Categories
Credit Cards

What Makes The Interest Rate on a Credit Card Go Up?

Credit cards have been on the good and bad list, but really this all depends on the person who posses the card. Discussed father are the questions what causes a credit card interest rate to increase, are the holders of the card informed before the change, and are cash back credit cards a good option.

A card holder can cause their interest rate to increase if they do any of the following things. Paid late on the credit card balance, wrote a bad check for your credit card payment, maxing out a credit card, not abiding by the set credit card terms, or using the credit card illegally. Some of the listed above actions can have more intense repercussions than others.

If your credit card interest rates are to increase, the credit card company is required to allow 45 days of advanced notice. Within the 45 days the card holder has the right to reject the new credit card interest rate. If rejected, the card holder can pay off the current balance at the lower interest rate. Yet, you will have to close your credit card if the new higher interest rate is rejected.

Credit card companies do not have to inform a card holder of an increased interest rate if it is being raised due to defaulting on your credit card. The lender may be lenient if this is the first late payment. If not, then after six months of timely payments you can call and request the interest rate be lowered to the old rate, credit card companies now have to do this.

So what is the buzz about cash back credit cards, basically they provide free money. Cash back cards are great if you are already using your credit cards for everyday purchases, and you have a decent amount of self control. If you do enough research a card can be found that provides no fees, low APR and 1-5% of free cash on every dollar spent.

Credit cards have a reputation for being safer than debit cards, the make more sense than using cash, and are quite profitable. The advantages to having a credit card can be great if a person just uses self control and is responsible. Then credit scores can be increased and the possibilities in the future also increase.

 

Categories
Credit Cards

Learning About The Credit Score Scale Now Can Help You Later

Keeping your own finances in good shape is just one of the many jobs an adult has. How to solve money problems is a great issue. Unfortunately, it is not something that is taught in school, or at least it never used to be. Many times it was not taught to children in the home either. This could help explain why so many adults have found themselves into difficult financial situations. Bad financial decisions can affect a person for many years to come. A bad credit score rating can make ones life a lot more difficult affecting the credit scores scale.

If you are young and just starting out on your own, finding out information on your credit score and how to build a good one is a wise investment in your future. Knowing what not to do will save you a lot of stress later in life.

One of the big mistakes that young adults make is not being realistic about what they can afford. Buying on credit is not a good idea, it’s easy to get behind in payments, and once that happens it’s almost impossible to catch up. The interest keeps building and before you know it you could be drowning in debt. Only buy on credit if it’s absolutely necessary. It is better to save for something you want. Put aside a certain percentage of your income for savings. This way if something comes up, you have cash.

It may be easier to set your bills up for automatic withdrawal from your checking account. This way you will not risk forgetting to make a payment.

Do not use credit to pay a bill. It is a very bad idea to pay your VISA with your Mastercard. Or your utilities with a credit card. You end up paying more because of the interest.

Do your best to stick to these financial rules. It may seem strict now but later when you are looking to buy a house, or finance a car, you will be glad that you did. It will be easier for you and you will be able to get the best interest rates.