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Get Your Credit Cards to Pay You – Some Tips for Getting the Greatest Rewards from Your High Limit Cards

Posted on 6 July, 2011 by admin
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Many consumers use credit cards for their convenience, but those who use high limit cards tend to be more sophisticated and affluent consumers. Cards with high credit limits, generally limits above $10,000 to $15,000, are often designed to entice those high income customers. These enticements may take the form of travel rewards like free airline tickets and upgrades, cash back awards that allow those affluent consumers to recapture some of their spending, or experience rewards like special access to hard to find tickets and special seating at concerts, Broadway plays and other events.

Analyse Your Needs and Your Spending Patterns

Analyse the spending you do on your cards. If your current credit card provides a year end summary broken down by categories, analyze that statement to see which spending categories have the most activity. If you do not have access to a detailed summary, you can create your own using your credit card statements. Create a spreadsheet listing each purchase and its assigned category, or simply write the information on a piece of tablet paper.

Once you know which categories represent the bulk of your spending, you will be better equipped to find the best card. If you find that you spend only 3 percent of your money on travel, a high-dollar travel rewards credit card might not be very useful. If your analysis finds that you spend 20 percent of your dollars eating out, a dining rewards card with a high credit limit could be very rewarding.

Look for High Limit Cards to Match Your Lifestyle

Seek out prestigious high-limit credit cards. These  type of credit cards tout their high levels of customer service and customisation as well as their high spending limits. If you hold a regular credit card call your issuer and enquire whether a change of card product may benefit you.

Understand the Terms and Conditions Before You Sign Up

Review the terms and conditions of each card carefully. Some high spending limit cards come with high annual fees, and you will have to decide if the perks and rewards offered are worth the extra cost. Also be aware of the tiered spending levels many of these cards use. In order to earn the highest cash back percentages and most prestigious perks, you might be required to spend $5,000 or even $10,000 annually on the card. If your spending levels are already that high, that should not be a problem, but it is something to be aware of.

Choose Your Card Wisely to Maximise Your Savings

Maximise your rewards by booking travel with the high limit card that provides the most bonus miles. Make your petrol purchases using the card that provides the best petrol rewards or cash back for fuel and car related expenses.

This article is for educational purposes only and is not financial advice. Consult your financial adviser or other professional before making a decision about any financial transaction.

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Posted in Credit Card Debt, Debt Management, Debt Tips, Wealth Management | Leave a comment

Financial Security

Posted on 21 June, 2011 by admin
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Do you dream of becoming wealthy and debt free? Unless you win a large prize in a lottery, you need to look at ways to make your money go further. You may not be able to control the amount of money at your disposal; however, by taking control of your personal finances you will gain financial security. Here are five tips to help you control your finances and reduce your debt.

1. Take Charge of Your Credit Cards

How many credit cards do you have? If the answer is more than one, you should consider consolidating your debts by choosing the best credit card to suit your circumstances and closing the other cards.

A bank officer will be happy to organise consolidating your debts onto one card. You may be able to negotiate a special deal to reduce the interest rate on your new card for the first six months to twelve months. To avoid the temptation of spending more money, cut up the cards you no longer require.

Depending on the amount of money you owe on your credit cards, and how well you can control your spending, it may be worthwhile to consider asking your bank manager for a personal loan to pay off your credit card debt.

Once you have a personal loan, you can change your card from a credit card to a debit card. A debit card allows you to purchase items using your own savings account. Your bank may offer a visa debit card, so you can use your card when you purchase items over the internet or over the phone. Remember though, consolidation through personal loans and credit cards will require you to met a strict eligibility criteria which most likely involves having a good credit history.

2. Start Saving

Before you open another savings account, consider using any extra cash you may have to pay off your credit card. The interest rate on your credit card will be higher than the interest rate you can obtain from a savings account.

Once you have reduced, or paid off, the debt owing on your credit card the next step is to open a term deposit or a high-interest savings account. Do not lock away all of your savings because you may require money for an unforseen circumstance, such as repair or replacement of a car or a household appliance.

If you find it difficult to save money, set yourself a savings goal and give yourself a reward if you succeed. For example, if you save regularly for six months, reward yourself with a weekend away.

3. Pay Extra Money into Your Mortgage

Although interest rates were low during the global financial crisis, interest rates have been steadily rising, since. If you can afford to pay even a small amount of extra money into your mortgage account, you will benefit financially.

Paying money into your mortgage is an ideal way to save because you will shorten the life of your mortgage by years and money invested into your mortgage is not taxed at the end of the financial year. Speak to your mortgage broker or financial adviser about the benefits of paying extra money into your mortgage.

4. Pay Extra Money into Superannuation

Once you have organised your credit cards and your mortgage, it is time to consider paying extra money into your superannuation. The amount of money that your employer puts into your superannuation is not enough. You will not be able to retire on even half of your current salary, if you rely entirely on the employer contributions. The government offers incentives for you to pay extra into your superannuation. Low income earners will benefit especially as the government will match dollar for dollar for the first $1000 that you put into your superannuation. These rules are often changing so make sure you seek professional independent advice.

Go to the Australian Securities and Investments Commission website for financial tips about superannuation, or alternatively talk to your financial adviser.

5. Teach Your Children How to Budget

You can begin teaching your child to budget when he is young. A five-year-old child is capable of managing a small amount of pocket-money. If you start to train your child from an early age, he will be better able to budget when he is an adult. A child that has learnt to budget will not make constant demands on you for extra cash when he is older.

Teaching your child to budget will not only ease your own financial burden, but will give your child the tools he needs to become financially secure when he grows up.

Take charge of your credit cards, start a regular savings plan, pay extra money into your mortgage or your superannuation, and teach your child how to budget. Follow these tips and your financial security will be well on the way to being assured.

This article is for educational purposes only and is not financial advice. Consult your financial adviser or other professional before making a decision about any financial transaction.

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Posted in Budgeting, Credit Card Debt, Debt Management, Debt Tips, Debt help, Loans, Mortgage Refinancing | Leave a comment

How Debt Consolidation Can Help You Regain Control

Posted on 15 June, 2011 by admin
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Debt consolidation is a personal finance strategy used by many Australians. When combined with more effective budgeting, improved debt management and a disciplined approach to future spending, debt consolidation offers many advantages relative to carrying several smaller but high cost debts. This article describes debt consolidation and the potential benefits it may have in regaining control of your finances.

Debt Consolidation for Australians

Many Australians have used debt consolidation loans to get the debt help they need to regain control of their personal financial situations. A debt consolidation loan makes it possible to pay off several debts and merge them into a single loan with a fixed and usually lower monthly payment. The lower payment reflects a longer maturity and an interest rate that is usually lower than the high rate loans that are paid off with the proceeds of the debt consolidation loan. Payments can usually be made on a weekly, fortnightly or monthly basis.

How a Debt Consolidation Loan Works

Most debts can be paid off and the balances consolidated into a single personal loan including credit card balances, vehicle loans, store card balances and personal loans that reflect earlier purchases. There are several advantages to having a single payment rather than several.

One major advantage of a debt consolidation loan is its cost, which is usually well below the aggregated cost of the several debts already outstanding. Credit and store credit cards have high interest rates on unpaid balances and any late payments will usually be reflected in late fees and potential upward adjustments in the interest rate charged. With several debts, it is not difficult to lose track and end up missing a scheduled payment but with a debt consolidation loan, the payment is fixed and the due date is known.

A single payment simplifies budgeting for monthly outgoings. Using a debt consolidation loan to pay off four credit card balances, a car loan, two store cards with interest accruing balances and two personal loans would result in one debt to track and pay rather than nine. This greatly reduces the likelihood of missed or late payments with their unpleasant results. It is easier to deal with only one creditor instead of several, potentially reducing the stress that comes from having one or more creditors following up to collect late payments.

A debt consolidation loan is best used as a strategy to regain financial control and improve your financial management moving forward, rather than as a short-term fix for a cash flow problem you may be having now.

Typical Terms

Debt consolidation loans usually have a term between two and seven years. Since the idea behind getting a debt consolidation loan is to have a predictable monthly cost, a fixed rate with constant monthly payments over the entire term of the loan is the typical choice. In most cases, the same procedures needed to apply for any personal loan are followed including proof of identity, credit checks, verification of employment, documentation of work earnings, a detail of all the applicant’s debts and other obligations and the value of the applicant’s assets.

The debt consolidation loan should clearly spell out any fees or expenses associated with the loan. In some cases, there may be an establishment fee, a monthly administrative fee and/or an early termination fee that applies if the loan is paid off early, usually within the first two years. Care should be exercised in fully exploring and understand all of the loan terms and whether or not there are any hidden fees.

Budgeting after Loan Consolidation

A debt consolidation loan becomes a single fixed line item on the budget. This makes it simpler and easier to develop and track a budget. The budget reveals the level of spending that is sustainable with the after-tax income. After consolidating debt, income and outgoings going forward should be balanced to avoid the use of borrowings to maintain current spending levels. If income exceeds expenses, consideration should be given to initiating a savings program to gradually build assets, rather than increasing spending.

Care must be exercised in avoiding the temptation to use the unused credit limits for financing new purchases on credit. Consideration should be given to reducing the number of credit cards and having the remaining credit limits reduced to the minimum comfortable level. Making purchases with a debit card is one of the more effective ways to avoid increasing debt to pay for daily expenses. The amount that can be spent on a debit card is limited to the balance in your bank account. An unwillingness to exercise restraint in spending will only lead to the need for debt help in the future.

This article is for educational purposes only and is not financial advice. Consult your financial adviser or other professional before making a decision about any financial transaction.

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Posted in Credit Card Debt, Debt Consolidation, Debt Management, Debt Tips, Debt help | Leave a comment