Finance Matters

Posts Tagged ‘credit card’

This is a guest post by Fiona Lippey. Fiona is the author of the bestselling book The $21 Challenge and founder of Australia’s largest frugal website, SimpleSavings.net.

If you want to save money, and I mean really save money, then you’re going to have to stop buying Stuff. You have reduce the amount you consume. Today I want to share the system I’ve been using for the last 15 years to reduce my spending and make sure I don’t get tricked out of my hard-earned cash.

Question 1: Stop! Is this a good decision?
Before you reach for your cash, before you grab your credit card, before you pick up the item up from the sales rack, pause for just a minute. Stop yourself and think about whether or not you are about to make a good or a bad decision. A marketer or salesperson’s job is to make you think you need something that five minutes earlier you didn’t know existed. Find a way to trigger your internal alarm bell, so you can stop for a second and move on to question number two.

Question 2: Are you hungry?
If your belly is empty then your decision making is impaired. Our bodies get confused between the desire for food and inedible objects. So if you are hungry, step away, eat something, then wait for 15 minutes before moving on to question three.

Question 3: Is there something else?
There are so many other things you could buy. Is this item really the one you want to spend your hard-earned money on? There are other things you could achieve with this money. Will you be limiting yourself by making the purchase? If you have decided that this is the only thing you want, go to question four.

Question 4: Is it worth the effort?
Every time you reach for your cash, ask yourself if it is really worth the effort. If every $15 you spend is an hour you’re going to have to work, is it worth the effort? Or should you leave your money in your wallet? (It’s so much easier than having to earn extra money!) Now, if you have decided the purchase is really is worth the bother, move on to the fifth question.

Question 5: What will you gain?
Next, work out what you or your family will gain by buying the item. What are the longterm consequences? Will it improve your health and happiness or genuinely give you more free time? How? If you cannot answer these questions positively, then leave your money in your wallet. It is important that you be really skeptical when you answer this question. Now move to question six.

Question 6: What will you lose?
When you buy an item, you both gain something and lose something. If you are lucky, the only thing you lose is cash and the time it took you to earn that money. But this is not always the case. A great example of this is a computer game. You gain entertainment, but you might lose quality time with your family. Once you are certain you have accounted for everything you could lose, move on to the next question.

Question 7: Is there a better way?
Now it is time to shop around for a better price and work out the smartest way to buy it. How can you get the best value for your dollar in the minimum time possible? Occasionally, working it out for yourself will take more time than you save (when calculating your time as an hourly wage), but you will get satisfaction in knowing that you’ve found a great deal and are doing the best for your family. Once you have researched your purchase and found the best way to buy it, go to question eight.

Question 8: Do you have the cash to spare?
Most of the time, buying things on credit is stupid. So if you don’t have the cash, remain free, walk away, and live happily ever after. Consumer purchases aren’t worth burdening yourself with debt. This means you should avoid credit cards, layaways, interest-free loans, mortgage refinancing facilities, etc. Only buy something if you have the spare cash — and if you don’t, go home and save until you do.

If want to save yourself some money, write down the eight steps and put them in your wallet! Every penny you save is one you don’t have to earn!

Nationwide has re-launched its Select Visa credit card which offers 0%-on-purchases for 18 months – the longest period currently available on the market for a 0% deal.

Cardholders also benefit from commission-free purchases while they are abroad and 0.5% cashback.

Balance transfers are eligible for the 0% interest deal, but for 17 months rather than 18 and there is a 2.95% balance transfer fee.

At the end of the offer period the card reverts to 12.9% APR and it
is only available to customers who use Nationwide’s FlexAccount as their main current account.

To qualify for a FlexAccount, customers must pay in £750 or more each month, not including internal transfers.

Nationwide has also launched a new mortgage product to help first-time buyers who only have limited funds available for a deposit.

The two-year fixed-rate 90% loan-to-value deal is available at an interest rate of 5.29%, with a £900 fee.

House purchasers who can make a 40% deposit will benefit from an interest rate as low as 2.99%.

The building society’s new products offer a breath of fresh air to consumers whose satisfaction is at an all time low according to recent research.

uSwitch.com’s survey of over 10,000 credit card customers found there was an overall drop in satisfaction with providers, but especially with traditional banks.

The Customer Satisfaction Report names Marks and Spencer as top for overall satisfaction followed by the Co-op bank, American Express, Tesco and Sainsbury’s, in that order.

Vanquis and Bank of Scotland came bottom for overall satisfaction with Barclaycard, HSBC, Halifax, Lloyds TSB and Santander just above them.

Michael Ossei, personal finance expert at uSwitch.com, said: “with overall satisfaction and customer service getting worse across the board, and the high street banks still providing some of the worst service, consumers should look around further afield at new providers for the best credit card for them.”

There’s a new dance in town, one that’s earning a few crafty frequent fliers more bonus miles than they can handle. It’s called “churning” in reference to the process of making butter, and though it takes some time to memorize the steps, once you know the routine you can reap thousands of sweet, morally ambiguous bonus miles for absolutely free. Here’s how to do it.

1)    Pick a partner. Like any dance, churning always works better with a partner. You can still do it by yourself, but teaming up with your spouse or significant other will double your total earnings and allow both of you to fly together.

2)    Make sure your credit ratings are high. When you start churning credit cards, you are going to be putting a LOT of little dings onto your credit score. Because you will need to be approved for a lot of credit card offers in a very short period of time, you should make sure that your credit scores of both you and your partner are at least 750 before starting a churn. This way your score can take a lickin’ and keep on tickin’. Also, it helps that this damage isn’t permanent. Many of these little dings will disappear from your score within 45 days.

3)    Get a churn-able card. Churning is all about repeatedly signing up for new credit cards that have good air-mile bonuses. Since some credit companies won’t allow you to refresh your bonuses with new cards, you need to make sure to pick a churn-able card to start with. It also helps to pick a company like Chase that offers both types of airline credit cards – generic air-mile rewards cards and airliner-specific credit cards in order to switch your offers up. Some churners consistently rotate through five Chase and three Citibank cards, while others use a combination of Delta, Chase and Citi cards.

4)    Start the dance. Once you and your partner squeeze all the bonuses you can from your current cards, including meeting minimum spending limits, sign up for different cards that use the same rewards system. This means, for example, moving from a Gold Delta SkyMiles personal card to a Gold Delta Skymiles Business Card. Once you get the new card, cancel your old one and milk the bonuses on the new one. When you’ve exhausted those, move to a generic air-miles card like the Chase Sapphire Preferred or the Capital One Venture Rewards card.

5)    Rinse and repeat. How long your churn cycle lasts depends on personal preference. While it used to be possible to rotate a fleet of cards every three months to keep the miles rolling in, many bloggers are reporting that the process now takes up to a year before companies will allow you to recycle bonuses. If you aren’t concerned about the sustainability of the churn and just want to max out your miles for one vacation, you and your partner can follow this USA Today blogger’s lead and sign up for six different cards in one day, netting you a total of 250,000 miles for a few hours of work.

If you’ve got the credit score and the patience, churning cards can be a great way to earn free flights. However, card companies are getting wise to the practice, and it has become increasingly more difficult to pull off. Since it’s pretty much a given that they’ll make churning completely impossible in the future, we recommend that our more enterprising readers get their kicks in now. After all, who doesn’t appreciate a free flight?

This post originally appeared at Credit Card Assist.

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See Also:

• Here’s How To Revamp Your Savings Account And Keep Your Head Above Water
• Here Are Four Places You Should Not Use Your Debit Card
• Why Every Company Needs To Be More Like IBM And Less Like Apple

Personal bankruptcies beat estimates for 2011, falling 11 percent in 2011, Fitch reported today.  Specifically, bankruptcy filings fell 176,892 to 1,353,186 from 1,530,078 in 2010.

The agency had expected a more modest 5 percent decline.

It was the first decline in four years..

The drop-off translated into a 37 percent decline in credit card chargeoffs; bankruptcies usually make up between 20 and percent of all chargeoffs.

Fitch expects to release its 2012 bankruptcy forecast in the coming weeks.

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See Also:

• FITCH DOWNGRADES HUNGARY TO JUNK
• Fitch Warns That Many European Countries May See Ratings Cut This Month
• FITCH ON GREECE: ‘Time Is Running Out’

Payments business Visa has reported a 2.3 per cent fall in spending on credit and debit cards over the four weeks to 27 November, compared with the same period in 2010.

Last week, which is traditionally one of the UK’s biggest Christmas shopping weeks, spending on cards fell both on the High Street and online, with sales 6.2 per cent lower than in the equivalent week last year.

John Lewis also reported slower trading, supporting Visa’s figures and suggesting that consumers are cutting down what on Christmas spending this year.

In the week to 26 November, the retailer’s sales fell 1.2 per cent compared with a year earlier.

Retailers have been hit by a fall in consumer confidence due to uncertainty over the economy, rising unemployment and an increase in household costs, including steep rises in the price of energy.

This week, John Lewis’s sales were up 10.5 per cent in the four days to 20 November, compared with last year, however this time last year the UK was covered in heavy snow which caused shoppers to stay at home.

Visa, which accounts for one in every four pounds spent, said that the poor trading figures may just indicate that shoppers are leaving it later to do their Christmas shopping than last year.

Despite signs that shoppers are tightening their purse strings, recent research by MoneySupermarket.com found that 25 per cent of people in the UK expect to go over budget this Christmas.

Based on an average expenditure of £437 on Christmas presents, food and alcohol, and an average credit card APR of 18.44%, MoneySupermarket.com warns that Christmas spending could cost an extra £70.20 in interest by Christmas 2012.

The comparison site is encouraging shoppers to make sure their credit card is appropriate for their needs.