Bank Promotions

Are Bank Promotions Worth Looking Into?

2011-12-15T18:55:00.000-08:00

You’ve probably seen various promotions for opening a checking account and wondered if it was worth it? Depending upon the type of promotion offered and the strings attached some of these promotions are definitely worth a look.

Generally, checking account promotions involve some sort of giveaway: cash, points, airline miles or electronics.

Most banks restrict bonuses to new customers, who then have to meet specific requirements to claim the loot.

Among the restrictions could be maintaining a minimum daily balance, making a certain number of withdrawals with an ATM card or setting up recurring direct deposit of your paycheck.

You also may encounter promotional interest rates that last for a period of time. The fine print of such offers generally indicate that rates are variable and may be subject to change. If you’re looking for this type of deal, try to find checking accounts that tell you how long the promotional rate will last. Always find out what the rate will be after the promotional period ends and what type of monthly fees are involved.

Credit Card Balance How What You Owe Is Calculated

2011-09-01T20:44:00.000-07:00

Balance Computation Methods

If you dont have a grace period or if you plan to pay for your purchases over time it's important to know how the credit card companies is calculating your finance charges. Which balance computation method is used can make a significant difference in how much of a finance charge you'll pay even if the APR and your purchasing habits reminan pretty much the same.

Average Daily Balance. This calculation method is the most common. It credits your account from the day the credit card company receives your payment. To calculate the balance due, the issuer totals the beginning balance for each day in the billing period and subtracts any credits made to your account that day.

While new purchases may or may not be added to the balance, cash advances typically are included. The resulting daily balances are added for the billing cycle. Then, the total is divided by the number of days in the billing period to get the average daily balance.

Adjusted Balance. This usually is the most advantageous method for cardholders. The credit card company figures your balance by deducting payments received during the current billing cycle from the balance at the end of the previous billing cycle. Purchases made during the billing cycle are not included.

This appraisal gives you until the end of the billing period to pay a portion of your balance to avoid the interest charges on that amount. Some issuers exclude prior unpaid finance charges from the previous balance.

Previous Balance. This is the amount you owed at the end of the previous billing period. Payments, credits, and purchases made during the current billing period are not included. Some creditors exclude unpaid finance charges.

Two-cycle or Double-cycle Balances. credit card issuers sometimes calculate your balance using your last two month�s account activity. This approach eliminates the interest-free period if you go from paying your balance in full monthly to paying only a portion each month of what you owe. For instance, if you have no previous balance, but you neglect to pay the entire balance of new purchases by the payment due date, the credit companies will compute the interest on the original balance that previously had been subject to an interest-free period. Read your agreement to find out if your card issuer uses this method and, if so, what exactly is the two-cycle method is used.

How do these methods of calculating finance charges affect the cost of credit? Suppose your monthly interest rate is 1.5 percent, your Annual Percentage Rate is 18 %, and your previous balance is $400. On the 15th day of your billing cycle, the card issuer receives and posts your payment of $300. On the 18th day, you make a $50 purchase. Using the Average Daily Balance method including new purchases, your finance charge would be $4.05. Using the Average Daily Balance method excluding new purchases, your finance charge would be $3.75. Using the Average Daily Balance Double Cycle method including new purchase and the previous months balance, your finance charge would be $6.53, and using the Adjusted Balance method, your finance charge would be $1.50.

If you dont understand how your balance is calculated, ask your issuer. An explanation also must appear on your billing statements.

What To Look Out For When Shopping For Credit

2011-09-01T20:09:00.000-07:00

The grace period on your credit card may be shortened, or erradicated. Commonly a credit card bill is handled in the following manner: You buy an item or service with your credit card.

The merchant reports the charge to the credit card issuer. The credit card issuer then pays the store and posts the charge to your account. If you do not pay off the account within the 25-day grace period, interest is charged, beginning on the date that the charge was posted to your account. However, some banks have shortened the grace period to 20 days -- only if you pay off your account in full each month! This amounts to a penalty for customers wh o always pay off their credit card debts. Some credit cards have eliminated the grace period entirely. You must pay interest on everything, from the day you buy it, even if you pay the full balance each month.

Low monthly payments have a high price tag. You may believe it is beneficial to have a card that only requires a monthly payment of two percent or 3% of the balance. Quite the contrary. The longer you carry out payments, the more of your money the card issuer stands to collect in "finance charges." Your best bet is to pay off your entire balance each month. If you cannot do that, pay off as much as you can afford.

You may pay interest twice in one month. If you paid off your full balance in January, but then failed to pay the total balance in February, some credit companies will bill you for two months' worth of interest. This is called 2 cycle billing.

Cash advances cost you extra. Most credit card companies impose both a finance charge and a transaction fee for cash withdrawls. Interest begins accruing from the day of the advance, and the transaction charge is often 2.5% of the amount advanced. Even credit card issuers that promote no finance charges often charge transaction fees.

The real deal is in the fine print. Don't fall for a "teaser" credit card offer. If you are offered a new credit card with a low introductory rate, such as 6%, be sure to read the small print. When the introductory period finishes, your full balance will in all likelihood be subject to a much higher rate such as twenty eight percent.

Your new credit card may also come with benefits such as a free lifetime warranty, discounts on travel, or protection if a purchased item is goes missing. If you sign up, be sure to read all notices of changes in the terms of your account as credit card companies commonly withdraw the special benefits while raising both the interest rate and the finance charges.

Some MC and Visa cards have payments deducted directly from your checking account. These debit cards look exactly like credit cards, but they offer less consumer protection. You don't have the same right to charge back problem purchases. These may be offered as checking account promotions.

If you miss payments, the bank may be able to withdraw funds from your checking account without your approval. If the card is lost or stolen, you must report the problem within 60 days or be responsible for all purchases made with the stolen card.

You can negotiate a better deal. If you are receiving a unfavorable deal on your credit card such as two cycle billing, finance charges of 18% or more, annual fees, and no grace period you can contact the credit card company and ask for new terms. These fees are not requisite costs of doing business, and you can ask that they be reduced or eliminated.

Or change to a more affordable card and transfer the outstanding balance.

What Is FDIC Insurance And Why It Is Important

2011-09-01T20:04:00.000-07:00

FDIC insurance stands for Federal Deposit Insurance Corporation, and is an isurance that is funded by premiums paid by the financial institutions. All of your accounts should be in banking institutions with FDIC insurance.

For example, if your bank becomes insolvent, your deposit balances are insured and repaid to you from the FDIC.

If you do have to rely on the FDIC your biggest concerns will be the timing required to receive your money and the lack of interest on your funds until the date the insurance pays you.

So it is a smart idea to have emergency reserves in a separate financial institution if insolvency is a concern. Furthermore, your deposits are guaranteed up to $100,000 per financial institution, not per account.

If you have deposits that exceed the $100,000 limit in one bank, you should consider moving the excess to another financial institution if you want the deposits insured by the FDIC. This would include any accounts that you may have acquired through a checking account promotion.

Credit Card Secrets

2011-08-31T22:25:00.000-07:00

Credit card companies are just like every other business. They exist to make as much money as possible, they have relatively well documented rules and operating procedures and they are willing to comprimise the second point in pursuit of the first.

With that being said, here are 7 unwritten credit card tips that may save you a a few dollars. If you dont learn a single secret or you have a secret of your own, please let me know! Secrets are better when they are shared.

Ask Lower Interest Or To Cut Down On Or Eliminate Fees

The credit card business is a competitive one. Use this to your advantage by asking for what you want. If you made a late payment and were assessed a late payment fee, phone them and request that they take it off. If your interest rate is too high, call them and ask that they reduce it. If they say no, simply tell them that you want to cancel the card or that youll take advantage of a new credit card promotions that you just received in the mail.

They make so much money from you when you spend via the charging the merchants a processing fee) that the late fee pales in comparison to the money they will make by keeping you as a customer.

If they dont budge, punish them by taking your business elsewhere.

Roll credit limits of the same issuer onto fewer cards

This is a popular one with zero percent balance transfer junkies because Citihas a not so often spoken rule of limiting a cardholder to at most three lines of credit (without regard to the actual dollar limit). This stinks for balance transfer arbitragers because they want to keep rolling that 0% balance from card to card to card and that gets dicey if they can only have three. One way of getting around this rule is to ask that you roll the credit limits of one of the cards into another one of the credit cards. They are usually willing to do this because the alternative is that you may cancel the card and they would lose your business.

Since they were willing to give you the total limit in the first place, putting it on two credit cards instead of three hardly makes a difference to them. This has an added gain for you from a credit score perspective, you reduce the number of open lines of credit while keeping your credit utilization and total credit limit the same. Double win!

Ask For an increase to the credit limit without a credit pull

Ive written about how you can demand a credit limit increase in the past and not get a credit pull but I wanted to repeat it in a post like this because its something not a lot of folks know. What you basically do is, through your online credit card account management portal, go through the normal process of requesting a credit limit or line of credit increase. Sometimes, based on how long youve been with the issuer and your credit worthiness, they may offer you an increase on the spot without a credit inquiry. Do not bother trying this within the 1st six months or 1st year with the card, they generally wont offer this without a credit pull so youd just be wasting your time.

Avoid the foreign transaction fee charge

When you pay for something overseas, your credit card will often charge you a foreign transaction fee to handle the foreign exchange process for you. In fact, part of that fee is imposed by Visa and MC itself, so any Visa and MC that charges you less than 1% is actually eating the fee.

Capital One and Discover are the only two companies that do not charge a foreign transaction fee; Capital One actually pays the fee for you and Discover, since its not on the Visa or MC network, just doesnt charge for it. As I wrote in the other article, if you want to pick between the two then Id go with Capital One cause Discover isnt as widely accepted overseas (Capital One cards are Visa or MC).

Change your card to a different type or rewards program

Do you have a Citibank Platinum Select card and you would instead prefer to have a Citibank Professional card? Just call up and ask; theyll probably honor your request. If they dont, just ask to cancel the card and retentions will probably do it for you. This will only work if theyre the same class of cards, so if you want to change from a Citibank mtvU card (student) to a Citi Business card (business), that will probably be impossible but still worth inquiring about. Their reasoning is that you can always cancel and apply for the new card anyway so they might as well reduce overhead by just shifting it over for you. Its all about lowering costs and keeping the customer, converting cards is hardly a job.

Most credit cards double manufacturers warranty

Most credit cards will cover purchases on that card to double the original manufacturers warranty, up to an additional 1 year. This comes at absolutely no cost and its offered cause most people never benefit from it.

Part of the reason is that you often forget this is something that is even offered in the first place due to the fact that most people think of manufacturers warranty first and then straight to repair or replace) and the credit cards only mention this when youre buying. :)

Most credit cards offer auto rental liability insurance

This particular tip has been documented quite a bit recently, the fact that many credit cards offer some form of rental car insurance for collision and loss if you use that card to pay for the rental.

What it doesnt cover your personal auto insurance may also cover so between the two you often dont even need the insurance, really its a waiver from the rental company in the 1st place. Some credit cards, such as Amex, have programs where you can pay for additional insurance.

Understanding Credit Cards

2011-08-31T22:20:00.000-07:00

A credit card lets you purchase and pay for things over time. Using a credit card is a type of borrowing, you have to pay the money back.

When you are selecting a credit card, there are many features, benefits and various types of cards to deliberate: Fees, charges, interest rates, and incentives can vary among credit card companies. As a result, some credit cards that look like a good deal at first glance may lose their charm once you read the terms and conditions of use and calculate how the charges could affect your available credit.

Credit Card Terms

Important terms of use generally must be disclosed in any credit card application and even in offers that don't require an application. Here are the most important terms to understand when you are choosing among credit card promotions and offers.

Fees.

Many credit cards charge membership and/or participation charges, and credit card companies have a variety of names for these fees, including annual, activation, acceptance, participation and monthly maintenance charges. These charges may appear monthly, periodically, or as one-time charges, and can range from $6 to $150.

What.s more, they can have an immediate effect on your available credit, for instance a card with a two hundred fifty dollar credit limit and one hundred fifty dollars in charges leaves you with $100 in available credit.

Transaction Fees and Other Charges. Some credit card companies charge a fee if you employ the card to get a cash advance, make a late payment or if you exceed your credit limit.

The APR is a measure of the cost of credit, expressed as a yearly rate. It must appear on your account statements and it must be disclosed before your account can be activated .

The credit card companies also must disclose the periodic rate. That s the rate the credit card issuers applies to your outstanding balance to ascertain the finance charge for each billing period.

Some credit card plans let the issuer change the Annual Percentage Rate when economic indicators or interest rates change. Because the rate change is linked to the index's performance and varies, these plans are called variable rate programs.
Rate changes also can raise or lower the finance charge on your account. If you're considering a variable rate card, the issuer must tell you that the rate may change and how the rate is determined.

You also must be given information about any limits on how much your rate may change and how often before your account is activated.

A grace period, also called a free period,lets you nullify finance charges if you pay your balance in full before the date it is due. Understanding whether a card gives you a grace period is important if you plan to pay your account balance in full each billing cycle. Without a grace period, the card issuer may impose a finance charge from the date you use your card or from the date each transaction is posted to your account.

Calculating Your Financial Worth

2011-08-27T21:03:00.001-07:00

Often your financial worth is asked for by a financial institution in the form of a personal financial statement. Your Net Worth is the total value of your assets minus the value of your what you owe.

Your assets generally include bank accounts, investments, property and cash. Be sure not to neglect the key components of your assets:

Cash includes funds in your checking account, savings, money market accounts, CDs, Treasury Bills and cash values in your life insurance policies.

Investments include stocks, bonds, mutual funds, retirement plans, IRAs, annuities, employee stock options and loans to individuals or businesses.

Personal Property includes collectibles such as art, stamps, antiques, and coins. These items may appreciate in value over time. This category would also include other holdings such as cars, electronics and furnishings. These items may decrease in value over time. Real Estate would include any homes, vacation homes, rental properties and land.

Your liabilities commonly include debts you owe on loans, outstanding credit card balances, mortgages, leases, alimony and child support. Be sure to account for all the money you owe others both short term and long term. Short term liabilities are credit card balances, monthly bills, taxes, insurance and installment loans owed within the next year. Long term liabilities would include loans you may repay over many years such as mortgages, student loans, contracts for deed or other long term obligations.

When establishing a financial plan for you or your family a first step is usually to take a look at a personal financial balance sheet or your net worth. You will quickly get a picture of what you have,your debts and what the net balance is of each.

Analyzing the components of your assets and liabilities and making projections of their individual values into the future can be helpful in forecasting your financial future and your retirement needs.

Accurately calulating your net worth every six months will give you a track record of how your wealth is growing or declining as time goes on.

Your Net Worth will generally be expected by entities such as financial institutions when qualifying for a home equity line of credit or mortgage. Universities and colleges may require a financial statement if applying for financial aid. Investment Institutions may require a financial statement when investing in high risk instruments. Sellers may require a financial statement when purchasing a business or other asset with seller financing, and finally clubs and partnerships may demand a financial statement where financial obligations are involved.

Protect Your Online Bank Accounts

2011-08-27T21:01:00.001-07:00

Protect Your Online Banking Accounts

Undoubtedly, identity theft is on the rise. More and more people are losing their identities every year due to the crusades of a few criminals who manipulate technology to their advantage. However, does that mean you shouldn't use online banking at all in order to avoid becoming a victim?

By being knowledgeable about how to protect yourself while carry on your banking on the web you can shrink the chances of becoming a victim while still benefiting from the conveniences.

It is crucial to understand that banking institutions take every available attempt to keep the banking transactions of their customers safe and secure. However, it seems as though malefactors and thugs get more and more creative every year in order to get around those security efforts.

Just a few of the techniques they use include keystroke collection and phishing activities.

Phishing involves the use of fake emails and websites to collect sensitive data from individuals.These could include credit card numbers, passwords and bank account numbers.

With this sensitive data, malefactors then have access to your funds. So, it is crucial to be sure that the website you are entering sensitive data into or whoever you share such information with is offical, secure and legitimate.

Phishing e-mails can look quite legitimate as if they are indeed coming from your bank. Before replying such to an email it's a good idea to always contact your financial institution to verify they actually sent the email.

If they can't confirm it, don't answer and certainly do not share any personal information.

Other techniques you should use to protect yourself while banking online is to use passwords that are extremely secure.

The safest passwords should be at least six characters long and include numbers and letters and symbols.

Never repeat passwords and try not to use numbers and letters that may be easy to figure out. This would include numbers from important dates like anniversaries, birth dates or names of your ptes, kids, etc.

Be careful of checking account promotions and credit card promotions delivered by email that ask you to click on links to sign in.