Repair My Finances.com

Credit cards are very useful and most of us do rely on them at some stage. With so many available we tend to only look at the balance transfer and purchase rates but there are a lot of hidden charges that you need to be aware of.Balance Transfer Fee - if you plan to start transferring balances to your new card check the fee first. If, for example, the transfer fee is 2.5% then work out how much this will cost you i.e. a transfer of $5000 might cost an additional $125.

Late Fees - credit cards must be repaid on a monthly basis even if it’s only the minimum amount. Many banks now charge a fee if this payment is late. Always check the date your payments are due, make sure you leave enough time for your payment to reach the credit card company and clear from your bank. Depending on your method of payment these times will vary, even payments made from online banking services may take several days to clear. Setting up a direct debit for the minimum card repayment amount each month is the safest way to avoid late fees and charges.

Important - many people are unaware of the clause that exists in some credit card companies term and conditions. If you miss just 1 payment on your card you may find that great 0% deal you just signed up for has been ended prematurely by the credit card company for breach of it’s terms and conditions.

There can be many reasons for missing a payment, a simply mix up at your bank, a postal strike delayed your cheque or you genuinely forgot to make the payment, whatever the reason the credit card company will still turn off your 0% deal.

Over Limit Fees - your card will be sent to you with a specific credit limit. If, through balance transfers and purchases, you go over this limit then a fee may be imposed. You can also find promotional rates turned off for breaking this term and condition.

Not Using Your Card - can you believe that some banks will actually impose a fee if you don’t use your card? So the days of holding a couple of cards with no balances ‘just in case’ you may need them could be nearing an end. Check with the credit card provider before you apply, often this is called a service fee, account fee or dormant fee.

APR Rates Explained - The APR rate (Annual Percentage Rate) of a credit card is very important because it helps you compare the repayment cost of credit cards against one another. Usually, the higher the APR on a credit card, the more you’ll have to repay on any sum of money you have borrowed (assuming that all other things are equal) e.g. a credit card with an APR of 13.9% is going to cost you more than one with an APR of 9.9% over the same period of time.

The APR does not include all the costs of a credit card, for example, late fees or over limit fees, but it tells you about the most important one. If you are looking around for a new credit card you usually want a card with the lowest APR rate possible. This is only one factor to take into account though. A credit card may have a low APR but if carries a service fee, late payment penalties or high cash withdrawal fees then this may effect how much you are being charged overall.

Credit scores are designed to measure the risk of default by taking into account various factors in a person’s financial history. Credit scoring is often used in determining prices for auto and homeowner insurance as well. Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. Using credit scores, lenders determine who qualifies for a loan, at what interest rate, and to what credit limits.

In the United States, a credit score is a number that is based on a statistical analysis of a person’s credit report, and is used to represent the creditworthiness of that person–the likelihood that the person will pay his or her debts. In the case of insurance companies, the likelihood that the person will pay his or her debts directly correlates with their likelihood of filing a claim against their insurance policy. People with lower credit scores have a greater history of filing claims according to an overwhelming amount of research and statistics done over the past 15 years or so.

The theory is that when times are tough smaller less relevant claims are now getting submitted to the insurance company, also claims are padded to look bigger so people can get a little extra cash from their company. A credit score is primarily based on credit report information, typically from the three major credit bureaus. Although the Fair Isaac Corporation develops these credit score versions for the different agencies (known as FICO scores), they are different numbers, and are periodically updated to reflect current consumer loan repayment rates. Recently, some of the agencies that generate credit scores have also been generating more specialized insurance scores, which insurance companies then use to rate the quality of potential customers as I mentioned before.

Understanding your credit score is the first step to improving it and making it work in your favor instead of against you. With an improved credit score, lower expenses,proper asset and identity protection, and maybe some extra income on the side; all of which I will discuss in future posts, you can eliminate your debt completely in a few years (not a joke) and live a less stressful life. Here are some tips on improving your credit score relatively quickly:

Payment History - Your monthly bills consist of expenses and debt. The debt is loans such as credit cards, car payments, mortgages, etc. You must make sure your debt is paid on time every month. Any history of late payments (including missed payments and derogatory payment statuses) is a negative factor. No reported history of payments on any account is also negative because lenders cannot tell whether you paid on time or were late. Some cases of late payments are worse than others. If you have not been late with any payments recently, lenders may think you are responsible and do not (or will no longer) miss payments. Lenders realize that many people occasionally pay late. Therefore, being late with a single payment is typically not as harmful as being late with two or more consecutive payments. Similarly, being late on many accounts is typically worse than being late on one. Also, lenders may view late payments as a more serious problem if you have collection accounts or negative public records such as bankruptcies or court judgments. These types of credit records indicate a pattern of credit problems.

Debt To Credit Limit Ratio - Having accounts with a high credit limit or loan amount is a positive factor, because it indicates to a lender that other lenders have trusted you with a lot of credit in the past. On the other hand, having accounts with low credit limits or loan amounts is a negative factor. It may suggest that your credit reports contained information that was of concern to lenders at the time they determined your credit limits or loan amounts. Finally, having no accounts with a reported credit limit or loan amount is a negative factor because lenders cannot evaluate how much other lenders have trusted you with credit so far. It might be beneficial to close the lower limit accounts and ask for higher limits on your preferred accounts.

Activity - Having accounts listed in your credit reports is a positive factor because the payment history of these accounts shows lenders how well you pay your bills. Therefore, having too few accounts or too few open accounts may be considered negative. However, having too many accounts or adding new accounts too quickly may also be considered negative because lenders worry that you are spending (or preparing to spend) beyond your means, even if you have never been late with any payments. Note that closing accounts will not change this. Also, if you do not currently have credit, getting your first few credit cards may be difficult and may involve high fees, high interest rates, and low credit limits. Note that accounts from personal finance companies (which specialize in lending to people with credit problems) may be considered negative.

Revolving Credit Balances - High balances are a negative factor because lenders worry that you are living beyond your means and may not be able to repay them. This is particularly true for credit cards. For installment loans such as mortgages and auto loans, lenders often use the proportion of the loan that is still unpaid to judge your ability to take on new debt. If very little of your installment loan balances have been repaid, lenders may not give you more credit that could add to your debt. In general, lenders evaluate how much you owe (your debt) in relation to how much you earn (your income). However, no matter how high your income, having a lot of debt may lower your credit scores because lenders know that adverse changes in your employment and life events such as divorce or illness may make it hard to pay your bills. Low balances, on the other hand, are a positive factor because lenders do not stand to lose as much if you become unable to repay them. However, not using your credit accounts may be considered a negative factor, because it does not provide lenders with information about how you typically use credit and repay your debts.

Applying For Credit - Applying for credit many times within a short period can lower your credit scores. When you apply for any type of credit (such as an auto loan, credit card, department store card, or mortgage), the lender considering your credit application checks your credit history. This is recorded in your credit reports as a “hard inquiry.” Although inquiries are an unavoidable result of applying for credit, lenders dislike seeing many inquiries within a short period (such as 6 months). This is because they cannot tell whether you are “shopping” for the best offer or if you are desperately trying to get credit because of financial trouble. Therefore, try to limit your comparison to a small number of lenders when “shopping” for the best offer.

In summary, it is quite easy to improve your credit score by 30-50 points in just a three month period. This could be difference between paying 25% more or less on your car insurance, or getting a credit card or mortgage with rates of 3-5% higher or lower. These little differences will most definitely affect your ability to get ahead of the game. People that pay more for insurances and have higher interest rates on their loans will never become debt free or get out from under it all.

Secured credit cards are another very popular breed of credit cards. Secured credit cards, as their name suggests, are secured. Well, they are secured for the credit card supplier, really. Secured credit cards require you to open an account with the credit card supplier and maintain some cash balance in that account. This cash balance acts as a security for the supplier of secured credit card. Your credit limit is dependent on the amount you hold in the account that you have started with the supplier of secured credit card. This is generally between 50 to 100% of your account balance. So in that sense, secured credit cards are not really credit cards (since they don’t offer you any credit really). For this reason, the secured credit cards are sometimes also referred as debit cards.

Why is the concept of secured credit cards so important?

As we know, credit card debt is a raging problem which is caused by improper usage of credit cards. Such people end up spoiling their credit rating to an extent where they cannot get another unsecured credit card (that is what we call the commonly used credit cards). Even after they have paid off their dues and cleared their debt, their credit rating still haunts them. For such people, secured credit cards are a boon. Secured credit cards present them with an opportunity to not only get a credit card in the first place but also to improve their credit rating by using the secured credit card in a disciplined way (paying their dues in time, controlled spending, utilizing a maximum of 70% credit limit etc etc). As they continue with these good habits, their credit rating gradually improves over a period of time. Hence secured credit cards provide them with the means of rectifying their mistakes (credit rating).

It’s not just the people with bad credit rating who go for secured credit cards. Some people go for secured credit cards because they don’t want to bother themselves with the bills etc for credit cards. They don’t like to even fill-up application forms for unsecured credit cards.

Then there are some who just don’t like to borrow money (even if it means borrowing from a credit card supplier by using their credit card). However, such people are very rare to find.

Some people just go for secured credit cards because they have heard a lot of horrifying stories on credit card debt – maybe someone from their family or one of their friends was devastated by credit card debt and they don’t want to repeat the mistake. So they decide to go for a secured credit card.

Whatever be the reason for going for it, the secured credit cards are surely popular too.

It is common sense to think that if you fix up your place, maybe add a little more counter space in the kitchen or maybe another bathroom, you’ll be able to sell your home for more than you bought it for. And in most cases, you would be right. But in a recent study done by Remodelling Magazine, there are some renovations that can actually cost you money and hurt the value of your house.

One of the biggest signs in today’s world that you’ve “made it” is the back yard pool. Maybe no other home improvement screams to the world that you’ve reached a level of financial security that you’re comfortable with like a pool. Well, not everyone feels the same way. Studies done in Florida and Arizona show that having a pool is still a big part in building equity in your property. But what about the rest of the country? How about places where it isn’t warm year-round? It turns out that a pool can work against you in parts of the country that have four seasons. The cost of upkeep and insurance are the main turnoffs. But there is one other turnoff, too. The risks of raising young children in a home that has a pool has become a red flag for many new parents. The fear of a drowning accident is very real for many, and the presence of a pool can turn a first-time home buyer away from your property.

Be careful when you try to get too trendy when you go to remodel. An extremely important point to remember is that while you may think a special touch is cool and fashionable, the people coming to look at your house may not think so. And while most remodel touches can be changed, you may have a hard time talking a prospective buyer into that. If you are not completely sure that the house you’re living in isn’t going to be the house you die in, try to make any remodelling touches neutral so that if the time comes to sell, you won’t regret what you did.

A final risk to avoid is the Jacuzzi tub. While you may have the time to sit in a hot tub for an hour a day, most people don’t, and most people won’t use it. You would be better off with an elaborate shower system than a big, fancy bathtub.

In the world of investing, certain phrases catch on like wild fire. Before you know it, you’re hearing catchphrases on the news, on analyst shows and even on the street from strangers. Maybe no other phrase exemplifies this better than the dot.com bubble. The dot.com bubble was a mini-crash of sorts in the stock market that only affected one segment of stock: the internet company.

The origin of the dot.com bubble can be traced back to 1994. The rise of the Internet from being a Department of Defense secret to a widely used tool in everyday life caused the formation of thousands of new businesses seemingly overnight. Many of these dot.com’s were not run by people who knew that much about business, but the ease of starting their own company over the Internet was so simple, most investors didn’t realize this.

As people poured onto the Internet, excitement grew as to the possibility of reaching such a large number of people so easily and so cheaply. It was, however, the misunderstood nature of the Internet that caused the eventual dot.com crash. Reaching all those people and getting them to buy your product turned out to be a little more difficult than most thought.

Three particular companies that would come to represent the dot.com age were WorldCom, who would end up not surviving the bubble, Netscape, which is still in business today but is considered an also-ran by many, and Yahoo, who isn’t the industry leader it use to be, but is still doing quite well.

The “bubble” referred to in the name comes from investors speculating about a companies future, and as the stock for that company begins to rise, the bubble builds. It’s called a bubble because the speculation and the rise in stock prices isn’t based on any real, ironclad evidence that the company is really worth all the hype.

The Dot.coms began to fail en masse midway through 2000. The Nasdaq market felt the full brunt of these failures since so much of their listed companies were dot.coms. Many companies, such as WorldCom and Pets.com ended up going out of business, costing investors millions. Others, such as Yahoo and Amazon survived, with Amazon being stronger than ever.

It’s unknown if there will be another dot.com bust in the future. With Google having bought YouTube for over a billion dollars, anything is possible. But one hopes that investors will be more careful this time and heed the lessons of dot.com bubble’s past.