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5 Secrets that Credit Card Companies Won’t Tell You Up Front

5 Secrets that Credit Card Companies Won’t Tell You Up Front

While there are a lot of terms and conditions that are buried in the fine print of credit card agreements, most people only pay attention to the big numbers in the summary box: the interest rate, the penalty interest rate and late fees.

Although these are important factors that can help you choose the right credit card, there are still some little-known facts that can make or break your creditworthiness once you’ve decided on a card and have started using it. Here are five secrets that credit card companies won’t always tell you directly, but that you can use to your advantage when building or maintaining your credit profile:

Credit Card Companies Can ‘Snoop’ on How You Pay on Other Cards

Most people realize that payment history on other accounts directly impacts their credit scores, which in turn affects whether or not their credit card application is accepted. However, this initial check is not the only time that your payment history can affect your credit card account.

If you are consistently late or over the limit on your other credit card accounts, some credit card companies will raise the rate you pay on their card, even if you’ve never been late paying them. The rationalization is that if you have poor payment performance on one account, theirs is likely to be impacted in the future.

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They Can Raise/Lower Your Credit Limit at Any Time

In the same vein, how you pay other accounts can also affect your credit limits. Late payments to other accounts or going over your limit on other accounts can cause your credit limit to be lowered on accounts where your payment history and credit utilization is satisfactory.

For example, let’s say you have a credit card with a $10,000 limit that you pay on time, and never use more than 20% of the balance. And let’s also say you have a credit card with a $5000 limit that is maxed out, and you’ve been late on a few payments. The company that issued the $10,000 credit card may decide to lower your credit limit significantly, even if you’ve never been late with a payment for them.

This will directly impact your ability to get new credit, as part of your credit score is based on your credit utilization and lower credit limits are seen as higher risk and can lower your credit score.

You Can Ask for a Credit Limit Review Any Time

On the other hand, if you have a good payment history across all of your accounts but haven’t gotten a credit limit increase, in most cases you can just ask for one. Some credit card companies make this easy and automated. To see if your credit card company is one of these, just log into your account and look for a link that says “Credit Limit Increase” or “Credit Limit Review”.

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Otherwise, you can call customer service and ask directly. In most instances, you can ask for a credit limit increase every six months.

Be aware that this may incur a hard inquiry on your credit file depending on the credit issuer, so don’t request credit limit increases on all of your cards at the same time.

There are a few credit card companies that do automatic and periodic reviews, in which case you won’t be able to ask but you should be seeing regular limit increases if your payment history and credit scores are satisfactory. If not, call and ask about their criteria for raising credit limits so you know what you need to improve in order to qualify.

Paying Early Cuts Your Balance Faster

Nearly all credit cards charge interest on your average daily balance, and most cards have a 30-day grace period so that if you pay off your statement on or before the due date, you don’t accrue interest.

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If you can’t pay off your entire credit card balance, the next best thing is to pay early. Why? Because lowering your balance early in the month lowers your average daily balance, which in turn lowers the amount of interest you pay for your purchases.

For example, let’s say you have a $1,000 balance on your card. If you pay $100 off immediately, you’ll only pay interest on the $900 balance remaining throughout the month. If, on the 15th of the month, you make an additional $100 payment, your average daily balance will be calculated like this: (15 x $900 + 10 x $800)/30 = $850.

Therefore, instead of paying interest on the full $1,000 balance like you would if you waited to pay at the end of the month, you’ll only pay interest on $850. This adds up in the long run, especially when you have higher balances.

You Can Ask for (Some) Penalty Fees to be Waived

Let’s say you get a payment in a few days late, and are hit with one of those pesky $30+ late fees. Nothing to do but pay up, right? Wrong.

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If you have an excellent payment history with the credit card company, in most instances you can request to have that fee waived. It’s generally not something that you can request online. You’ll need to call in to speak to a representative, and expect them to scrutinize your past payment history and credit utilization before agreeing.

Usually, you can only make this request once per year, or once every six months at the most, so don’t waste it.

To Sum Up…

Credit card agreements have a lot of confusing terms and conditions in the fine print, but there are ways to use these to your advantage if you are savvy and keep track of how you are using your credit. Pay attention to how much of your credit you’re using on each card, pay early, and make sure you are getting credit limit increases in order to improve your credit scores a

Featured photo credit: Paper money, extreme macro/Kevin Dooley via flickr.com

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Last Updated on July 20, 2021

Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

Have you ever considered your life now, and how it would be if you had more time to spend with your family and less worries about money?

Nowadays, financial stress is one of the most troublesome weights in life. If you’ve ever encountered financial stress, you know the difficulty of not having enough income to pay your obligations or bills.

Many people say that money is not the ultimate goal of life. While that’s true, money certainly plays a very significant role. The meaning of financial freedom changes with the different phases of our life, but ultimately, it is something that many people strive for.

In this article, we’ll explain how to capture that financial freedom you’ve been looking for. Read on to learn the secrets to financial freedom.

Break Free of Your Finances

Financial freedom is about having a constant flow of cash from your assets to cover all your regular needs.

When you are not worried about your income, or living paycheck to paycheck, you gain a great sense of freedom. It’s the freedom to be obtain and do what you truly need to make your way through everyday life.

Gaining financial freedom, though, is a process of growth, making small improvements and gaining emotional strength.

Though it seems hard to believe, it is really very simple to get financial freedom.

To do so, you simply need to make sure that your assets exceed your liabilities. In other words, you’ll need to find the sweet-spot where your residuals meet or surpass your expenses. This is something that you can achieve with the proper plan.

While not every person will accomplish financial freedom, the potential for anyone to do so is certainly there. Anyone can achieve this success, regardless of their income level.

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Outlined below are 9 secrets that will help you in your goals of achieving financial freedom.

1. Stop Unnecessary Spending

We often spend money inwardly, instead of objectively.

For example, you may spend when you’re anxious, depressed, restless, exhausted, from fear of missing out, or to please others. This is a very unhealthy way to handle your finances.

To stop this habitual spending, log down all your spending over the course of a month.

Just as some people keep a food diary, keep an expense diary. Remember not to just write down how much and what you spent the money on, also include the circumstances of why you spent the money. Was it an impulse buy at the checkout line or was it something you planned to purchase?

This increased self-awareness could enable you to avoid triggering situations in the future when you are considering an impulse buy.

2. Plan a Monthly Budget

This is a great opportunity to get serious.

Take a seat with your spouse or partner and make a monthly budget based on your income, not your expenses. You are never again going to spend more cash then you have on hand.

Overspending is the thing that led you to more financial obligations. Make sure you decide every month what is coming in and what will be going out and stick to that budget… no matter what.

3. Cut-up Credit Cards

Perhaps you are the type of person who always pays your credit card balance in full before the end of your billing cycle, and enjoys the reward points you gain. If this is the case, then you’re already way ahead of the game.

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If not, you may want to consider ridding your life of the burden that credit cards bring.

Many cards have strategies set up so that if you make a certain number of late payments, they will raise your interest rate much higher. This can really add up in the long run and you won’t be doing your financial situation any favors. If you’re prone to late payments or have a large balance due on your cards, cut them up!

Without proper self control on credit card spending and payments, you are basically throwing your money away. To ensure that you have better control over your spending, use only cash or debit for all future purchases (and don’t forget to pay at least your minimum payment on your cut-up cards each month!).

4. Increase Savings

There is no doubt that for a comfortable retirement you must accumulate satisfactory savings throughout your working life.

It’s good practice to save up to 15% of your income.

Start with your workplace 401(k), if you have one. If not, a Roth IRA (if you are eligible) or a traditional IRA (if you are not eligible for the Roth) are the next logical steps.

Increase in longevity means you might be able to look forward to 25 to 30 years in retirement, or possibly even significantly more. Investing now in good retirement plans will ensure that you have a guaranteed a stable monthly income when the time comes to stop working. [1]

5. Invest Wisely

Consider investing in funds.

Specifically, you will gain higher returns if you invest in different types of mutual funds such as Debt funds, Equity funds and Hybrid funds with a proper balance, although it absolutely relies on your personal preferences and sense of risk taking.

To get the most of these benefits, make sure you are investing in a variety of assets. Another resource of investing in mutual funds is SIP (Systematic Investment Plan) where you invest some money every month in funds. SIP works by averaging the per unit price of the stock.

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Mutual fund investors are aware of the benefits of an SIP (Systematic Investment Plan). For one, it is the most secure way to invest in equity mutual plans so that wealth is created over a long period of time. This plan also helps you to gain a better sense of financial discipline, which will come in handy in all your financial endeavors.

6. Invest in Gold

There isn’t really a better way to invest in gold than to have the physical gold itself in your possession.

You can purchase gold coins and bars from mints as well as from coin dealers and other private sellers.

Another way to invest in gold is through ETFs (Exchange Traded Funds).

These are is similar to mutual funds but they are exclusively investments of gold. ETFs are great because they offer more liquidity; the ETF owns the actual physical gold, stores it, and retains the value of the shares. These shares can then be bought and sold in the stock market, and one big benefit is that the transaction costs of gold ETFs are much lower than the that of physical gold.

With its consistently-increasing demand, investment in gold can be very wise long-term investment to make.

7. Stash Emergency Funds

Whether it’s a cash gift or a work bonus, always try to save any extra money that comes your way rather than making unneeded purchases.

If you get paid every other week, you’ll get an “extra” paycheck (three rather than the usual two) twice a year. Either save those paychecks towards your emergency funds or utilize the money to pay down other obligations, such as loans, credit cards or other debts.

Make it hard to get your cash.

Put your savings in an alternate bank, maybe an online bank that forces you to delay for several business days before transferred money hits your regular bank account.

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8. Find Fabulous Mentors

Find a mentor, such as a friend or family member, who has exceptional control over their finances and pay attention to everything they do.

If you do not have any friends or family that are enjoying financial freedom, then find a mentor online! There are numerous blogs and guru websites featuring the advice of many people who have reached financial freedom, and they exist primarily to let you in on how to achieve it for yourself.

There are also plentiful forums available that share tips and tricks on how to best achieve financial freedom. Read as much as you can and start changing your habits for the better.

9. Be Extra Patient

Patience is the key of financial success.

Being patient can be quite tough, especially when you’re struggling with your finances, but having faith is worth it. You’ll continuously be on the right track if you are taking the proper steps above.

So don’t be discouraged, even if you are only saving a few dollars a month; it all adds up. Within just a few years you’ll look back proudly at your accomplishments and be glad that you had the patience to get there.

Financial Freedom for All

Anyone can achieve financial freedom, regardless of their financial circumstance.

Use the tips provided above to get yourself on the track to financial freedom and toss your monetary concerns out the window. If you wish to achieve a life with financial freedom for yourself and your family then you must adopt a disciplined approach towards your finances.

Following the simple secrets above is a great start to making your money work for you, so you can work less and live more!

Featured photo credit: rawpixel via unsplash.com

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Reference

[1] Hartford Gold Group: IRA Retirement Accounts

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