If you’ve been facing credit challenges and haven’t been able to obtain credit, you may be getting ready to apply for secured credit cards. Before you do, you need to realize that not all secured cards are created equal. Here are some things to consider before submitting any secured credit card application…
The Deposit
When you apply for secured credit cards, make sure the cards you’re applying for offer reasonable security deposit requirements and that they allot 100% of that deposit to your line of credit. There’s no reason to provide a deposit of $500 if the card will only grant a credit line of $250.
You’ll also want to make sure your deposit earns interest. You’re going to be paying finance charges on any balance you don’t pay off in full, so it’s only fair that you earn interest on the deposit the bank is holding for you.
The Fees
Not all secured cards charge the same fees, and you need to know exactly what fees you’ll be paying before you actually apply for secured credit cards.
An annual fee is acceptable, and may even be expected if you want to pay a low interest rate. Application and processing fees, however, are not. If a credit card company wants to charge you application and processing fees in addition to the annual fee, take your business elsewhere.
Also make sure the interest rate is reasonable. Even if your credit is shot, you’re securing this card with a deposit. There’s no reason to pay a rate of 20 percent or more in finance charges.
Who Will Know?
Some secured cards are really nothing more than prepaid credit cards, not reporting any of your account activity to the credit bureaus. If you’re looking to apply for secured credit cards, it’s because your credit needs improvement. That’s not going to happen if your positive account activity isn’t made available on your credit report.
Will It Evolve?
Another thing to consider when you apply for secured credit cards is whether or not those cards evolve as your credit improves. Some secured credit cards keep the same terms and conditions indefinitely. The best cards evolve into unsecured cards as your credit situation improves.
Remember, secured cards serve more than one purpose. They don’t only serve as access to a credit card number when traditional cards aren’t an option, they’re also a way to improve your credit rating and rebuild your financial standing. Remember this and the above information before you apply for secured credit cards and decide which one is right for you.
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Often when people are in need of borrowing, it’s a choice between a credit card and a loan as these are the most common forms of borrowing in modern society.
So which one is the better option? You may ask.
Generally it depends on 2 factors; 1- your credit rating and 2- how much you need to borrow, but in both cases, there are reasons to say a credit card would be better than a loan:
1. Ease of getting credit
If you have good credit, you wouldn’t have much difficulty getting either a loan or a credit card. Therefore, this area applies to people with bad credit:
If you have bad credit history, you might find difficulty with either option but credit cards would easier to get than a loan, this is because lenders would find it considerably easier to scale risk on a credit card than they would have on a loan; a credit card can start off with a low credit limit and then increase as you prove your credit worthiness. By contrast, a loan once given, that’s it, there can not be adjustments along the way.
2. Flexibility
A loan is a one off; you take the money in one swoop and start paying interest on it immediately. A credit card on the other hand; the money is simply made available to you, you can spend it in bits and you’d only pay interest on what you’ve spent.
Furthermore, the money you’ve paid back in the past is made available; this is convenient if you need a supplemental source of money for emergencies.
3. Credit score improvement
Typically credit cards update your FICO score on a monthly or quarterly basis, this means that continuous use of a credit card, be it good or a bad credit card, will improve your credit score.
The opposite is also true; if you keep missing payments or making payments late, credit cards will report badly on you and that will reduce your credit score.
By contrast, a loan once you take it out, your credit score will go down by a few points. And although your credit rating improves as you pay off the loan, once you pay it off in full, it can no longer help you.
In short, a loan it a single item in your credit history where as a credit card is an ongoing process; which is more beneficial in terms of proving that you’re financially responsible.
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Everyone can enjoy high value home insurance without paying top price. All you have to do to achieve this feat are pieces of information (That is, if you implement them). Below are a few things that will help you reach this goal…
1. Ensure you don’t make the mistake of not subtracting the land’s worth from your home’s value as you apply for a home insurance policy. People do this ignorantly. You’ve made same mistake if you insured your house for the cost you bought it without checking the cost of the land it’s built on and deducting it.
For those who have ignorantly done this, call your agent and check your home insurance coverage again. Lower your coverage to the cost of your house and its contents minus the land’s value.
Your premium will be more affordable and you’ll still have adequate coverage if you do this right. Because insurance is for valuables that can’t afford to lose, insuring the land which can neither be lost or damaged isn’t a smart move.
2. Motion-sensitive lighting lowers your home’s risk of burglary and, as a result, helps you get lower home insurance premiums. Your home becomes less attractive to thieves as they’ll be spotted easily. Because thieves avoid homes with such lighting, you reduce your home’s risk of burglary and, consequently, your rates.
3. Some security and fire systems are monitored 24/7. You get huge discounts apart from the fact that you’ll feel safer that your house is being watched by trusted people. Depending on the insurance provider, this type of systems can help you shave off between 25% and 30%.
4. A group policy will cost you less. It’s as well good to check with associations you belong to if they have any group discount from any insurer.
I will, nevertheless, recommend that you still get and compare quotes from other insurers that your association may have no affiliations with. You can get an insurance company that your association has no form of affiliations with that gives your profile a far lower rate. There’s stiff competition in the home insurance sector and you can take advantage of this to get lower premiums if you spend some time to do extensive shopping and comparisons.
5. There’s the chance that you could spend less for home insurance if you spend time to go through your policy either whenever there’s much change in your home or just routinely once of twice anually. The market price of your diamond ring might have dropped considerably and therefore require that you review your coverage.
If it’s now worth less, you’ll then do the sensible thing: Lower your coverage accordingly and get lower rates as a result. But know that the reverse could as well be the case where you would have to purchase additional coverage because it’s increased in its worth. The interesting thing, though, is that whichever it turns out to be you will be at an advantage.
6. You can get lower rates on home insurance today by visiting not less than five insurance quotes sites. Each site will take you about 5 minutes or less to obtain quotes. (Some people fill in information that are not really true about themselves. That isn’t smart since the quotes you’ll get this way will NOT do you any good). You’ll simply pick what represents the best home insurance quote for you from the list of quotes you’ve obtained. It’s as simple as that. However, you could easily save hundreds of dollars.
Here are great pages for home insurance quotes…
Cheap Home Insurance Quotes
Low Cost Home Insurance Quotes
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A. For you, the hit should be minor and temporary. Still, there are considerations to make before you cancel.
Ask yourself if you’ll be applying for any major loans, such as a mortgage or car loan, in the near future.
“You might want to keep the card until that credit is obtained to get the best possible rate of interest on the loan,” said Jody D’Agostini, a certified financial planner with AXA Advisors/RICH Planning Group in Morristown.
Take out any loans first because canceling your oldest card will have an effect on your length of credit history, which makes up about 15 percent of your credit score. Keeping the oldest card is good for that part of your score, but given the rest of your credit history, it sounds like you’d make up any decline rather quickly.
“The nick on your credit should be minimal, and as long as you continue to pay your bills in a timely fashion, then you should have little cause for concern,” she said.
If there was no annual fee, D’Agostini said she’d recommend sticking the card in a drawer and not using it, though sometimes inactivity will cause the lender to close the line of credit.
Although you’d be closing your oldest card, you still have the Hilton card, which goes back to 1988 — not bad and certainly proof of a long credit history.
Something else to consider before closing the card is your credit utilization ratio, which compares how much credit you have available and how much you’re actually using, said Michael Gibney, a certified financial planner with Highland Financial Advisors in Riverdale.
Gibney said closing the card will lower your available credit, and together with your outstanding auto and home improvement loans, your credit utilization will move higher — and higher in general is bad for your credit score.
This again, given your overall solid credit history, will be a temporary hit.
“I agree with canceling the gold card because of the annual fee,” Gibney said. “I find it hard to justify an annual fee on a credit card because there are many offerings available with no annual fee.”
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