns? Freeze Your Credit for Free, Now

A law that went into effect Sept. 21 allows you to freeze your credit with all three credit bureaus: TransUnion, Experian, and Equifax.

Why You May Want to Freeze Your Credit

According to the Federal Trade Commission, a credit freeze, also called a ‘security freeze,’ “lets you restrict access to your credit report, which in turn makes it more difficult for identity thieves to open new accounts in your name.”

Freezing credit is not something new, however many states allowed the credit bureaus to charge to do so, according to BizJournal.

Congress made credit freezing ubiquitously free after a hack compromised an estimated 143 million people’s personal information on Equifax’s servers in 2017. Sen. Elizabeth Warren (D-Mass.) pushed for the Freedom from Equifax Exploitation (FREE) Act.

FAQs about Credit Freeze

From the Federal Trade Commission’s Consumer Information web page:

Does a credit freeze affect your credit score?

A credit freeze has no negative effect on your credit score. It also does not prevent you from getting your free annual credit report. Nor does a freeze prevent you from “opening a new account, applying for a job, renting an apartment, or buying insurance.” However, you do have to lift the freeze before embarking on anything that requires a credit check (more on that later).

What is the difference between a credit freeze and a fraud alert?

A credit freeze prevents a crook from opening up an account using your credit or from identity theft. A fraud alert will not prevent identity theft but will alert you when there is suspicion of something shady going on.

Is credit freezing a 100% guarantee that your data and credit won’t be compromised?

No. According to a post on Experian’s blog, “In the event your credit card number falls into a fraudster’s hands after a data breach, know that a credit freeze won’t help.”

How to Freeze Your Credit

You can freeze your credit online or by calling each individual credit bureau. You will need your Social Security number, name, address, and date of birth. Additionally, each bureau will ask you to verify your identity by answering a series of questions: checking off previous addresses; past loans or leases you may have taken out, etc.

Here are the websites and phone number for each bureau:

Equifax

Equifax.com/personal/credit-report-services

800-685-1111

Experian

Experian.com/help

888-EXPERIAN (888-397-3742)

TransUnion

TransUnion.com/credit-help

888-909-8872

Lifting a Freeze 

After you’ve placed a freeze, each bureau will provide you with a PIN (Personal Identification Number). You must keep this PIN in a safe place because you will need it whenever you want to lift the freeze.

Also, there have been reports that since the law was passed, the credit bureau’s websites have been inundated with credit freeze requests. There may be some wonkiness with some of the sites (I had trouble placing a freeze on TransUnion’s site this past weekend). If you can’t use the site, call the bureau to place the freeze (and expect long waits to speak to someone, for now).

In the meantime, if you are trying to clean you your credit, check out:

FIX YOUR SHADY FICO SCORE AND FIX YOUR CREDIT

FOUR TIPS TO INCREASE YOUR CREDIT SCORE FROM A CREDIT EXPERT

4 STEPS FOR BLACK ENTREPRENEURS TO BUILD THEIR FIRST BUSINESS CREDIT REPORT

 

 

 

 

 

 

 

The post Identity Theft Concerns? Freeze Your Credit for Free, Now appeared first on Black Enterprise.

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Credit Card Debt? These 4 Sites Could Help You Pay It Down Faster

So, you have thousands of dollars in credit card debt, and the burden of paying off all that — and interest — is gobbling up your income.

Instead of financially treading water making minimum payments and paying maximum interest, make the smart move, and take out a debt consolidation loan. It’s a personal loan, usually at a lower interest rate that you can use to pay off your high-interest credit cards.

In the long term, you can save a ton of money, but first you have to shop around for a loan.

Sound difficult? It doesn’t have to be. Instead of spending hours scouring the internet, you can go window-shopping at an online marketplace that’ll help pinpoint the best loan for you.

We recommend you try more than one site and see what kind of results you get. Heck, try them all if you want. It won’t take long, and you have nothing to lose: Seeing your options won’t cost you anything, and it won’t hurt your credit score.

4 Marketplaces for a Credit Card Debt Consolidation Loan

To start, you’ll need to know your credit score, but that’s super easy. Just sign up for Credit Sesame, a free credit-monitoring service that helps you keep track of your credit. It’ll immediately show you your credit score, and it’ll offer you personalized tips to better manage your credit.

Here are four different options for places to find a loan online. At the end of this article, you’ll find a chart comparing them at a glance.

Credible

Credible is a one-stop shopping place where you can compare rates side-by-side from multiple lenders who are competing against each other for your business.

It allows you to compare quotes from seven different lenders: Avant, Best Egg, Freedomplus, Lending Club, Payoff, Prosper and Upstart.

Through Credible, you can borrow $ 1,000 to $ 50,000 with a loan term of two to five years, at interest rates ranging from 4.99% to 35.99%. The interest rates you’re offered will depend on your individual credit profile.

Credible is best for borrowers who have good credit scores and just want to consolidate their debt. It requires you to have a credit score of at least 680.

Even Financial

Compared to Credible, Even Financial allows you to borrow more money and borrow it for a longer period of time — if that’s what you want to do.

You can borrow up to $ 100,000 and spend up to seven years paying it back. That’s more money and time than you can get from any of these other three lending marketplaces.

Even’s lending partners include Avant, Best Egg, Freedomplus, Lending Club, LendingPoint, LightStream, Payoff, Prosper, SoFi and Upgrade.

You’ll need a credit score of at least 580. Interest rates range from 4.99% to 35.99%.

Lendvious

Lendvious is the newest of these four online loan websites.

Depending on your credit score and how much you want to borrow, you’ll immediately get offers from up to 10 lenders. You can borrow up to $ 50,000 with no collateral required.

Different lenders are looking for minimum credit scores ranging from 560 to 650. The company’s lending partners include Avant, Best Egg, Freedomplus, LendingPoint, Lending Club, Marcus, OneMain Financial, Prosper and Upgrade.

Interest rates range from 4.99% to 35.99%.

If your credit isn’t great, Lendvious might be your best option.

Upstart

Unlike those others, Upstart is a lending platform that manages the process from pre-approval through servicing your loan.

Founded by ex-Googlers, Upstart is a lending platform that’s striving to change the personal loan game. Rather than solely focusing on your credit score to determine your borrowing power, it looks at other factors, too, including your education and employment history.

Upstart tends to be especially helpful for recent grads, who have a short credit history and a mound of debt.

Many lenders judge consumers based only on their credit history. But Upstart believes this leaves out an entire segment of the population — even though they’re totally qualified.

When it comes to the length of the loan, Upstart offers three options: three, five or seven years. The company says its average three-year loan has a 16% interest rate*, with 36 monthly payments of $ 35 per $ 1,000 borrowed.

Comparing Your Options One More Time

Seeing your quotes from each of these platforms takes 5 minutes, tops, so you can easily try out more than one. Each conducts a soft inquiry on your credit, meaning it won’t affect your credit score at all.

Once you actually apply for a loan, the lender will perform a hard inquiry on your credit, which will ding your credit temporarily.

Here’s the chart we promised you:

  Credible Even Financial Lendvious Upstart
Interest rate 4.99% to 35.99% 4.99% to 35.99% 4.99% to 35.99% 8.92% to 29.99%
Term Two to five years Two to seven years One to five years Three or five years
Loan amount $ 1,000 to $ 50,000 $ 1,000 to $ 100,000 $ 1,000 to $ 50,000 $ 1,000 to $ 50, 000
Minimum credit score 680 580 560 620

*The average three-year loan offered across all lenders using the Upstart Platform will have an APR of 20% and 36 monthly payments of $ 35 per $ 1,000 borrowed. There is no down payment and no prepayment penalty. Average APR is calculated based on three-year rates offered in the last one month. Your APR will be determined based on your credit, income and certain other information provided in your loan application. Not all applicants will be approved.

All loans are made by Cross River Bank, an FDIC insured New Jersey state chartered commercial bank, equal housing lender.

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. He knows a lot about credit card debt from personal experience.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.


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Why Your Credit Cards May Deserve A Second Chance

(AP Photo)

While paying off $ 1,700 in credit card debt in 2014, Jamie Griffin cut up his card. To tackle the remaining $ 90,000 in student loans he and his wife carried, he read personal finance experts’ tips and turned to cash and a spreadsheet to budget. Now that most of their debt is paid off, he’s giving credit cards a cautious second chance.

Griffin has come to see credit cards as a way that he and his wife, Jenna, who are both teachers, can potentially defray the costs of travel. Instead of immediately applying for a travel credit card, though, the 31-year-old from Duluth, Minnesota, let his wife’s longtime rewards credit card lead the way as they transitioned from using cash to credit for most purchases.

“We wanted to practice to make sure we could actually do it rather than reverting back to our old spending habits of just swiping a card because we could,” Jamie Griffin says. “We haven’t had to pay any interest. We haven’t had any late payments.”

If you, too, have developed new spending habits — and potentially higher credit scores — since paying off debt, you might be a good fit for rewards credit cards that earn cash back for your emergency fund or miles for a vacation. Here are factors to consider.

REWARDS CAN HELP WITH EXPENSES

Rewards credit cards generally require a credit score of 690 or higher. They can earn cash back, points or airline miles in specific categories or on everyday spending. Rewards rates vary by card and some also offer sign-up bonuses with introductory zero percent interest rates for new cardholders.

Depending on the card, rewards can be redeemed for things like cash, statement credit, travel, gift cards or merchandise — all of which can help with household expenses, as long as you pay credit card bills in full every month to avoid interest charges.

Since early 2017, the Griffins have collected 38,000 points — that’s over $ 300 in cash back. They redeemed 20,000 points (about $ 200) into their bank account earlier this summer.

YOUR CREDIT MAY DEPEND ON IT

Paying off debt is a worthy goal. But if you later stop using a credit card, it can hurt your credit scores. That’s because credit utilization and length of credit history are key factors in the calculation of those scores, according to FICO.

Say you were to close an older high-limit credit card after paying it off — or that you use the card so infrequently that the issuer ends up closing the account for you. Shutting down the account would not only decrease your amount of total available credit; you would also lose the card’s account history.

Another factor in your credit scores is credit mix — the combination of different kinds of credit accounts. A healthy credit mix might include a mortgage or car loans, for example, and also credit cards.

“If you have a healthy mix of credit, and you’re using them wisely, and you have a good history, that should reflect in your credit score,” says Jeffrey Arevalo, financial wellness expert at GreenPath, a credit counseling agency.

Of course, without piles of cash on hand, you’ll need good credit if you want to qualify for a home or car loan at the lowest interest rates. Keeping a credit card active and using it responsibly is an easy way to maintain good credit.

But if the temptation to overspend is too great, closing a credit card account may be the way to go, Arevalo says.

CREDIT CARDS CAN HELP YOU PLAN

Before moving most of their expenses to credit, Jenna Griffin asked the issuer about benefits for longtime customers. The couple secured a six-month safety net with a zero percent interest rate that they didn’t have to use.

Recently, the couple was approved for a credit card that earns miles to help them save money on travel expenses. Jamie Griffin continues tracking all of their expenses on his spreadsheet.

If you’re ready to give credit cards a second chance, here’s how to use a rewards credit card and maintain good credit:

– Pay your bill in full and on time every month.

– Don’t stray from your budget just to earn credit card rewards.

– Keep charges below 30% of your available credit.

– Use your credit card as a budgeting tool to track your spending and review your purchases.

– Keep your no-annual-fee accounts open and active to avoid hurting your credit score.

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BEST DEAL UPDATE:

Identity Theft Concerns? Freeze Your Credit for Free, Now

A law that went into effect Sept. 21 allows you to freeze your credit with all three credit bureaus: TransUnion, Experian, and Equifax.

Why You May Want to Freeze Your Credit

According to the Federal Trade Commission, a credit freeze, also called a ‘security freeze,’ “lets you restrict access to your credit report, which in turn makes it more difficult for identity thieves to open new accounts in your name.”

Freezing credit is not something new, however many states allowed the credit bureaus to charge to do so, according to BizJournal.

Congress made credit freezing ubiquitously free after a hack compromised an estimated 143 million people’s personal information on Equifax’s servers in 2017. Sen. Elizabeth Warren (D-Mass.) pushed for the Freedom from Equifax Exploitation (FREE) Act.

FAQs about Credit Freeze

From the Federal Trade Commission’s Consumer Information web page:

Does a credit freeze affect your credit score?

A credit freeze has no negative effect on your credit score. It also does not prevent you from getting your free annual credit report. Nor does a freeze prevent you from “opening a new account, applying for a job, renting an apartment, or buying insurance.” However, you do have to lift the freeze before embarking on anything that requires a credit check (more on that later).

What is the difference between a credit freeze and a fraud alert?

A credit freeze prevents a crook from opening up an account using your credit or from identity theft. A fraud alert will not prevent identity theft but will alert you when there is suspicion of something shady going on.

Is credit freezing a 100% guarantee that your data and credit won’t be compromised?

No. According to a post on Experian’s blog, “In the event your credit card number falls into a fraudster’s hands after a data breach, know that a credit freeze won’t help.”

How to Freeze Your Credit

You can freeze your credit online or by calling each individual credit bureau. You will need your Social Security number, name, address, and date of birth. Additionally, each bureau will ask you to verify your identity by answering a series of questions: checking off previous addresses; past loans or leases you may have taken out, etc.

Here are the websites and phone number for each bureau:

Equifax

Equifax.com/personal/credit-report-services

800-685-1111

Experian

Experian.com/help

888-EXPERIAN (888-397-3742)

TransUnion

TransUnion.com/credit-help

888-909-8872

Lifting a Freeze 

After you’ve placed a freeze, each bureau will provide you with a PIN (Personal Identification Number). You must keep this PIN in a safe place because you will need it whenever you want to lift the freeze.

Also, there have been reports that since the law was passed, the credit bureau’s websites have been inundated with credit freeze requests. There may be some wonkiness with some of the sites (I had trouble placing a freeze on TransUnion’s site this past weekend). If you can’t use the site, call the bureau to place the freeze (and expect long waits to speak to someone, for now).

In the meantime, if you are trying to clean you your credit, check out:

FIX YOUR SHADY FICO SCORE AND FIX YOUR CREDIT

FOUR TIPS TO INCREASE YOUR CREDIT SCORE FROM A CREDIT EXPERT

4 STEPS FOR BLACK ENTREPRENEURS TO BUILD THEIR FIRST BUSINESS CREDIT REPORT

 

 

 

 

 

 

 

The post Identity Theft Concerns? Freeze Your Credit for Free, Now appeared first on Black Enterprise.

Money | Black Enterprise

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