Owning an unsecured credit card can give you a lot of benefits.  However if you misuse it, it could become your worst enemy.  In this article I going to cover 3 rules you should follow to help keep you away from financial despair.

Pay Off The Balance

This isn’t exactly a trick question, in order to keep your credit in good standing and stay away from the dreadful high interest payments you need to pay off your balance in full every single month.Even worse don’t just pay the minimum payments,  this will only case more problems.  In fact minimum payments are designed to last forever so the credit card company can suck even more money from you.

Watch Out For The Benefits

Next, what kind of benefits do you get?  A lot of times we associate benefits as a good thing with credit cards but that always isn’t the  case.  Sometime the benefits can really be a trap for you.  For example zero percent interest credit cards my sound great but what happens a lot of times is people will rack up the card full of debt since they have a 0% interest rate.  However, what happens a lot of times is we forget and all of a sudden we’re paying 30% interest.

However, not all benefits are bad, I have a credit card that give 5% cash back every time I buy gas with it.  The great thing about this benefit is I always use it and second the benefit almost works all by itself.  So if I forget it won’t cost me.

Use Your Card For The Right Reasons

Finally, what is the reason for owning the credit cards you have?  For example, I own one card for making purchases on the internet, and the second card I own is just for buying gas.  Can you say the same for your credit cards.  If not you may want to consider closing those accounts.  In fact you may have a few cards that haven’t been used in a while.

Lastly, do you follow these rules, if not you may want to consider changing some of your behaviors so that you don’t end up in a bad financial situation again.

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Unfortunately, a major credit card is needed to make reservations for hotels, car rentals and airline flights. You also need a credit card to place an order online or over the phone.  So, how is a person with bad credit supposed to survive?

As you will see below, prepaid credit cards (also called secured credit cards) are a good way for a person with bad credit, or no credit, to have access to the benefits of a credit card.  Let’s take a look at prepaid credit cards, how they work and how they can benefit the consumer with bad credit.

What Is A Prepaid Credit Card?

You open a secured credit card account by depositing money into an account much as you would a savings or checking account.  Once the money is safely in the account, the credit card issuer issues you a credit card with a limit equal to that of the amount that you deposited.  You use the credit card just like a regular credit card.

You can use the prepaid credit card up to the limit of the deposit.  You cannot spend anymore unless you pay  off the credit card or make another deposit.  You can always have the company pay the balance with the funds on deposit as well.  In theory, a prepaid credit card works the same way as prepaid debit cards linked to your checking account.

Downside To Using Prepaid Cards

Although pre paid credit cards are generally a good idea for those with bad credit, there are some fees involved in opening the account.

Fees And Charges. You will have to pay a fee of $5 to $10 to open the account.  Also, you will be charged a fee every time you make a deposit onto the credit card.  But for those with bad credit or who are unable to manage their finances, the benefits far outweigh the fees charged to use the card.

No Ability To Pay For Subscriptions. If you are planning to use the prepaid credit card to purchase a subscription or monthly internet service, it might not be possible. Many service providers do not accept a prepaid credit card because of the possibility that the account will be empty when the bill comes due.

Prepaid Credit Cards Are Good Alternative For Bad Credit

If you are suffering from bad credit and have gotten rejected when you apply for a credit card, a prepaid credit card may be a good alternative.  You have all of the advantages of a regular credit card without the danger of spiraling deeper into debt.  Be careful of the fees and understand that your prepaid card may be useful for recurring services.  All in all, the prepaid credit card serves as a useful alternative to those needing a prepaid Mastercard or prepaid Visa card.

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There are many low interest and even 0 APR credit cards available!

Read the following tips to begin saving:

Find the Low or No Interest Card that is Right for You

Before you begin filling out that credit card application, there are a few different things to take into account.

Many credit card companies will offer 0 credit cards with an interest free introductory rate. This is great, but before apply for a credit card, you want to be sure you know all of the details.

Find out how long the introductory rate will last. Typically, the no interest rate is given to a new cardholder for the first six months.  It used to be as long as a year.

Check the regular APR when you apply for credit card. Find out what your rate will switch to once the 0 APR rate has concluded. You will also want to be aware of any additional fees that are associated with the new card, such as an annual fee. There are many cards that you can obtain without an annual fee. Since you are trying to save money, it is suggested you find a company that does not charge an annual fee on their credit card.

Initiate a 0 APR Balance Transfer

Initiating a 0 balance transfer can be done in two different ways.

The first and most recommended is to find a company that offers 0 balance transfers on the entire balance for the life of the loan. In this market, that is going  to be tough to do.  But, if you have good credit, you may be able to find balance transfer credit cards that offer a 0 APR balance transfer for the life of the loan.  Companies offering interest free credit cards are expecting to gain you as a long time customer.

Remember, any purchases you make on your card will be billed at the regular interest rate, but the balance you have transferred will be at no interest until you have paid it off. This is an excellent way to save money and cut down interest costs. This is also the most advised option. If you are unable to find a company that offers a no interest balance transfer, the second option would be to find a card that has a great introductory rate. In this case, it would be wise to pay off as much of the balance transferred as possible before the rate goes up.

Consolidate Credit Card Debt

Consolidating your credit card debt with a 0 interest credit card can save you a lot of money in the long run! If you have several credit cards, it is suggested that you consolidate them with one credit card balance transfer and save money with the lower interest and easier monthly payment.

Take a look at your credit card statements to verify the interest rates you are currently paying.

Depending on your financial situation, you will want to take some or all of your credit cards and open one new account that has the best overall interest and benefits for you.

Instead of making three different minimum payments, make only one to a company that is offering you the 0 balance transfers option.

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Many credit card companies are still offering offer 0 interest credit cards; and, receiving this type of loan easier if you have a good credit score.  But, with the recent FICO 08 changes, even those with minor credit blemishes still may qualify.

So what steps do you need to take to receive this interest free loan?

How to Obtain a 0 Credit Card

If you already have a low interest credit card, the bank may send you additional balance transfer offers in the mail.  Compare credit cards issued by your bank to others online.  There are several sites that offer credit card help comparing interest free credit card offers.

Your bank may not provide the best credit card deals for you.

If you currently have a credit card with a certain bank, look for 0 APR balance transfer checks or other 0 balance transfer offers. If you do not have a credit card with a specific bank, you might still receive a balance transfer offer as an incentive to get you to open an account.  If you receive one of these offers, be careful to apply for a credit card that offers the longest balance transfer period and the lowest balance transfer fees.

Note, that you may not receive offers like these in the mail if you have opted out on marketing materials. But, you can still search for an offer by visiting your bank’s website or by calling customer service. You can find attractive offers online.

How to Initiate a Balance Transfer

Once you have found the best credit card deals, you need to initiate the credit card balance transfer.

If you received an offer in the mail for a new credit card, fill out the provided form. You will need to provide the account number of the credit card you wish to pay off. Mail the form back to the bank in the provided envelope. Some banks provide an online form you may fill out instead.

If you receive a 0 APR balance transfer offer from a current credit card, checks will be attached. Use these checks to pay your other credit cards or merchandise.

How to Consolidate Credit Card Debt

When you find interest free credit cards, use them as an opportunity to consolidate credit card debt and pay down (or off) a higher interest credit card.

If you do not have excessive balances, you may be able to pay off all your credit card debt using this one 0 interest credit card.  But, even if you’re only able to pay off part of your credit card debt, you will save money on interest and probably lower your monthly payments.  The savings can add up quickly.

Additional Considerations For Interest Free Credit Cards

Consolidating your credit card debt can save you money and can reduce your monthly payment, but be sure to read the balance transfer terms and conditions very carefully.

All offers expire; some sooner than others.

If your offer is good for 12 months, you may want to consider paying it off within the 12 months unless you can transfer the outstanding balance to other low interest credit cards at the expiration of the balance transfer period.

Once the offer expires, the credit card company will charge you the regular interest rate. Sometimes this interest may be more than the credit cards you transferred it from.

Plan ahead to avoid financial problems in the future.

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These no or low interest credit cards offers are not easily found unless the consumer has excellent credit. The most common method of obtaining a low or no interest credit card is to find a deal of a balance transfers.  Most of the time, these cards don’t have an annual fee, although balance transfer fees of 3% to 4% may exist.  In the tighter credit climate, the balance transfer period is now shorter (an average of six months or less).  Even with the tighter requirements and shorter balance transfer periods, finding a low interest credit card is a key personal finance strategy particularly if the consumer is currently carrying a balance.

Qualifying For A 0 APR Credit Card

Obtaining any VISA credit card in the current credit market is not a simple task.

To obtain a 0 interest credit card today, there are tighter qualifications and guidelines that applicants must meet before being able to qualify.  Issuers offering the best credit cards are going “the extra mile” to make sure the applicant is not a credit risk.

Even with the adoption of FICO 08, issuers still closely review past payment history, credit score and number (and seriousness) of any delinquent accounts. If you have a good credit score and no seriously delinquent accounts, your chances of getting a 0 APR balance transfer credit card are reasonably good, even now.

Applying For A 0 APR Credit Card

To obtain a low interest credit card, it is best to start by filling out a credit card application through your own local bank or a qualified credit lender.  After all, the consumer already should have a positive banking relationship with this lender which should help in the credit card application process.  Ask for their low interest credit card offers. Most banks carry these and you will be sent an application either through mail or on the phone (depending on your bank).

Some consumers elect to go through online referral sites to apply for a VISA credit card, which is only okay.  But, the consumer would be wise to evaluate whether or not they have a history of good service.  If they try to charge you a membership fee or other fee to apply, look elsewhere.  A consumer should not be subject to any such fee, even if he or she has less than stellar credit.

0 Credit Card Offers:  Enjoy The Rewards Of Good Credit

If the consumer enjoys good credit, he or she should reap the rewards associated with a low interest credit card.  Owners of these types of credit cards enjoy rewards points that can be redeemed for hotels, airline tickets and, sometimes, cash.  While the bonuses vary from lender to lender, they are extremely helpful when needing to make future purchases. One caution is that bonuses that can only be spent at certain shopping stores or online marketplaces.

What About Those With An Average Credit Score?

In the credit market of today, lenders offering 0 balance transfer credit cards require excellent credit.

In some cases, the issuer might be a little lenient and qualify the consumer that has “good” credit instead. That is one of the benefits that consumers enjoy as a result of the recent FICO 08 changes.  Remember, the average APR is 14.9% on credit cards, which is almost twice as much as the low interest rate of 7% found on most low interest cards.

So, if a consumer has the credit score `1to qualify and the balance to justify paying the balance transfer fees, 0 credit cards are still a smart financial move.  In the end, any time a consumer can borrow money at a low interest rate, he stands a better chance of paying off the balance without any problems or late payments.

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