Monthly Archive: December 2019

How to save with your credit card during the holidays

During 2015, 3 out of every 4 trips (73%) that the Spaniards made were paid with cards, according to the Brain Trust Tourist Barometer, specifically 42% of these payments were made by credit card. This method of payment is a favorite since it allows the possibility of dividing expenses between several months and not having to pay everything in one time. However, it is important to calculate the costs of deferring expenses so as not to end up paying too much.

 

The term, your ally to not overpay

The term, your ally to not overpay

If you decide to defer summer payments by several monthly installments, you must calculate how much you will pay in interest. The key to saving by splitting expenses is to choose a higher monthly fee and shorten the repayment term as much as possible, always within our economic possibilities. Thus the interest generated will be lower.

For example, if we make a purchase of $ 1,000 with our card, with an average interest of 25%, and decide to post it in 3 monthly installments, $ 42 in interest would be generated. If for the same expense we decide to defer the payment in 5 months, the interest generated would be $ 63 and when reimbursed in 10 months would amount to $ 118.

Choosing a short term will not only help you pay as little as possible in interest, but it will also serve as a way of not over-spending. and not over-borrowing.

 

The 3 keys to saving with cards abroad

The 3 keys to saving with cards abroad

In addition to knowing how to divide the expenses you make, there are also some factors that will help us make the most of our credit cards:

1. Use discounts and promotions: returns of up to 5% on all purchases, redeemable points for gifts, discounts at gas stations, … The possibilities are almost endless. Depending on your behavior as a consumer you must choose a card or another to get the most out of it. For example, if you plan to make a trip by car, looking for plastics with discounts at gas stations will help you save. Do not be afraid to request a new card at another entity if you can get a promotion that benefits you.

2. Be aware of commissions outside of Spain: Using credit cards outside the national network is not always cheap. The commission for the disposition of cash on credit, that of the bank of the country where we are, for currency exchange or for purchases outside the Euro Zone are some of the most common costs when using the cards. In these cases it is better to use a debit card that does not have any of these commissions and that, in addition, will allow you to have greater control over the expense.

3. Don’t forget about insurance: virtually all credit cards include free insurance included. The most common are travel coverage that usually covers flight cancellations, lost luggage or accidents outside of Spain. Knowing the coverage we have and having the insurer’s contact information at hand can save us a few headaches.

Although the cards allow you to get extra capital to enjoy your vacation, it is advisable to always make a detailed budget and keep expenses in check to avoid discomfort when you return.

When contracting a credit: fixed rate or variable rate?

The popular saying that “cheap is expensive” also applies to loans. Honestly, how many have not been tempted to see ads of “low” interest rates, zero commissions, substantial reductions in the premium to be paid, among many other facilities? Such offers are common, for example at fairs, but a “detail” that could seriously erode their finances is generally ignored: the attractive rate they offer is variable.

 

When a credit agreement is signed

credit agreement is signed

It is rarely read in detail and the interest is not understood. When talking about a variable interest rate, bank representatives often say that it could increase “a few cents”, so that customers do not consider it a risk.

But there are cases like those of a colleague who signed a mortgage loan with a variable rate, because the bank advisor promised that the fee would not change much, but over time the rate was adjusted upwards and for six months he came to pay 20 dollars more compared to your initial fee. He had to request the review from the bank, claimed and the fee was reduced. He currently pays $ 11 more each month than when he started the loan.

As I have insisted in other articles, in a highly dollarized economy such as Nicaragua, but with salaries in Cordoba and with an annual slip (devaluation or loss of value) of five percent, a change of ten or twenty dollars in a monthly installment can unbalance any average budget.

 

That is why before getting a loan you must take into account:

Compare rates

Do not leave with the first option. In the local financial system there are half a dozen banks, we must compare the interest rates they offer and mainly understand how that rate is structured. The bank advisor should explain what the base rate is and what factors are added to it (if it is the behavior of an international reference rate, the average rate published by the Central Bank, etc.). If the rate is variable, it will be reviewed quarterly.

 

Rate a fixed rate

This is mainly for very long-term loans, such as mortgages and not all users can apply. Generally fixed rates are agreed when banks offer the credit, but when it is the user who comes to request it, it must be he who initiates the negotiation. Although a fixed rate could initially be higher than the variable rate offered, in time it would save strong increases in their fees, as happened to the colleague.

 

The advantage of the fixed rate

interest rate

Is that you could budget your installments without problems they will not vary, but whether the financial institution approves it or will not depend on other factors such as the level of risk of the loan type and the credit rating of the client. It is important to have a good credit record.

Variable rates are manageable by people with flexible budgets, who can take that risk without damaging their finances. But you should know that the rate initially agreed would be the minimum rate over the life of your credit, you can go up but not go down that amount.

 

If your credit is very short-term

If your credit is very short-term

The variable rate may suit you, as the review is every three months and in such a short term it would hardly increase much.

If you want to give weight to your weights, analyze these factors before deciding on a rate. Also take the time to compare the credit offer, as one bank may offer you a better deal than another.

Avoid being scammed in the face of despair of paying a student loan.

Student loan with debt

Student loan with debt

You have probably seen ads or have been contacted by companies that promise to help you.  Anxiety and nerves can be overwhelming, and it is even more uncontrollable, when you have a debt that is difficult to pay.

How to detect scammers

How to detect scammers

  • They charge a fee in advance, which is totally illegal.
  • Any type of fee for paperwork must be cashed out of a check or is already in full refund.
  • They offer you a very tempting interest rate, in exchange for charging in advance from 1 to 5 of the total balance.
  • They charge for trying to consolidate, a service offered by the education department for free.
  • If the company claims that it can have its debt immediately forgiven or canceled.
  • If they claim that they have a relationship with the Federal Government or try to convince them that it is somehow related to it.
  • Ask them to give them their student loan PIN.
  • The company offers you a service in which you pay the company instead of the administrator of your student loans.
  • Your ads appear constantly, in your Facebook feed or in advertisements.
  • They offer you to negotiate with your lender on your behalf and they do not.
  • They promise total forgiveness of student debt, an immediate alert as this is practically impossible.

Seek help from a credit specialist, there are very reliable and free advice.

Recommendations to avoid being scammed

Under no circumstances do you pay anything in advance, it is more in case the refinancing is a completely free service.  At all times deal directly with the lender. Make sure the loan is under federal student aid, through its website.  Be jealous with your information, do not give anyone personal information or passwords, read everything before signing.

No one can promise you a total loan condemnation. It will be only the scammers will tell you to stop paying off your student loans.

In case of being scammed:

  • The only way to apply for federal aid is through FAFSA, Free Application for Federal Student Aid.
  • The application is free. You must complete the FAFSA form at fafsa.gov every year you are in college or vocational school.
  • In addition, many states use the data on their FAFSA form to determine their eligibility for state or university aid.
  • If you want to know how the credit works so that it impacts your life in a positive way, check this DVD in the finance store here

You will use your FSA ID (created by yourself, username and password) to:

  • Enter the Federal Student Aid system.
  • complete the FAFSA form.
  • Legally sign your student aid documents.

Do not share your FSA ID with anyone else.

There will be those who want to use your FSA ID to log into your account and take control of your personal information.

No, credit cards are not bad

The fact that we were staying in an all-inclusive resort also meant that I didn’t have to budget meals either, an additional advantage. The only expenses that remain to be considered are round trip transportation to the resort and money to get tips. Once she took care of that, I looked forward to a week of fun, mojitos and beach time with my best friend.

When the bad weather attacks

When the bad weather attacks

So we left and we didn’t look back. Unfortunately, we did not realize that a giant storm of snow and ice moved right after we left, burying places like Charlotte, North Carolina, the city we were supposed to return to. But we were not worried. Hell, we were having too much fun to worry about the world’s problems. That was, of course, until it was time to leave and we got on the computer to verify our flight.

Cancelled.

What’s even worse is that the same flight was also canceled the next day. And after calling the airline and discovering that all flights were complete or canceled during the next two days, we did what we had to do. We put the money in cash for two more nights at the resort for a sum of $ 520, which was much more than what we paid to start. 

Although it was a bit demoralizing to spend more than planned, I secretly hoped that they would reimburse me for those expenses. How do you ask? I was pretty sure that the Chase Ink Bold card I used to pay for our flights offered free travel insurance as a benefit of owning the card. Then, when I got home, I immediately called Chase and asked him. Then they sent me a claim form that I filled out and mailed along with all the requested documentation. The verdict: they sent me a check for $ 582, completely covering our two additional hotel stays and lunch and dinner on the way home.

The advantages of paying with credit

The advantages of paying with credit

Travel insurance is just one of the often ignored advantages of paying with credit. Some other advantages that are rarely mentioned include things like price guarantees, return protection, free extended warranties, protection against theft, breakage and loss, and roadside assistance. Another big one: protection against fraud. I wrote about being a victim of a scam in motion at the end of last year, and one thing I couldn’t mention at the time (because it hadn’t happened yet) was that the same fraud protection coverage of the Chase card returned the total amount when They charged me more. This left the company and the bank to solve it among them, which was a great relief for me at that time.

Of course, some of the biggest benefits of using credit come in the form of points and miles, something I often talk about as editor of Frugal Travel Guy. It is true that when the credit is used in the right way, it can become a powerful tool to obtain advantages such as national and international travel, gift cards and cash back. But to get there, you have to make the credit work for you and stop making it work against you. This requires a certain level of discipline, but the benefits cannot be underestimated. Just ask anyone who has traveled the world for pennies. They will tell you.

No, credit cards are not bad

No, credit cards are not bad

The use of credit cards is such a controversial issue, and for good reasons. Ask any indebted person and they will tell you how easy it is to load a card without even realizing it or going through a difficult time and resorting to the use of credit for daily expenses. When almost everyone you know has had some kind of problem with an ungovernable credit card debt, it is easy to assume that credit cards are the culprits that should be avoided at all costs. Personal finance gurus like Dave Ramsey perpetuate this belief by making general claims about the use of credit, like this one:

“The responsible use of a credit card does not exist. There is no positive side to using the credit card. You will spend more if you use credit cards. ”

-Dave Ramsey

Although I don’t think that’s true in my personal experience, I think it’s good advice for people who have had problems in the past. But I don’t think the same rules apply to all of us. Obviously, many people use credit responsibly, and do so without damaging the credit or their wallet. How? They make credit work for them.

Become the teacher of your credit card

Become the teacher of your credit card

Fact: Credit cards are not intrinsically good or bad. They are a tool, and it is up to you to decide to master their use for your benefit or to let the credit card debt become your teacher. Your choice, but I personally would choose the first. If you want to get all the benefits of using credit without all the headaches, here are some tips that can help:

  • Use your statement as a budget tool: the fact that you are using a credit can help your monthly budget if you play your cards well. Start by registering to get an account online, then use your statement to track your expenses in individual categories.
  • Avoid credit card rates: in order to get the most benefit possible, it is important to avoid paying unnecessary and expensive fees related to your card. This means paying on time to avoid late payment charges and making sure to weigh the pros and cons of any annual fees you are asked to pay.
  • Never pay interest: no matter what you do, do not pay interest. Be sure to put only your regular expenses on your card and pay them before they are due each month. Remember, paying in cash hurts, and it should hurt. The same rule should apply to the charges you credit.
  • Do not chase points and miles: the fact that you are earning cash or miles for your purchases is a good thing, but do not use it as an excuse to spend in excess. Points and miles should be a benefit of card ownership, but it is not beneficial to buy things that you would not otherwise have bought. Remember, you want to be the master of your credit card, not vice versa, right?

Inquire about your debt rescheduling loan

Anyone who has several loans going will know the problem. Financing was used for various things, the overdraft facility was used, and a loan was agreed here and there and monthly installments for the mobile phone and mobile phone contract were agreed. And each installment may be due on a different day. You actually have to put your head and collar together so that you don’t overlook any obligation.

Direct debit could not redeem

Direct debit could not redeem

Normally, interest still accrues for each individual installment contract – and should you have missed an appointment, dunning costs and default fees are added, because the risk of overlooking a payment obligation does not diminish if the installments – as usual – by Direct debit. Quite the contrary, because if you do not always have your account balance in view and possibly do not have an expensive overdraft facility, then the normal rates and, if applicable, the respective interest as well as the reminder and delay fees are added to the fees for the direct debit from the house bank, that the direct debit could not redeem.

If you do not compensate for this as quickly as possible in order to at least avoid further costs, you can quickly run into major financial problems. In addition to the increased costs that could have been avoided, there is also the risk that claims management will report – and then it will be really expensive. Not to mention the destroyed credit bureau.

However, even if several things have to be financed or have to be financed at the same time, or if the individual obligations have gradually accumulated, the above-mentioned difficulties can be avoided, because the customer was apparently creditworthy when taking out his loans or similar liabilities.

Debt rescheduling loan 

Debt rescheduling loan 

A debt rescheduling loan is usually a good and sensible solution in order to maintain this creditworthiness even with several loans and, above all, to keep an overview and not to lose too much money on interest. If and when such a loan actually makes sense or is possible and what you have to consider, as well as tips on how to apply for such a loan – this short overview is intended to serve this purpose.