One of the most important steps in responsibly using a credit card comes before a card is even applied for - making sure the right card is chosen. There are numerous credit card options available and should be considered carefully. There are two basic fees attached to any card that need to be compared: the annual percentage rate (APR) and is there a holder fee. The APR is the sum of the interest on the card. If the card does not list an APR, just multiply the monthly interest rate by 12. Holder fees are fees charged by the credit card to use the card and not all cards have one. Many rewards cards come with a yearly fee, but most cards from credit unions do not. Obviously, the lower the interest rate the better. Some credit cards offer introductory rates that will increase after the first six months or the first year, so be on the lookout for the fine print. There are credit card comparison websites that will present the information from several different cards in a clear format to help people avoid confusion and make the best choice for them.

One of the most positive things about using a credit card is the convenience. They can be used to pay bills, book travel reservations, make purchases where cash is unavailable or impracticable and be used in emergencies. Credit cards are also safer than cash in many ways - a lost or stolen card can be canceled immediately to prevent fraudulent purchases, while cash is gone for good. Many credit card companies also offer purchase protection which helps protect the card holder from purchases that are flawed, such as a brand new computer that breaks and the store will not accept fault. Purchasing with a credit card actually allows a person to legally dispute the purchase - something that cannot be done with cash or a debit card.

A credit card is also one of the best ways to build or credit scores. Credit scores determine the rates of interest a person will be charged on future purchases such as cars or homes, and are also often checked by landlords and even employers. Essentially, a credit score is the financial history of person and how well they pay their bills. Using a credit card sensibly allows the person to build a solid credit score and show that they can handle a line of credit and pay it back according to the cardholder agreement. One of the best ways to do this is to pay off the credit card every month, which will build credit while avoiding paying interest on the card. Rewards cards are doubly helpful, since they reward the cardholder with airline miles, hotel stays, cash back or other incentives. This can help save money over time as well as being convenient. These rewards cards may charge a yearly fee, requiring the cardholder to make sure the rewards are equal to or greater than the fee so they do not lose money.

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However, as is said, prevention is better than cure; you should not bank upon credit card consolidation and go on spending beyond your budget. It is better that you practice frugal living during and before the festive season to save money so that you will be able to spend on things required and not get into debt in the process. Here are some methods you can use to save money during Christmas.

1. Save on Christmas cards – If you see that Christmas cards are not on your budget then you can refrain from spending on them. Instead of sending Christmas cards to your friends and family you can send them normal postcards. This will help you to save money as postcards require less postage as compared to Christmas cards. Also if you really want to send Christmas cards you can use some tricks. You can wait till the months of December to buy Christmas cards as you can get them on sale in many places. You can also be innovative and make Christmas cards on your own by cutting out cards from last year and sending them as postcards.

2. Save on decoration of gifts – Christmas is that time of the year when you need to give presents to friends and family. As much as buying presents takes up money, so does decorating these gifts. You can save money on the decoration by doing some work on your own. First of all you can use colorful magazines or the comic section of a newspaper to wrap your gifts instead of using costly wrapping paper as these would look attractive enough. You can save wrapping papers from gifts you received all the year round and fold small pieces of these to make gift tags. You can also cut up old Christmas cards to make gift tags.

3. Save on shopping – Christmas is the time for shopping and it is mere torture to refrain from doing so with all the wonderful things displayed around. However, if you shop wisely, you can avoid excess expenditure. First of all start collecting coupons and use them to buy things from different store. You should also compare price, especially while shopping for food stuffs. There are times when you get discount if you buy items in bulk. You can buy non perishable items in bulk to get a discount.

Thus you can see how the above methods can help you to save money during Christmas and avoid debt.

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A credit card offers a flexible way to pay for goods and services, based on the user’s promise to pay for the transaction at the end of the month. Once issued with the card, the holder is given a credit limit, which the maximum amount of money that can be spend within one calendar month. People can choose to use credit cards for their spending due to the fact they offer better protection than cash, checks or bank account transfers. As part of the Consumer Credit Act legislation, you’re much more likely to get your money back if a supplier (for example, a travel firm) goes bust if you’ve used a credit card.

Of course, as with any financial product, there are pros and cons to consider – although in most cases, the key is to get the card with the features that most suit the user.

Some common pros include that they:

• Offer a flexible way to borrow money
• Can boast rewards, such as cash-back or air-miles
• Give you more protection than debit cards or cash
• Offer the chance to clear your outstanding balances on other cards using a balance transfer credit card

On the other hand, some of the cons are:

• If not used properly, they can wind up putting the user in debt. The fact that interest is incurred on this debt can be particularly problematic, as it can make it harder and harder to get back in the black as time moves on.
• Loyalty isn’t rewarded – the longer you stay with one card, the worst its deals and rates are likely to be. New customers on introductory deals usually get the best bonuses and 0% deals, so it’s always worth comparing credit cards once your initial period is over to make sure you’re getting the best deal.

Ultimately, the way you use a credit card will determine whether it’s a good move for your finances – use them wisely and they could end up saving you money each month, use them recklessly and you can expect the opposite effect in some cases.

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The Financial Side of Buying a Home
When you are considering buying a home, there are several essential steps to take in order to make sure that your finances are in order. Before considering purchasing a home, you need to:

• Check your credit score. A credit score over 720 or so should qualify you for the best rates. If your credit is low, consider taking some time to build your score by paying off debts and making payments on time before you buy a house. A low score can lead to a higher interest rate and a more expensive mortgage over the life of your loan.
• Consider your job status. Banks and mortgage lenders like to see that you have been in the same job for a while and that you have a reliable source of income. For the self-employed, this requirement is usually more stringent, with most lenders requiring at least 2 years of tax returns before they’ll count income you earn.
• Have a healthy down payment. Today, most banks and lenders require that you put down at least 20 percent in order to qualify for a home loan. While you may be able to find a lender that will let you put down less, you will have to pay something called PMI (private mortgage insurance) if you borrow more than 80 percent of the value of the home in a single loan. You also take a risk if you don’t have a down payment because if property values continue to decline, which is a real possibility in an uncertain real estate market, you could find yourself under water and unable to sell if you need to.
• Have an emergency fund: Home ownership can come with a host of expenses you don’t have to deal with as a renter. When the furnace breaks, the pipes burst or the roof needs replacing, the money for this comes out of your pocket. An emergency fund can provide you with the cash you need for unexpected expenses and can also be used to pay your mortgage if you end up out of work or unable to pay your bills for a period of time.

Living Like a Homeowner
If you believe your finances are in good shape and that buying a home is right for you, it is a good idea to actually practice making your mortgage payment before you have to make it. In other words, if you are considering buying a home that will have a $1200 a month mortgage payment, you should pretend you have to make that payment before actually buying a home. If your rent is only $800, for example, then set aside the extra $400 each month. You can use this money to build up your down payment or your emergency fund and you can see if you can really fit the mortgage payments comfortably into your budget.

If you are able to make your “mortgage payment” for a few months without feeling a pinch in your pocket book, and if you have carefully evaluated all other aspects of homeownership including your financial readiness and your long and short term goals, then now can be a great time to jump into the real estate market.

Author: Christy Rakoczy writes about PPI claims and bank charges at www.PPIRefundsUK.co.uk a UK based mis sold PPI reclaim website in the financial claims sector. Christy also writes about personal finances, mis-sold mortgages, unfair loan agreements and credit rating advice.

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Being able to check your bank balance over the net is a great way to keep track of your spending. You can link your ISA and your current account to make it easier to transfer money between the two. You can also set up direct debits and send payments to other bank accounts. You are completely in control of your own finances, which makes it easier to save money and to budget.

The phenomenon makes it easier for you to be in control of your bank account, instead of having to traipse down to the bank every time you want to pay your electricity bill or your rent. Once you have set up a scheduled payment it is just as easy to cancel it and you are always in control.

You can also monitor your account and it is easier to spot something that is out of the ordinary or when something has gone wrong with your account. Most banks also let you check the balance of your account on your phone, so you can figure out what you can afford to buy at the shops.

Online banking is also a good resource for people who are self-employed. You are able to print off bank statements, making it easier to do your own accounts. To stay safe online there are a few things you should remember, try to keep personal information out of your password as these can be easy to guess. Try to change your password regularly, this way you can keep an element of spontaneity to your
password. Do not give banking details over email, your bank will not ask for these details via email.

The whole online banking phenomenon has made life easier for the average person. It has never been easier to check balances, transfer money, budget and make payments. Online banking facilities are heavily guarded making it unlikely that someone else could access your account.

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Though credit card debt management companies are there to assist people in making their debt more manageable, it is better to stay aware of your finances so that you do not need to seek help of professional companies. Here are some simple ways of managing your personal finances.

• Make a frugal budget:

Budgeting is the most effective way of personal finance management. Unless you follow the budget and keep a close watch on your finances, it is not possible for you to stay within your means. Make a frugal budget so that you can keep a track on what you make each month and how you spend it. If you can determine where each penny goes, you can immediately get better results. You must follow the budget that you make to get best results.

• Pay off your debts:

Nothing can be more effective than reducing your credit card debts. Debts are something that can have a terrible impact on your financial life. Therefore, you need to make sure that you save enough money and pay off your credit card debts. You can even seek the help of a credit card debt management company that may help you repay your multiple creditors in easy and affordable monthly payments.

• Stop using your credit cards:

Credit cards may apparently seem to be attractive, but you must know that ineffective usage of credit cards may get you into a serious financial mess. The more you use your credit cards, the more you will push yourself towards the debt hole. You must always carry cash in your wallet and stop shopping as soon as you exhaust cash. Don’t go for purchasing things on credit.

• Contribute to your retirement plan:

If your employer offers a retirement account, you must make sure that you contribute money to that account. Nothing can be better than planning your retirement. Contribute a part of your monthly income to the retirement account, the 401(k) account. This will act as a future savings account or even an emergency fund.

Thus, with the present economic conditions, it is extremely necessary to manage your personal finances in order to stay away from credit card debt. You can get help from credit card debt management companies to eliminate your unsecured debts, but it is always better to stay safe than sorry.

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Reasons to buy:

You plan on settling down and would really like someplace more permanent.

Over the long term, they tend to be good investments. The population keeps growing but land doesn’t, the price of homes with land should theoretically keep going up.

You are benefiting from your monthly payments, not your landlord. Often your payments are going to be larger when you are buying your own home, but some of that money goes to pay down the mortgage. This is money you will get back when you sell.

Reasons not to buy:

You plan on moving soon. Realtors take out huge chunks of the sale price. If you buy then sell shortly after, it is hard to get all of your money back. Even if you are in a good market, the price of the house would have to go up significantly just for you to break even.

If you don’t need a lot of space. Sharing an appartment with another person or two is often cheaper than buying your own place. If you don’t mind living with others, you could probably save more money if you shared an apartment with a few other people.

You are lazy and don’t like taking care of a yard. Either you have to do the work yourself, or you have to hire someone to mow the lawn. This costs you either time or money which I’m sure you don’t have enough of.

Things to think about before you buy:

If you are really interested in saving money, do the calculations before you buy. I would assume that the value of your home stays the same to be on the safe side. To make a like comparason of home vs rental, figure out your monthly payment for both house and rental. Make sure you include all the small things that go along with a house like maintenance, taxes and utilities.

For an amortization schedule and calculator check out this amortization calculator. Here you can see how much you actually are ‘paying down the house’. Most people are surprised to see how little of it goes to pay down the house. In the first few years of home ownership, most of your mortgage is going to pay interest to the bank. Very little of it is going to pay off your home.

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Basic Savings Account

The Basic Savings Account is a type of account you can use to store your emergency cash. I wouldn’t recommend using it for large amounts of cash being that the interest rates on the Basic Savings Account is usually pretty low and you could find other accounts with higher interest rates for your large lump sums of money so that you can earn more money on your money.

With this type of account there may be fees associated with it if you don’t meet the minimum balance or if you perform more transactions beyond the minimum amount allowed. Therefore, it is important for you to ask your bank representative about any fees associated with this type of account before you consider opening one.

High-Yield Money Market Accounts

These accounts can be compared to a checking and savings account rolled into one. On the savings side they pay an interest rate, which is usually higher than a Basic Savings Account and on the checking side you have the ability to write a limited amount of checks. However, with a High Yield Money Market Account you will need a higher balance to open one compared to the required minimum balance of a Basic Checking or Savings Account. Another difference in High Yield Money Market Accounts is that you normally would have to go to an online bank to find one. Online banks are able to offer higher interest rates due to their minimal expenses they incur in relation to a physical bank such as Chase or Bank Of America.

Once you begin to look around for online banks offering High Yield Money Market Accounts, you are sure to find many other institutions offering them however it is important to do your research on these offers. I would recommend, for those just starting out, to go with institutions that are FDIC insured this way you know your money is safe.

Certificates of Deposit

A Certificate of Deposit is a way to earn higher interest on your money. However, it is different from the Basic Savings Account and the High Yield Money Market Account being that you can’t make any transactions on the account. You can’t withdraw any money or write checks on the account. You earn higher interest rates by keeping your money in the account for a certain amount of time.

Basic CD’s

When you invest in a Basic Certificate of Deposit you are committing your money to the bank for a certain period of time. The longer you commit your money to the bank the higher interest rate you will receive. This is because any money that you deposit into this account the bank will use to offer loans to it’s customers at a higher interest rate. Therefore, the longer you commit to leaving your money untouched the higher compensation you get because the bank will be able to make a profit off of your money. This is the business of banks.

The normal time commitment can range from three months to five years. When you have completed your time commitment you are free to take your money and your earnings or you could rollover the balance into another CD. In some instances your bank may automatically renew your CD therefore it is important to ask your representative how they handle that and ask to be notified once your CD has matured. If you have to withdraw your money before the end of your time commitment you will be charged a fee. Therefore, it’s important to decide how much money you can afford to put away for the length of time required by your bank.

There are many different types of CD’s you could choose from. Some banks offer a variety of CD’s while others may offer one or two options. Just know that just because you are banking with one bank that doesn’t mean that you can’t go to other banks and compare their investment options with your current bank. You may find a better option somewhere else.

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Rather than rant and rave about the effects, I thought I’d take a look at the causes and by doing this hopefully deter some from making irresponsible financial choices or lackadaisical attempts to learn about their finances. What we don’t realize is what we pay the least attention to is what has a large impact on our lives.

Take for instance myself. During my earlier years in college, I took advantage of all of the offers of credit I was given only to later find myself unable to pay back my debts, which in turn was reflected on my credit report. The negative reports on my credit would later come back to haunt me when I was trying to purchase my first car. However, I didn’t think of that while I was carelessly spending money I didn’t really have. I just think that personal finance should definitely be talked about more in high school and college if not in depth at least to the point where it would peak the interest of students to go out and learn more about it on their own.

I know I’ve talked about this in my other blogs, but making smart decisions is a benefit in all aspects of your life-especially concerning your finances. So I thought I’d offer some areas where you could start making better decisions.

Plan What You Spend - being conscious of the amount of money you make in relation to your overhead will keep you aware of what you can and can not spend and also help you to focus on areas where you can lower expenses and create more spending money.

Use Your Credit Wisely - this means knowing the advantages and disadvantages of credit cards, their rates and their purpose. This also gets into Good Debt vs. Bad debt. I wrote about this in an earlier blog.

Stay Within Your Means - when you do this you make room to increase your means so that you are able to comfortably afford even more luxuries without overextending your finances.

Build An Emergency Fund - when you have an amount of money put aside you don’t have to worry about car trouble or a pricey repair putting you behind on your monthly expenses.

IRA or 401(k) - contributing to one of these accounts prepares you for a comfortable retirement.

Learn More About Investing - gaining more knowledge on investing will help you to increase your finances by having the ability to choose the investments that are right for you. A lot of people shy away from investing thinking they can’t do it however if you learn about it you will find that anyone can use investing to their advantage.

All of these topics, if they haven’t already been discussed, will be discussed in depth throughout this blog so that you can gain full control of your financial future. It all starts with a base. Having a firm knowledge of how personal finances work and what areas to strengthen before you move on to the next is the best way to go. That’s why in this blog I started with the base, the ground floor, of your financial fortress so that you can learn about how everything works together for your benefit. Once you understand how everything works, why you should do certain things in a certain order and how to make the right financial choices that will lead you to the achievement of your financial goals, it makes it that much easier to move along the right path to financial success. Here’s to the desire to learn more about personal finance and the want to make the right financial choices towards financial abundance!

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The characteristics of Money Market Accounts resemble that of a savings account rather than a checking account because of their limitation on monthly transactions. The benefits of these types of accounts are their interest rates. They offer a much higher interest rate. However, along with the higher interest rates comes a required higher minimum balance. Therefore if your balance falls below the minimum balance you will be charged a large amount of fees. These types of accounts are used to save up for large purchases such as college tuition or income taxes.

Money Market Mutual Fund

These accounts can be used as another way to earn interest on your money while still being able to use it and they work almost the same way as a Money Market Account. However, the FDIC does not insure these. Therefore, a lot of people just use them to hold money for a short period of time until they decide where they would like to invest that money. If you have a certain amount of money that you won’t need for about 6- 12 months I would recommend you consider investing it rather than just holding it in this type of account.

Asset Management Account

An Asset Management Account is a mixture of a bank account and a brokerage account. What this means is that you get the benefits of investing your money while still being able to have access to it. You have check writing privileges with this account however you don’t want to use the money for everyday purchase as you would use your checking account ATM card. The advantage of having access to the money in this account is that you can use it to take advantage of other investment opportunities.

As you can see there are quit a few options when it comes to checking accounts. Take the time to have your banking representative explain them to you so that you can choose the one that best suits your needs.

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