Tag Archives: Credit Management

Credit Card Regret: It’s More Common Than You Think

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“Regrets, I’ve had a few. But then again, too few to mention.” – Frank Sinatra

If you’re the kind of person who prefers to play it safe, there’s a good chance that, like Ol’ Blue Eyes, your list of regrets is mercifully short. But if you’re the adventurous type who’s more likely to yell “YOLO!” than take the time to consider the pros and cons, you may have made more unfortunate decisions than you care to admit. And if we’re being honest, some of them are probably related to finances.

Going into credit card debt is one of the most common financial regrets. According to a recent NerdWallet survey, “About 6 in 7 Americans (86%) who have credit card debt say they regret it.” With numbers that high, it’s safe to assume most of us would make different credit decisions if given a chance.

Common Reasons for Credit Card Regret

If you’ve ever opened a new credit card account and felt that distinctive twinge that tells you it was a bad decision, there’s a pretty good chance you filled out that credit application for the wrong reason. Bad reasons come in a variety of forms. Here are a few of the most common:

You wanted that sign-up swag. T-shirts. Koozies. Collapsible drink coolers. It doesn’t matter what it is, we all love free stuff. Credit card companies know this. Sure, free t-shirts are cool, but are they really worth opening a credit card that will charge you 26% interest on your purchases?

You can’t resist that one time discount.

“Would you like to save 25% on today’s purchase by applying for a store credit card?” If you’ve ever shopped at a retail store, there’s a good chance you’ve heard this sales pitch at the checkout register. If you took advantage of the offer and suddenly wished you hadn’t, you’re not alone. According to a recent survey, almost 75% of Americans have at least one store credit card. Not surprisingly, nearly half of them regret it.

You’re in a financial pinch.
When your checking account is running low, it can be incredibly tempting to sign up for a credit card just to get some temporary relief. However, credit cards don’t remedy poor financial habits, they tend to make them worse. If you’ve ever signed up for a new credit card “just to cover things until payday,” this regret may feel all too familiar.

OK, you signed up for a credit card and regretted it. Now what?
Before we go any further, it’s important to remember one thing: Just because you have a credit card doesn’t mean you have to use it. Even if your regrettable card carries a 26% interest rate, 26% of $0.00 is still $0.00. However, if you’re worried you won’t be able to resist using your card, you might be tempted to close your account immediately. This could certainly help you avoid charges you can’t afford to repay, but there may be a better approach.

Available credit and length of credit history are two of the main components of your credit score. Having an open, active account you don’t use could actually help you. If you were given a $1,000 credit line with your new card and you don’t make any purchases, you have $1,000 of available credit. If you close the account, you have no available credit. In this case, maintaining the credit line may be beneficial for your credit rating.

As for the length of credit history, that part’s fairly self-explanatory. The longer you maintain a satisfactory account, the more favorably it reflects in your credit score. With this in mind, you might be better off just removing the card from your wallet instead of closing the account altogether.

Good credit is one of the building blocks of your overall financial health. If you live, work, worship, attend school, or volunteer in Monmouth or Ocean Counties in New Jersey and you’re trying to find financing options that are right for you, contact First Financial to make an appointment with a representative. We can help you review your financial situation and recommend the best products and programs for your needs. We are happy to help with managing your credit — and finances in general, with no regrets!

Don’t Let These Mistakes Ruin Your Credit Score

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When it comes to your finances, your credit score can be a big deal. A good credit score can mean big savings (or costs) if you take out a loan. Good credit can also mean lower costs when you get car insurance in some states.

If you have good credit, you’ve worked hard to manage your finances and your loans in a way that shows you are responsible. You are proving that you are a solid risk. But what happens if you slip up? How much could that ruin your score?

According to the major credit bureaus, the damage affects different people differently. One late payment will affect a person with a lower score, but it’ll have a much bigger impact on someone with a really high score. That’s right: if you have great credit now, a mistake could mean a bigger hit to your credit score. Someone with mediocre credit won’t see the same impact as the result of a mistake.

Do you have an excellent credit history and want to keep it that way? Here are some things to avoid if you want to keep that credit score in the good to excellent range:

Missed Payments

The biggest factor in your credit score is your payment history. One missed payment can tank your credit score, if you have excellent credit – by as much as 100 points, according to Equifax.

The longer you wait to pay your bill, the worse the impact. If you are just a couple days late, you might not see a huge change. However, once you reach that 30-day late mark, it’s a big problem.

Do your best to plan your finances so you make your payments on time and in full. Easier said than done, but it’s much easier to stay on track if you have a budget. If you don’t, get working on one. Check out our free budgeting guide.

High Credit Utilization

If you have excellent credit, there’s a good chance you carry small balances on your cards — if you carry them at all. Best results come when you use 30% or less of your available credit each month.

But when you start charging, and that credit utilization number starts to climb, you can see changes to your credit score without realizing it. The closer you are to your limit on the credit cards, the more it impacts your score.

If you end up over the limit on your cards, then your score will suffer. Try to continue keeping balances low. Better yet, pay off your cards each month if you can and avoid paying the interest.

Cosigning on a Loan

One day you may want to help your child or sibling by cosigning on a loan. It might seem like a good idea to cosign on a loan to give them a boost, but think twice before you commit.

Your credit is on the line as soon as you sign on the dotted line, because you accepted responsibility for all payments as a cosigner. Plus, it will look like you have that debt — even if you don’t, and that can affect how much you can borrow if you were to, say apply for a mortgage on a dream home. If the borrower misses a payment, that’s on you as well. You can see your credit score fall.

And if you do cosign, make sure the borrower keeps you up to speed. It may not be ideal to make their loan payments, but at least it can save your credit if you do.

Article Source: Miranda Marquit for Moneyning.com

4 Ways to Quickly Raise Your Credit Score

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1. Don’t miss a payment.

This is the number one thing that credit bureaus look at when determining your credit score. Your payment history makes up 35% of your FICO score. If you have trouble remembering to pay your credit card on time, set a reminder on your phone or automatically schedule your payment to be deducted from your account on the same day each month.

2. Pay as often as you can.

Going a step further, pay on your debt as often as you can. Just because your payment isn’t due for 3 weeks, doesn’t mean you shouldn’t go ahead and make a payment. You don’t know when your credit card company reports your balance to the credit bureaus, so try to keep your balance as low as possible.

3. Reduce your debt.

Even if you’re making regular payments on your credit card, the goal is to get it paid off. If you’re keeping a balance from month to month, you’re getting charged more interest than you should be. Try and pay off your balance each month, but if that’s not possible, keep your balance as low as you can and your credit utilization under 30%.

4. See if you can increase your credit limit.

This is more of a trick than a solution, but it can work for you. If you’ve used $950 on a $1,000 limit, try calling your credit card company and getting that limit raised to $2,000. Then you’ve got a card that’s only 50% utilized as opposed to one that’s nearly maxed out. It doesn’t hurt to at least ask!

Learn about managing your credit and reducing debt with our guide.

Article source: John Pettit for CUinsight.com

 

5 Things to Consider Before Signing Up for a Store Credit Card

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Many times, you’re at a store paying for your items when the cashier asks, “would you like to save 20% off your purchase today by signing up for our credit card?” Sounds like a great deal, doesn’t it? You’re inclined to say yes, fill out the easy application and have the instant gratification of saving on things you were willing to pay full price for. Is it too good to be true though?

Retail stores have been tempting customers for years to sign up for credit cards with discounts, free gifts, and special promotions. While it may seem like a no-brainer to sign up and get instant savings, there are longer term implications that can affect your finances for years to come.

Make sure you consider these five important things before signing up for a store credit card:

Your Credit Score May Be Impacted

Whenever you sign up for a credit card, especially one from a retail store, your credit report will most likely be pulled. While that doesn’t seem like a big deal, it might actually have a negative effect on your credit score. This is what is called a ‘hard pull’ which happens usually when a financial institution, like a credit card company, asks for your credit report. Hard pulls can decrease your credit score by a few points. While it is temporary and usually only stays on your credit report for about two years, it is something to consider, especially if you are applying for any bigger loans (like a vehicle or mortgage) in the near future.

Read and Fully Understand the Terms

When you’re signing up for a store credit card on the spot at checkout, you’re mostly likely not taking your time to read the fine print. But, make sure you fully read and understand the terms and conditions of your new card. Store credit cards are notorious for having very high interest rates and fees, so you should thoroughly consider the terms before signing your name on the dotted line. You don’t want to be stuck paying a high interest rate in the long run. If it sounds too good to be true, it most likely is.

Consider the Sign-Up Bonus

The number one reason people apply for a store credit card is because of a special sign-up bonus. Often, stores will offer you a discount on your purchase that day or for a specified period of time. They might also give you free products and other perks. While it feels great to be able to save money instantaneously, you should really consider the sign-up bonus before you commit. While saving 15% on your purchase seems like a no-brainer, is it really that much of a bonus in the long run? In the grand scheme of things, sign-up bonuses are almost insignificant when compared against drawbacks, like interest rates and fees if you are carrying a balance on that store card.

Do Competitive Shopping

Consider your options before you sign up for a store credit card. Every store has different cards and policies and you want to make sure to pick the one that is right for you. If you’re really set on opening a store credit card, look first at the retailer where you spend the most money. You’ll probably get the most return if it has a good rewards and points program. Opening a card at a store you don’t really go to often probably won’t benefit you much. And of course, compare the terms and conditions between all cards.

Take Your Time to Make a Decision

Finally but most importantly, don’t make a spur of the moment decision. Stores will often reel you in with an engaging sales pitch at the register and many customers feel almost pressured into making a decision right then and there. If you’re interested in signing up, ask how long their current promotions and sign-up bonuses are valid for. Also ask for an application to take home for when you’re ready. Many companies will also allow you to apply online. This way, you can take your time to read the fine print and make a decision that is right for you (and your credit).

Store credit cards are very enticing, but they aren’t for everyone. Make sure you understand all the ins and outs of the card before you sign up. Otherwise, you can really do some damage to your credit score and debt levels. Choose wisely!

First Financial’s Visa Credit Cards offer benefits that include higher credit lines, lower APRs, no annual fees, a 10-day grace period+, rewards (cash back or on travel & retailer gift cards), an EMV security chip, and more!*

Click here to learn about our credit card options and apply online today.

*APR varies up to 18% for purchases, when you open your account based on your credit worthiness. The APR is 18% APR for balance transfers and cash advances. APRs will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fee. Other fees that apply: Cash advance fee of $10 or 3% of the total cash advance amount—whichever is greater (no maximum), Balance transfer fee of $10 or 3% of the balance—whichever is greater (no maximum), Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa® Credit Card and is available to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

+ No late fee will be charged if payment is received within 10 days from the payment due date.

Article Source: Connie Mei for Moneyning.com

The 4 Fastest Ways to Pay Off Credit Card Debt

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There are many reasons why most of us decide to sign up for a credit card. Whether it’s to help boost your credit score or as a means of purchasing a more expensive item that you plan to pay off in increments, credit cards can be a smart option for your finances. Unfortunately, they can also be very detrimental to your budget if not used wisely or paid off in a timely manner. If you’re feeling stressed about your card balances – keep your head up and remember you can work your way out of debt! Here are four fast tips for effectively paying off your credit cards.

Cut them up.

This may sound like an obvious solution, but it is an enormously effective one. Stop the behavior that has gotten you in trouble in the first place and put an end to making charges once and for all. Moving forward, plan to only make purchases you can pay for right away and begin the process of working your way out of the debt you’ve created.

Pinpoint the problem.

What is it that you’ve had to use your cards to purchase? Clarity is key when it comes to your personal finances. Are you living out of your means and making high end purchases that you simply cannot afford? Are you making poor financial choices like eating out too much that you can easily rectify? Sit down, look at your credit card statements, and alter your lifestyle accordingly.

Compare interest rates.

If you owe on multiple cards, go back and review each one’s interest rates. Many people automatically assume that the card with the highest balance is the one to work on first, but this is a mistake. The high interest rates are what will get you in the end, so concentrating on those cards will have a greater impact on your finances.

First Financial’s Visa Credit Cards come fully loaded with higher credit lines, lower APRs, no annual fees, a 10-day grace period+, rewards, and so much more!* Click here to learn about our cards and apply online today.

Get a side job.

Sometimes, if your debt is going to take a significant amount of time to control, it’s best to look into other sources of income. There are often easy ways to make money on the side to get a few extra dollars in your pocket.

*APR varies up to 18% for purchases, when you open your account based on your credit worthiness. The APR is 18% APR for balance transfers and cash advances. APRs will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fee. Other fees that apply: Cash advance fee of $10 or 3% of the total cash advance amount—whichever is greater (no maximum), Balance transfer fee of $10 or 3% of the balance—whichever is greater (no maximum), Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa® Credit Card and is available to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

+No late fee will be charged if payment is received within 10 days from the payment due date.

Article Source: Wendy Bignon for CUInsight.com

3 Totally Common Financial Tips You Should Probably Ignore

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Mature man taking data off the computer for doing income taxesWhether you get your financial tips by asking friends and family, checking out library books, attending seminars or searching online, impractical pieces of advice sometimes abound.

Too many personal finance experts tend to populate their cable appearances, books, columns and blogs with the same simple tidbits. But some of that common advice is also not applicable to everyone. For each of these three clichéd tips, let’s look at some other alternatives:

1. In Debt? Cut Up Your Credit Cards

Certain financial gurus advise people in debt to cut up all their plastic and consider using credit cards as the eighth deadly sin.  Here’s some advice: don’t cut up your cards.

People land in debt for various reasons, and some – like student loans, don’t have anything to do with credit cards.

If being unable to pass up a sale or discount clothing bin is your trigger for getting into massive amounts of debt, then put your cards in a lock box and back away. If you fell into some bad luck and used your credit card for an emergency, consider a balance transfer.

But just because someone is in debt and wants to get out of it doesn’t mean they’re going to stop spending money entirely. People still need to eat, fill the car with gas, and deal with the occasional unexpected expense.

Some may counter that it’s best to use a debit card, but consider the ramifications of debit card fraud.  A compromised debit card gives thieves direct access to your checking account. While most financial institutions will cover the majority of money taken from your account, it can be an extreme hassle to deal with. When a credit card is compromised, the issuer typically reacts quickly – possibly even before the customer notices, and usually offers fraud protection.

It also helps to have a low-interest rate credit card for emergencies. Think of it as a fire extinguisher housed in a glass case. You don’t want to break that glass unless you really, really need it. But you do want the fire extinguisher to be there.

2. Have a 20% Buffer in Checking

Undoubtedly, it’s preferable to have a buffer in your checking account to avoid overdraft fees, but two types of situations typically cause overdraft fees.

  • Person A is forgetful, forgets a recurring charge or neglects to check his or her balance before making a purchase.
  • Person B uses overdrafts as a form of short-term borrowing because he or she does not have enough money to get by without going into overdraft.

About 38 million American households spend all of their paycheck, with more than 2/3 being part of the middle class, according to a study by Brookings Institution.

It’s simple for personal finance experts to recommend tightening up the purse strings, doubling down on paying off debt, and moving out of the paycheck-to-paycheck lifestyle – but those who don’t have assets and who struggle each month to make ends meet don’t need to hear people harping about avoiding overdraft fees by “just saving a little bit.” Every little bit counts for them.

Instead, let’s offer some practical advice: Those looking to avoid overdraft fees should evaluate their banking products.

Americans who use overdraft fees as a form of short-term lending may want to set up a line of credit with a credit union or have a low-interest credit card for emergencies.

3. Skip That Latte!

Many years ago, David Bach created a unifying mantra for personal finance enthusiasts. The “latte factor” was that you could save big by cutting back on small things.

Bach’s deeper concept – that each individual needs to identify his or her latte factor – got lost in the battle cries, with many people crusading specifically against your daily cup of coffee.

Yes, people should be aware of leaks in their budget. But everyone’s budget looks different. If “Person A” buys a coffee each day, but rarely buys new clothing, and trims the budget by cutting cable and brown-bagging it to work, then leave them alone about their caffeine habit.

People are allowed to live a little when it comes to their personal finances. It’s important to save for the future, but it’s also important to enjoy life in the present. Personal finance shouldn’t be a culture of constant denial either. Create a budget, figure out if you can work in an indulgence or two, and don’t live in complete deprivation. For those working to dig out of seemingly insurmountable debt, then yes, it may be time to identify and limit your latte factor or make an appointment with a financial counselor.

Decide What’s Right for You

Keep in mind, personal finance is indeed personal.  A generic piece of advice, like keep a 20% buffer in your checking account to avoid overdrafts, may not be helpful in your personal situation.  You need to figure out what works for you, and ask for help along the way if you need it.