Pick A Card That Works For You
The first step in shopping for a credit card is considering your spending habits. For example, could you benefit from earning cash back on gas or groceries? Do you frequently travel and want to earn points or miles? Are hotel discounts important to you?
These questions can help you decide what type of card you want and which potential rewards would be most helpful to you. Start researching by comparing credit cards among card issuers or banks, like Chase, Capital One or Citi. Use a card comparison tool if you need help comparing offers. Forbes Advisor provides an array of lists and other resources to help you cut through the plastic jungle and find a path lined with cards to fit your specific needs.
After narrowing down your options and evaluating which card issuer you may want to work with, look at each cards terms and conditions to be aware of potential fees, payment due dates and restrictions to using benefits. Make sure you can afford any annual fee a card charges and look at , promotional APRs and welcome bonuses.
Dont Apply For Too Many Cards At Once
While it may seem counterintuitive, you dont want to apply for a stack of credit cards to see which one you can get. Most card issuers perform hard credit checks during the application process, which can temporarily lower credit scores. Keeping up with payments can help a score rebound, but too many applications in a short period can have a lasting negative effect.
The best practice is to research which credit cards are best suited to your needs first, narrow the list down to two or three cards and finally, pick one to apply for. If the first application isnt approved, try again for a different card. If the second one isnt approved, wait a few months before applying again. You may need to improve your credit score to qualify for certain cards.
When available, use a card issuers pre-approval tool to know which cards you qualify for. Pre-approval tools typically result in soft inquiries with no impact to a credit score. Receiving a pre-approval for a card can also inform you of which rates, fees and terms you may receive if you follow up with a formal application.
Picking A Method To Pay Off Your Credit Card Debt
Both the snowball method and the avalanche method have been proven to be effective ways to reduce credit card debt.
Proponents of the snowball method suggest that working on a smaller balance allows you to develop habits that promote credit card health while creating a goal that can be quickly completed.
Avalanche method supporters contend that building a budget that works against your highest APR card is more financially advantageous, as you are immediately reducing the debt that produces your largest bills.
Either method can combat your credit card debt, provided you have a full understanding of all of your credit card’s balances. You can also use both debt reduction methods by switching between paying off smaller balances then shifting to cards with high APRs: as best matches your available budget and motivations.
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Spend Only What You Can Afford
Its tempting to think of a credit card as an endless supply of borrowed money but its imperative to remember credit cards are not consequence-free. Your is the maximum amount you can charge to a card, and you have to pay back everything you spend .
The average credit card interest was 16.17% as of February 2022. Paying interest on a credit card balance will quickly cost more than the value of any rewards you have earned. By restricting your card use to only what you can afford, it will be much easier to pay off your balance in full every time and avoid being charged large amounts of interest each month.
Maxing out credit cards or ever-increasing interest charges can lead to high credit usagealso a dangerous game with your credit. A cardholders credit usage, commonly known as a rate , is the second-most important factor affecting credit scores.
Your CUR is the amount of credit used compared to the total amount of credit available. For example, if your card limit is $10,000 and you have a rotating balance of $3,000, youre using 30% of your available credit. Experts recommend keeping your CUR below 30%, but the ideal range is much lower.
What Are Credit Card Issuers
These are banks, like Chase, that are financially responsible for the card. Card issuers take on the inherent risk of lending unsecured credit to consumers. When you apply for a card, you do so through the issuer. Here are a few things that credit card issuers do:
- Approve or deny credit card applications
- Set the terms and conditions of the card
- Pay for transactions on behalf of the user
- Collect payments from the cardmember
- Provide customer service
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Understand How Credit Scores Work
Part of using a credit card is understanding how credit scores can work for or against you. Lenders use credit scores to determine whether applicants are risky borrowers. The higher the credit score, the more it proves to lenders that someone is a responsible borrower who makes payments on time, pays off balances and has a healthy mix of credit.
Three major credit bureaus use slightly different scoring models to measure credit scores. The FICO model is used by 90% of top lenders. FICO credit scores range from 300 to 850from poor on the low end to exceptional at the high end:
- Very good: 740-799
- Exceptional: 800-850
Payment history and credit utilization make up a big part of your credit score, but so do the mix of credit types, length of credit history and the number of recent credit card applications. A high credit score means youre more likely to be eligible for lower interest rates when taking out big loans for mortgages or car purchases.
Managing Money Problems In Alzheimer’s Disease
People with Alzheimers disease often have problems managing their money. In fact, money problems may be one of the first noticeable signs of the disease.
Early on, a person with Alzheimers may be able to perform basic tasks, such as paying bills, but he or she is likely to have problems with more complicated tasks, such as balancing a checkbook. As the disease gets worse, the person may try to hide financial problems to protect his or her independence. Or, the person may not realize that he or she is losing the ability to handle money matters.
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Airline Or Hotel Points And Miles
Some card issuers offer co-branded credit cards in partnership with major airlines and hotel programs. For example, Delta, United, Southwest, American Airlines, Hilton, Hyatt and all offer credit cards with various card issuers. The downside to earning points and miles that are associated with a specific airline or hotel is that they can typically only be used with the cards partnership airline, the airlines partner airlines or the hotel and may only be redeemable for travel-related purchases like flights, upgrades or seat assignments and hotel nights.
The value of points and miles can vary from program-to-program and even between different times of the year. If youd like to apply for a co-branded airline or hotel card, figure out which airline or hotel you travel with the most and take the plunge .
Managing Credit Accounts And Finances For A Loved One
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- Plan ahead, if you can, in the case of an aging parent
- Know what legal options may exist
- You can place a security freeze or fraud alert on the persons credit reports
Each year, millions of U.S. consumers find themselves managing finances and credit accounts for an aging parent, friend, or family member with special needs. It can be an overwhelming task, but there are some steps you may want to consider both before and after a need arises to help better protect them from fraud or identity theft.
Plan ahead if possible
If your parent still has active financial and credit accounts, you might suggest he or she add a trusted family member or friend to their credit or bank accounts. This may be especially important if he or she is in the early stages of a progressive disease involving memory loss. If it becomes necessary, that person can help pay bills on time, make timely deposits and withdrawals, monitor account balances, and stay vigilant in checking for signs of fraud or identity theft.
Why its important: If your parent or other loved one is unable or becomes unable — to manage their credit accounts and finances, and you havent been able to plan ahead, you may need to piece together their financial affairs yourself. In addition, they could pile up unnecessary debt miss credit card or bill payments, which may impact their credit reports and trigger late fees or penalties and they could be unable to recognize signs of fraud or identity theft.
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This Week In Credit Card News: A Card For People With Dementia Card Spending Strong Despite Inflation
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Mastercard Partners with Caregiver to Launch Debit Card for People Living with Dementia
A British woman who acts as caregiver to her parents has launched a debit card to help people living with dementia and their families take back control of their spending with Mastercards backing. Both of Jayne Sibleys parents are living with Alzheimers, and after noticing her mothers condition worsen and seeing her start to mismanage her money, Sibley saw a need to protect both her mothers everyday money and her independence. She wanted to empower her mother to spend her own money, by herself, within safe limits. She created Sibstar, a debit card app that allows people living with dementia to access and spend their money while also keeping it safe by managing how and where that money can be used through the app. Sibstar describes itself as a profit with a purpose business, and donates 7.5% of its net profit to the Alzheimers Society.
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Parent With Dementia And A $40000 Debt: Who’s Liable
Dear To Her Credit, My mother has recently gone into an assisted living facility. She has about $40,000 worth of credit card debt, and she cannot continue to meet the minimum required payment on most of the cards. She has dementia and does not know what’s going on.
As her daughter, I pay what I can from her bank accounts. However, the cost of the care she requires does not leave any extra money for the credit card payments. Most of the credit card companies won’t even talk to me, and I really don’t want them to know that I am her representative. The cards are all in her name only.
What will happen if I continue to pay something on them but just not the minimum? — Teri
Dear Teri, You can stop worrying about becoming liable for your mother’s debts. Talking to credit card companies on your mother’s behalf does not make you liable for anything.
If you already have set up a power of attorney to you can deal with all of your mother’s finances, you can show it to financial institutions, including the credit card companies. Then they’ll know that you are the person they should talk to. If her condition is past the point that she can grasp the situation and grant power of attorney, you will have to go to court and get conservatorship. An attorney can help you with either of these issues, as well as help you with her will, if necessary, and any other financial and medical directive issues.
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Lock But Don’t Close Your Credit Card Accounts
Debt reduction only works if you stop adding to the balance with new purchases. To avoid overspending or accumulating additional debt, you can request your account to be locked or frozen. This will keep your account open, but you won’t be able to use the card to make purchases until it is unlocked. This will help three key elements of your credit score:
- Your the total amount of debt you owe divided by the amount of credit account limits you have open to you will stay low as you pay off your debts and keep your existing credit lines open.
- Your average account age the average time you have had each of your credit lines open grows with every month you keep an account open.
- Your credit mix how many different lines of credit you have open stays high when you have a diverse set of open credit accounts.
Make sure your paid-off accounts aren’t incurring fees for a zero balance, and then check your credit score: chances are it’s gone up and you now qualify for much better terms on future credit.
Entering A Nursing Home
Admission to a long-term care facility does not protect your elderly parent from the jaws of an agency collecting on defaulted credit card debt. However, lawsuits lose their teeth the longer she resides there.
The national average cost of nursing home care is $10,000 per month. An extended stay can quickly exhaust the life savings of an elderly retiree, and force a home sale leaving little on the bone for collectors to pick.
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Cultivate A Healthy Credit Lifestyle
Often, we drive ourselves to learn about credit only when we realize we have credit problems. As you look to pay off your credit card debt, you can begin to understand the best ways to sustain a healthy and affordable credit lifestyle. This can help you avoid a credit crisis, but it can also drive your credit score higher so you can obtain attractive terms for the loan or line of credit that you may need in your future.
Debt Forgiveness Through Consolidation And Settlement
Knowing that seniors are dependent on social security payments and their retirement funds, lenders often dont hesitate to issue loans.
This may be beneficial to the lenders, but it is not always easy for the older adults because they dont have enough breathing room when it comes to their money.
If they get stuck, there are programs that can help them consolidate and more easily settle their debts.
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Why Older Adults Shouldnt Worry About Old Debts
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If youre an older adult with outstanding debts and youre worried about paying them off, or debt collectors are hounding you, just know that you have options. In reality, you might not need to worry about most of your old debts. In this video, our Editor-in-Chief, Jeff Hoyt, interviews Eric Olsen, the founder of a nonprofit organization called HELPS, which helps seniors with their finances and debts. If youre concerned about your debt, watch the video above or read through the interview transcript below.
My Mother Who Has Dementia Is Being Harrassed For Non Payment Of Credit Card Debt Can The Win
Sorry to hear that your mother has dementia, but that is not a legal justification for her to not pay her debts. Sure would have helped had you indicated HOW she is being harassed. I may be a little cynical but I am not impressed by people who claim that a debt collector who professionally does their job by calling and demanding payment on a legitimate debt is “harassing” someone.The word “harassing” has a specific meaning with falls into the category of being a criminal offense, or at least a violation of federal and state laws regarding debt collection laws. Falsely accusing someone of a crime is itself a crime.If you are annoyed by debt collectors, that is not a crime. There are ways to deal with calls that are annoying. Hope this perspective helps!
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Tips For Making Money Easier To Manage
There are steps you can take now to manage your financial affairs more easily:
- set up standing orders or direct debits for regular bills and subscriptions so they’re paid on time
- have all your income, including pension and benefits, paid into your bank or building society account
- consider getting a chip and signature card you only need supply your signature rather than a personal identification number
- set up a third party mandate this gives someone else access to your bank account you can specify how much access to give
Home Equity Loans Or Lines Of Credit
Similar to loans earmarked for debt consolidation, home equity loans or home equity lines of credit can allow you to put your loan towards existing credit card debt. Given that these loans are secured by your home, you can often have higher loan limits than a personal loan. Of course, the risk involved is that if you are unable to regularly meet the payment terms of your home equity loan or line of credit, the bank can foreclose on your home.
Like a debt consolidation loan, it can be attractive to wipe out your credit card debt all at once through a home equity loan. But, as you take on your monthly loan payment, take care to monitor and limit any of your credit card expenses to be certain that you don’t build another debt that you can’t repay.
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