Of course, eliminating credit card debt is easy to talk about, without a plan it can be just talk with no action behind it. One plan that can work for virtually anyone is a balance transfer. Unlike other options, like getting a second job or taking out a personal loan, the balance transfer is available to most everyone who has decent credit and a lot of determination. A balance transfer is when you move the debt from your old credit card or cards to a new credit card in order to get a lower interest rate. In some cases, like that of one of the most successful balance transfer credit cards the Virgin credit card, you can even get a zero interest deal. That means that you can go from paying upwards of 20% in interest fees to paying nothing. The reduction in interest fees means that you all of your payments go to the actual debt, making it a lot easier to pay it down quickly.

Tricks To Succeeding With A Balance Transfer

As you might expect there are some tricks of the trade to making the most of a balance transfer deal. The first is to get a good handle on exactly how much money you owe on credit cards and how much you are spending on interest. Remember to take into account not just the balance of your cards but also the interest fees and any other costs associated with owning each credit card including annual and other account maintenance fees. Once you know those costs you can compare them to what it will cost to do the balance transfer. You might have to pay an application fee or an annual fee for your new card. There may also be a balance transfer fee that you will have to consider when you compare costs. Not all balance transfer deals are interest free so you might also have to add in potential interest costs. Typically the interest rate directly relates to the length of the term with lower rates lasting for a shorter period of time. It is very important that you get a card that gives you enough time to completely pay off your debt before the low rate expires even if it means spending a little bit on interest. In the vast majority of cases, the balance transfer will save money in the long term.

There are other things to watch out for when you do a balance transfer too. For starters, you should not use your card for anything else until after the transfer is paid off. If it is used for purchases or cash advances you will likely wind up in an allocation of payments trap that sends all of your payments to the lowest interest debt first. This means your balance transfer will get paid off, but those higher interest purchases and cash advances will gain interest until the balance transfer is paid in full. This could mean months of interest fees, quickly landing you in the same spot you were in before the transfer. You will also want to pay it off while you still have the low interest rate. Once it expires you will again be stuck with a traditional interest rate, basically putting your debt back to square one.

If you have are really dedicated to getting out of credit card debt a balance transfer is one of the best ways to do it. Using a balance transfer carefully can save you loads of money whilst still eliminating credit card debt for good.

This article was written by Timothy Ng who is a regular personal finance writer and part of the team at Credit Card Finder, a 100% free Australian credit card comparison and application service. Visit the Credit Card Finder website for more information on the or subscribe to their RSS feed for more practical articles.

Related posts:

1. Tips for Making a Credit Card Balance Transfer
2. 7 Reasons to Pay Off Credit Card Debt
3. 8 Signs You Have Too Much Credit Card Debt

There are a lot of factors involved that are creating gold to skyrocket and these factors make buying gold a very good investment.

The savvy investor will heed these economic conditions that make gold an attractive investment. At this time, owning a precious metals portfolio is a good idea. Below are some of the reasons why gold will increase in value and could rise to $2,000.00 an ounce.

Economic Stimulus:

Now, that the government has put trillions of dollars of stimulus money into banks and businesses to ward off a global recession, this excess money in the marketplace will eventually boost up prices for goods and services. This causes inflation and lowers the investors’ confidence in paper money. Therefore, the investor will buy gold to protect their wealth against inflation and, thereby, making gold go higher.

Volatile Stock Market:

In 2008 the stock market turned down dramatically as the global economy went into recession. While the stock market has somewhat recovered, it still remains volatile. Because of this global economic recession, it created new gold investors along with established gold investors, which drained the gold inventory, thereby, driving up the price of gold. Investors will buy gold to preserve their wealth against a volatile stock market. This makes gold go higher.

Downturn in Real Estate:

Real estate was always a great investment until the housing debacle. Homeowners have lost from 18% to 50% of their homes value depending upon where you live. Buying gold will help to protect you from these difficult and trying times. This will make gold go higher.

China:

Because of their huge trade surplus with the United States and Europe, they are buying the United States debt as well as diversifying their resources by investing in gold. Since Chine is now a large gold investor, this is creating a supply shortage. This will make gold go higher.

Low Gold Prices and Environmental Controls:

In the 1980’s gold was $850.00 an ounce. Then in 1999 gold dropped to $252.00 an ounce. Because, of the low price of gold and the environmental controls that were placed on mining of gold, this discouraged mining companies from discovering new supplies of gold. Now, this creates a shortage of gold and the supply of it is not meeting the global demand of gold. This will make gold go higher.

Low Interest Rates:

When interest rates are low, investors will look away from paper assets and look toward gold. Therefore, there is little incentive for hedging which will result in the removal of gold from the market. This will also shrink the gold supply creating another lack of balance in the marketplace where supply does not meet demand. This will make gold go higher.

Credit Crisis:

The United States economy has been hit with a tightening up of the credit market because of the losses associated with the housing and financial areas. The Federal Reserve in an attempt to lift up the economy out of the recession, they cut their interest rates to nearly zero. Rate cuts pushed down the investment returns on paper assets making many of the investors buy gold. This will make gold go higher.

All of the above creates higher gold prices and in this economic recession where the currency is declining and inflation is looming there is no better time to invest in gold. This is why everyone is buying gold and will continue to do so.

Remember gold has nearly quadrupled in ten years since going from $282.05 on January 4, 2000 to $1081.50 on January 30, 2010 Bad economic times run up the cost of precious metals and the economic recession we are in now is no different. The housing market is very weak, the dollar is weaker and business is slow. As a result of all of these economic conditions makes the price of gold go higher. Gold is a commodity that is subject to the normal forces of supply and demand.

On December 2, 2009 gold hit an all time high of $1212.50. The current economic recession is not out of the woods yet and economists don’t see a turnaround anytime soon, therefore, the possibilities of higher gold prices remain positive.

Gold is a hard resource that does not change and is easy to store. If you want the investment company you bought the gold from to store your gold, make sure they are reputable as they will charge you storage fees to keep the gold. Or, you can have the gold delivered to your home and you can keep it in a safe or a safe deposit box.

Gold remains the most practical store of value. When you see the price for gold drop, it is an opportunity to buy and get into the market before the price goes back up. Gold is a long-term investment opportunity. Like real estate, now is the time to buy while the prices are low. Eventually, the market will turn around and the real estate market will start to go back up.

While precious metals (gold, silver, platinum, and palladium) are all in a bull market right now, precious metal analysts feel they still have a long way to go. Analysts believe investors should consider diversifying some of their assets into precious metals to hedge against inflation which may happen by the end of the year. Even though investors feel that the precious metals market may have peeked, if inflation hits, they will be sorry they didn’t get into the market ahead of time. The U.S. Government is printing money at an astronomical rate making inflation a very real possibility.

Precious metals, unlike shares, are not affected by poor business management, strikes, high costs and/or bad hedging policies. If the dollar remains weak or weakens further, the price of gold will go up.

Gold is a sound long-term investment.

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You can avoid many credit card costs by using your credit card responsibly. Here are 9 slip-ups that can increase the amount you pay for the convenience of using a credit card.

1. Paying credit card bills late.

When you use your credit card, you agree to pay your minimum payment by the due date. If you’re late on your credit card payment, there are some costly consequences. You’ll get charged a late fee that could be as much as $39 in some cases. Then, your interest rate could increase, which would also increase your minimum payment. If you’re in the habit of paying the minimum on your credit card, the late payment fee could make it hard to get caught up on payments.

2. Going over your credit limit.

Your credit limit is the maximum amount you can charge on your credit card without being charged a penalty. If you go over your credit limit, you’ll be charged an over-the-limit fee. Just like with late payments, your interest rate could increase if you exceed your credit limit. The over-the-limit fee will make your minimum payment go up. If you don’t pay the late fee plus your regular minimum payment, you’ll be charged a late fee.

3. Misunderstanding balance transfer deals.

A six-month zero percent interest balance transfer offer is a good deal, if you can pay off the balance within six months. However, once the offer expires, you’ll be subject to a much higher interest rate. The interest rate could be so high that you negate all the interest you saved during the no-interest period. Before you do a balance transfer, make sure you understand the terms of the promotion. Check your budget to see whether you can afford to pay off the balance within the promotional period. If you can’t, it could be cheaper to leave your balance where it is.

4. Taking out a cash advance.

Cash advances are much more expensive than purchases of the same amount. That’s because cash advances have a fee and a higher interest rate. Not only that, interest begins accruing on a cash advance the day you make the withdrawal. So, you don’t get a grace period to pay off the balance and avoid a finance charge. Since cash advances have higher interest rates, you’ll face higher finance charges on the balance.

5. Failing to report unauthorized credit card charges immediately.

When your credit card is lost or stolen, it’s important to report the missing credit card as soon as you notice the theft. If you notice fraudulent activity on your account, let your credit card issuer know as soon as possible. If you wait more than 60 days to report credit card fraud, you could be liable for some of the charges.

6. Paying only the minimum.

Making minimum only payments is always more expensive than paying off your credit card balance quickly. The longer it takes you to pay off your credit card balance, the more you’ll pay in finance charges. If all you pay is the minimum, you could end up paying double the amount of finance charges than the amount you originally charged.

7. Making purchases just to get more rewards.

Reward credit cards can be very beneficial, when you can afford to pay off the balance at the end of every month. Abusing reward credit cards just to accumulate rewards is risky because you pay not be able to repay the balance. Plus, reward credit cards tend to have higher interest rates, so if you don’t pay off your balance quickly, you could end up paying more in interest than you received in reward benefits.

8. Failing to read your credit card mail.

Credit card issuers are required to send advance notification of certain credit card changes, like an increase in your interest rate. If you have a tendency to throw away unmarked mail or even your billing statement inserts, you could miss an important announcement about your credit card. These disclosures keep you from going over your credit limit, making purchases on a high interest rate credit card, or from trying to use a credit card that’s been closed.

9. Adding authorized users to your account.

When you add an authorized user to your credit card, that person is allowed to make charges on the credit card, but isn’t required to make payments. Instead, you, as the primary account holder, are responsible for paying all charges made on the credit card. So, if your authorized user maxes out the credit card and incurs an over-the-limit charge, it’s your responsibility. You have to decide whether that’s a risk you’re willing to accept.

Credit card companies want you to pay more credit card fees because it makes them richer. If you want to avoid paying steep fees for your credit card, pay attention to the terms and conditions of your credit card and avoid these costly credit card slip-ups.

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Contact your credit card issuer. If your credit card information has been stolen, contact your credit card issuer as soon as possible. The sooner you let your card issuer know your credit card has been stolen, the less likely it is you’ll have to pay for any charges. If you wait until after you’ve been billed for the charges, you may face up to $50 in credit card charges.

Sometimes thieves open new credit cards in your name. If this is the case, contact the company who issued the card to report the identity theft. You may need to provide a police report or identity theft affidavit to prove that you were indeed a victim of credit card fraud.

Any account that’s been or could be used fraudulently should be closed immediately to prevent future charges.

File a police report. More and more local police stations are adopting procedures for handing credit card fraud and identity theft. Call your local police station to report that your credit cards have been stolen. If they are uncooperative, try working with another police department in your area. For example, you might try the county police station.

File an identity theft affidavit. The Federal Trade Commission (FTC) provides an identity theft affidavit that many banks will accept as proof that you’ve been a victim of credit card fraud. You’re not required to file the form, but it will help the FTC crack down on identity thieves. It will also give your credit card company and the credit bureaus the information they need to handle your identity theft case.

The identity theft affidavit is available online at the FTC’s website. You’ll need a PDF reader like Adobe Acrobat to view the file. You can also call 1-877-ID-THEFT to obtain a copy of the form.

Place a fraud alert on your credit report. A fraud alert lets any business who pulls your credit report know that your identity has been compromised. The fraud alert urges these businesses to take extra steps to confirm you are indeed the one applying for credit.

If only your personal information has been stolen and you haven’t had any fraud occur you can place an initial fraud alert on your credit report for 90 days. This initial fraud alert can be done online, by mail, or by phone. Here is information to add a fraud alert at each of the three credit bureaus:

Equifax: Online Instructions
Phone: 1-800-525-6285
Mail: P.O. Box 740241, Atlanta, GA 30374-0241

Experian: Online Instructions
Phone: 1-888-397-3742
Mail: P.O. Box 9532, Allen, TX 75013

TransUnion: (does not have a link to file a fraud alert online)
Phone: 1-800-630-7289
Mail: Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92834-6790

If you have definitely been a victim of identity theft, you can place an extended fraud alert on your credit report for seven years. You must request the extended fraud alert in writing. With your request, include a copy of your driver’s license or state ID and a copy of your identity theft report.

Equifax and Experian both provide online forms you can use to request a fraud alert. Both require a PDF reader. TransUnion doesn’t provide such a form. Instead, you should write to the address above to request an extended fraud alert.

Equifax form for extended fraud alert

Experian form for extended fraud alert

There is no fee to add a fraud alert to your credit report when you do it yourself. However, you may have to pay a third-party service if you decide to hire one to add your fraud alerts.

Order your credit report. If you’ve been a victim of identity theft, e.g. credit card fraud where someone has opened a credit card in your name, you’re entitled to a free copy of your credit report.

Under federal law, you can also receive a free credit report whether you’ve been a victim of credit card fraud or not. Visit AnnualCreditReport.com to receive a copy of your free credit report granted by federal law.

If you don’t have options for a free credit report, you can purchase a credit report from each of the three credit bureaus. It’s best to view all three of your credit reports since not all credit businesses report to all three bureaus.

Enroll in credit monitoring. Credit monitoring services alert you to changes in your credit report, like new credit card accounts or changes in your credit card balances. These alerts can give you an earlier warning to credit card fraud than if you waited for collection calls.

Credit monitoring services range from $10 a month to $30 a month and vary in the services they provide, for example, the number of credit reports you can have monitored. Before you sign up for a credit monitoring service, remember that you can view your credit report for free by using AnnualCreditReport.com.

Related posts:

1. 10 Ways to Avoid Credit Card Fraud
2. How to Get a Free Credit Report
3. 5 Reasons to Check Your Credit Report

1. Paying your credit card late.

Your payment history has the most significant impact on your credit score. To be exact, it makes up 35% of your credit score. Timely payments help build a positive credit score. Late payments will bring your credit score down.

The more delinquent your credit card becomes, the more it hurts your credit score. A single 30-day late payment won’t hurt your credit score as much as a 90-day late payment. Late payments continue to affect your credit score for seven years, as long they’re included on your credit report. They hurt your credit score less over time as long as you add more positive payment history to your credit report. After seven years, they won’t hurt your credit score at all.

2. Letting your credit card get charged-off.

A credit card gets charged off after 180 days of delinquent payments. Charged-off credit cards are one of the most devastating things that can happen to your credit score. Charge-offs are more difficult to recover from than a single late payment.

3. Having a high or maxed out credit card balance.

Your level of credit card debt is another important factor for your credit score. It’s 30% of your score. Your level of debt compares your credit card balances to your credit limit. The higher your balances are, the more your credit score hurts.

As your credit card balances grow beyond 30% of your credit limit, your credit score will begin to drop. A maxed out credit card can cost hundreds of credit score points, especially if you have a high credit score to begin with.

The good news is that you can recover credit score points lost from a high or maxed out credit card balance by paying the credit card balance below 10% of your credit limit.

4. Applying for too many credit cards at once.

Each time you make an application for credit, an inquiry is placed on your credit report. Inquiries make up 10% of your credit score and can cost 70 to 80 points if you have a credit score in the 700s or 800s. The more credit cards you apply for, the more your credit score will hurt.

When you’re on the market for a new credit card, avoid applying for several credit cards at once. Instead, compare credit card offers and choose one credit card to apply for.

If you’re denied for a credit card, wait before applying for another one. The credit card issuer will send a letter telling you the reasons you were denied. You can use this as an opportunity to repair your credit and improve your chances at getting approved for your next credit card.

5. Opening a new credit card.

Your age of credit is 15% of your credit score. The credit scoring calculation uses the average age of all your credit card accounts. Anytime you open a new account, even a credit card, your average credit age will drop. Opening just one new credit card won’t devastate your credit score. However, the more new credit cards you open, the more your credit score will fall. So, open only one new credit card at a time.

6. Not having a credit card at all.

You can build your credit score without having a credit card, but you’ll be missing out on some credit score points. Ten percent of your credit score considers your mix of credit. That part of the credit score calculation is checking to see if you have experience with different types of credit – both credit cards and loans. Having a credit card and a loan can help you build a better credit score.

7. Closing a credit card

Closing a credit card is more likely to hurt your credit score than to help it. If you close a credit card with a balance, your credit score is going to drop because it looks like you’ve maxed out your credit card. That’s because credit issuers typically report a $0 credit limit on a closed credit card.

Even if the credit card has a $0 balance, closing it could still hurt your credit score depending on the balances on all your other credit cards. When the credit score calculation considers your level of debt, it looks at each credit card individually, then at your total credit cards and credit limits (credit utilization). When you close a credit card, it can drive up your total credit utilization and hurt your credit score.

It’s widely reported that closing an old credit card will hurt your credit score in terms of credit utilization, but that’s not true immediately. The credit bureau will continue to report an account closed in good standing for up to 10 years. It’s only after that point that the credit card will drop off your credit report and potentially hurt your credit score.

Related posts:

1. How to Improve a Bad Credit Score
2. How Credit Cards Impact Your Credit Score

There are many different types of reward programs, but in general, the more you use your credit card the more rewards you receive.

Types of Rewards

Rewards credit cards offer several different types of rewards.

You can accumulate reward points for your purchases. For example, you might receive 1 point for every $1 you charge on your credit card. Once you accumulate a certain number of points you can redeem the points for merchandise, services, or discounts on future purchases with your credit card.

Some reward credit cards offer cash back on your purchases. With cash back rewards, you earn a certain percentage of cash for each purchase you make. For example, you might earn .05% cash back for every $1 you make in purchases. Cash back rewards can be received as a check or a credit to your account.

With airline and hotel credit cards, you earn miles and points that can be redeemed for a free flight or a night’s stay at the hotel. The amount of miles you earn per flight and points you earn per hotel differ by airline and credit card issuer.

Which Type of Reward Credit Card is Best?

When it comes to reward credit cards, cash back is the most universal option. If you don’t travel much, airline or hotel rewards cash back is your best option.

If you’re a frequent traveler, look for a rewards credit card that’s co-branded with your most traveled airline. That way, you’ll earn the maximum rewards for your purchases. The same thing goes for hotels – choose a co-branded hotel card to earn the most rewards.

Reward Credit Card Watchouts

Rewards credit cards can lead you to accumulate more debt than you can handle by encouraging you to spend more money to earn more rewards. Some estimates show that credit card users charge double the amount on rewards credit cards than on regular credit cards. If you’re not careful you can end up with more debt than you can afford to repay in exchange for rewards that you may never use.

With a rewards credit card, just like any other credit card, you shouldn’t charge more than you can afford to repay. Use your credit card to purchase something you would have purchased anyway, not to purchase things you couldn’t afford if you didn’t have a credit card.

Pay your balance in full each month. Rewards credit cards often have high interest rates, so carrying a balance on one of these credit cards can be more expensive than other credit cards. You can afford hefty finance charges by paying your balance in full at the end of each month.

Rewards aren’t plentiful. In fact, many reward programs are set up to keep you from earning the maximum amount of rewards. For example, many reward credit cards have a cap on the amount of rewards you can receive.

For cash back reward credit cards, you may have a dollar limit on the rewards you can earn within a period of time, like $300 in one year. Similarly, on credit cards that let you earn points and miles, there will be a limit on the points you can earn within the year. Even if there’s not a limit on what you earn during a year, there may be a limit on what you can redeem in a year.

Rewards typically have an expiration date. If you don’t use your rewards within a certain period of time, they’ll be forfeited. Make sure you know whether your credit card has an expiration on your rewards. Use your rewards before they expire or your purchases will have been in vain.

Don’t sign up for rewards you won’t use. Rewards credit card often come with annual fees that make the card unattractive unless the rewards you redeem are greater than the annual fee. Don’t waste your money on rewards that will just accumulate and then expire. If you rarely buy books, the Barnes and Noble MasterCard isn’t for you.

Choosing a Rewards Credit Card

When you’re shopping for a new rewards credit card, all the regular shopping rules apply. For example, check the interest rate and fees before signing up for the card. There are some other reward specific questions you should know before you accept the credit card.

What are the rewards? Are you getting cash back or points. Not only do you want to know what rewards you’re getting, you should also know where you can use the rewards.

Are there any minimum spending limits? With some credit cards, you must make a certain amount of purchases before you ever start receiving rewards. With this type of reward program, you may not ever receive any rewards because you have to meet the minimum purchase threshold first.

When do the rewards expire? You don’t want to rewards to expire before you get a chance to use them. Look for a rewards credit card with a long expiration.

Is there a limit on the rewards? Unlimited rewards are ideal, but not common. If you see a rewards deal that seems too good to be true, look over all the other terms to make sure there’s not a catch.

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No matter how smart credit card thieves get, it’s important for all cardholders to practice some basic credit card safety habits to avoid credit card fraud.

How to Avoid Credit Card Fraud

Don’t loan your credit card to anyone. First, you can’t be sure they’re only going to charge what they say they will. If they overspend with your credit card, you’re ultimately responsible. Second, no one will be as careful with your credit card as you will. It’s never a good idea to let someone else use your credit card.

Always make sure you get your credit card back from cashiers and waiters. Double check your purse or wallet before you leave the store or wallet to confirm your credit card is back in your possession.

Don’t give your credit card number out over the phone unless you initiated the call to the customer service number listed on the back of your credit card. Some credit card thieves trick you into giving out your credit card number, expiration date, or security code by posing as your credit card company or another business you trust. Avoid giving out your credit card number to anyone who calls saying they’re from your credit card company. Instead, hang up the phone and call your card issuer using the number on the back of your credit card.

Don’t enter your credit card information in any email link. Credit card disguise emails to make them look like they came from your creditor. These emails typically encourage you to visit your card issuer’s website to resolve an issue with your credit card. If you click on the link, the email may look just like the real thing, but it’s probably fake. A credit card thief is simply trying to steal your login information by getting you to login to a fake site. If you suspect something is wrong with your credit card, either call your card issuer’s customer service or visit your card issuer’s real website by typing in the URL yourself.

Report address changes to your credit card issuer immediately. Your credit card billing statements include your credit card number. Not only that, if you order a new credit card and it goes to your old address, the new residents (or anyone else) could use the card. Whenever you move to a new address, let all your current billers know your address is changing. You can file a change of address with the postal service to have all your mail forwarded to your new address.

Never sign a blank credit card receipt. The cashier has the ability to write in any amount and send it through to your credit card issuer. It’d be hard for you to dispute the charge because, after all, the merchant as a copy of the receipt with your signature on it. If you’re given a blank receipt, write in the total amount and draw a line through any blank spaces. Ask for a copy of the receipt for your records, just in case you’re billed for a different amount.

Watch your credit card during transactions. Cashiers sometimes use a credit card skimmer to capture your credit card information. The device can easily be hidden, so if you look away for even a moment, your credit card number, security code, and expiration date can be stolen.

Shred any credit card applications you receive. Don’t simply toss them into the trash because dumpster divers can get them and apply for credit in your name. You should also shred your billing statements before putting them in the trash.

Keep your credit card number hidden when you’re using your card in a public place to keep thieves from taking a picture of your credit card with a camera or camera phone.

Never write your credit card number on the outside of a postcard, envelope, or any other piece of paper that will leave your possession. If there are documents with your credit card number on them inside your home, store them in a safe place, or shred them immediately.

Recovering From Credit Card Fraud

If you think you have been a victim of credit card fraud, contact your credit card issuer immediately. The sooner you let your card issuer know your credit card information has been stolen, the less financial responsibility you’ll have for fraudulent charges.

Monitor your billing statement closely and report any errors as quickly as possible. If you have the ability to check your credit card transactions online, login every few days to make sure no one is using your credit card.

While you still have your credit cards, write down your credit card issuer’s phone number and your card number for each of your credit cards. Store this piece of paper in a safe place and refer to it if your credit cards are ever lost or stolen.

Related posts:

1. 10 Ways to Avoid Credit Card Debt
2. How to Respond to Credit Card Fraud
3. 9 Smart Ways to Use Your Credit Card

Annual Percentage Rate (APR)

The annual percentage rate or APR is the yearly cost of borrowing money using your credit card. The annual percentage rate is also known as the interest rate for your credit card. These days, the average APR for credit cards is around 12.5%. The higher your interest rate, the more you pay when you carry a balance beyond the grace period (more on grace periods below).

Your credit card could have several APRs. One for purchases you make on your credit card, one for balance transfers, and one for cash advances. Read What You Need to Know About Interest Rates for more information about your annual percentage rate.

Grace Period

The grace period is the amount of time you have to pay off balances before you have to pay interest on your purchase. The grace period typically only applies to new purchases made with you begin the billing cycle with a zero balance. You may not receive a grace period for certain types of transactions like cash advances and balance transfers. Instead, interest begins accruing on those balances immediately.

Grace periods are typically between 20 and 25 days depending on your credit card. Ideally, you have a longer grace period, giving you more time to pay your balance without receiving a finance charge.

Finance Charge Calculation Method

Your finance charge is the amount you pay when you carry a credit card balance beyond the grace period. Finance charges are calculated based on your credit card balance and your interest rate using one of several methods.

1. average daily balance method
2. daily balance method
3. ending balance method
4. previous balance method
5. adjusted balance method
6. double billing cycle method

You can learn more about finance charges in the article How Finance Charges Are Calculated and How You Can Avoid Them.

Credit Limit

The credit limit is the maximum amount you can charge on your credit card without receiving a penalty. You may have a different credit limit for purchases and cash advances. The cash advance credit limit is usually lower than the credit limit for purchases. If you exceed your credit limit, your card issuer may charge a over-the-limit fee and raise your interest rate.

Another reason to stay below your credit limit is to protect your credit score. The closer your credit card balance gets to your credit limit, the lower your credit score falls.

Credit Card Fees

Credit cards come with lots of fees and card issuers are continually coming up with more fees. Some typical credit card fees include:

• Late fee is charged when you miss your credit card payment due date or you pay less than the minimum payment. Some credit cards have tiered fees based on your balance. For example, you may pay a $10 late fee if your balance is less than $500 and a $20 late fee is your balance is above $501.
• The annual fee is a yearly fee charged for using your credit card.
• An over-the-limit fee is charged when you exceed your credit limit.
• You will pay a cash advance fee when you make a cash advance with your credit card. The cash advance fee might be a certain percentage of your cash advance, or it could be a flat fee.
• Returned check fee is charged with the check you sent for your payment is returned by your bank. If your check is returned, you might also face a late payment fee and a penalty interest rate increase.

These are not the only fees charged by credit card companies. To find out which fees your credit card charges, refer to your credit card agreement.

Credit Card Rewards

Your credit card may offer rewards as an incentive for using your credit card. Rewards are typically awarded as cash back or points that can be redeemed for discounts, merchandise, or services.

Rewards can be received as frequent flier miles that can be redeemed for airline tickets. Some reward credit cards allow you to accumulate points for a free stay in a hotel. Other cards give a certain percentage of cash back for your purchases.

With reward credit cards, you must be careful about overcharging for the sole purpose of accumulating rewards. It’s also important to know how you accumulate rewards, when they expire, the maximum amount you can accumulate, and the number you need to redeem them. All these factors come into play when you’re using a rewards credit card.

Other Credit Card Benefits

Some credit cards come with other fringe benefits that may be free, but more typically are offered only with credit cards that have an annual fee. These benefits include travel insurance, purchase warranty insurance, and car rental insurance. These insurance benefits are usually only offered when the purchase is made on your credit card.

How to Find Out Credit Card Terms

Most credit card features are included in a disclosure box that’s sent with your credit card application or solicitation. For your existing credit card, information about most features will be included on the back of your credit card statement. Otherwise, refer to your credit card agreement for information about your credit card features.

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How Credit Card Charge-offs Happen

Late payment entries on your credit report progress in 30-day increments. So, one late payment is 30-days late; two late payments are 60-days late. Once your credit card reaches 180 days late, you’ve missed six credit card payments.

As long as your account is current, credit card companies consider your balance to be an asset to the company. However, when you reach 180 days late, your debt is now considered a liability for your credit card issuer. As an accounting practice, the credit card company writes off your debt on their books and calls it a charge-off.

The charge-off listing is added to your credit report, letting future creditors and lenders know your debt got so late the credit card company had to write it off.

A charge-off is one of the worst things that can appear on your credit report. It will devastate your credit score and can take years to repay.

You Must Pay a Charge-Off

Even though the word “charge-off” sounds like you’ve been forgiven for the debt, that’s not the case. You owe a credit card charge-off just like you owe your current credit card balances. Once your account has been charged-off though, your credit card company may not spend anymore time trying to get you to pay the debt. Instead it will hire a third-party debt collector to work on getting you to pay.

Charge-Off Listings Affect Your Credit Report and Credit Score

A charge-off will remain on your credit report for seven years and 180 days from the time your account first went delinquent. Even if you pay off the charge-off, your credit report will still reflect the fact that your account was once charged-off. The only thing that makes it better is that it becomes a Paid charge-off rather than an unpaid one.

It is difficult to get a charge-off removed from your credit report. You may be able to negotiate with the credit card company to remove the charge-off listing in exchange for payment. But, the credit card company has little incentive to agree to this. Not only that, credit card companies have an agreement with the credit bureaus to provide accurate information about your accounts.

The glimmer of hope is that some consumers have been able to work with their credit card issuers to remove the charge-off if they paid the account. It’s a matter of talking to the right person at the right time.

Settling Charged-Off Credit Card

If you can’t convince the creditor to remove the charge-off, consider negotiating a lower payment amount. This is called “settling your debt.” When you settle a credit card account, your creditor agrees to accept a lower payment to satisfy the debt. From the credit card company’s perspective, something is better than nothing. For you, it means you part with less money than you actually owe.

Be careful about settling a credit card charge-off. Your credit card issuer is required to let the IRS know about any debt above $600 that’s cancelled. In turn, you’re required to report the cancelled debt as income on your next tax return. That could mean you owe taxes or receive a lower refund than you would have otherwise.

If you settle a charge-off, your credit report will be updated to show the account was settled rather than paid in full. This could hurt your credit score as long as it appears on your credit report. Fortunately, the negative entry will fall off after seven years from the date the account was charged off.

Benefits of Paying as Charge-Off

Whether you pay a charge-off in full or you settle the account, you shouldn’t leave the charge-off unpaid. If you don’t pay a charge-off, it can impact your ability to get credit cards and loans in the future. That means you’ll have difficulty purchasing a house or a car. Not only that, you could pay higher insurance rates, be turned down for a job or promotion, and you could even have difficulty renting an apartment.

Once the charge-off is paid, collection efforts on the account will stop. You don’t have to worry about getting calls and letters from debt collectors.

How to Avoid a Credit Card Charge-Off

You can avoid a charge-off by making at least the minimum payment on your credit card each month. Make sure you let your credit card issuer know your current mailing address so you receive your billing statements in time to make your payment. Or, if your credit card issuer has the option, you can sign up for paperless billing.

If you notice you have trouble making your credit card payments, contact your credit card issuer ahead of time. Your card issuer may offer a hardship program that lowers your interest rate or monthly payments to make your payments more affordable. Or, you may take advantage of consumer credit counseling which will help you negotiate a lower interest rate or minimum payment if your card issuer doesn’t have a hardship program.

Avoid using cash advances, balance transfers, and payday loans to pay your credit card bills because create more credit card problems than the charge-off itself.

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Note that these details apply to third-party debt collectors that are hired by businesses to collect a debt. They do not apply to in-house collectors that work for your credit card issuer.

When Can Debt Collectors Call?

Debt collectors primarily use telephone to contact you to pay your debt. It seems like the calls come at the most inconvenient times. By law, debt collectors can call anytime between 8 a.m. and 9 p.m. your local time. They can’t call you while you’re at work at any time if you let them know your employer doesn’t approve of the calls.

Debt collectors aren’t allowed to call you at any time that they know or should know is inconvenient. If you receive a call from a collector at a time that’s not convenient, just let them know that time doesn’t work from you. They’ll likely ask when is a better time, so be prepared for that question.

How To Stop Debt Collector Calls Completely

You have the right to ask a debt collector to stop calling you all together. To stop debt collector calls, all you need to do is send a written letter asking them to stop contacting you about the debt. As with all other correspondence you send to credit-related businesses, you should send this letter via certified mail with return receipt requested. Keep a copy of the letter for your records.

After you send this letter requesting the debt collector to stop calling you, they’re allowed to contact you one final time to let you know that either they will stop trying to collect the debt, they may take certain actions in the future, or that they are definitely going to take certain actions in the future.

What If It’s Not My Debt?

Debt collectors have been known to contact consumers about debts that do not belong to them. Sometimes this is deliberate. Sometimes it’s a mistake. If a debt collector calls you about a debt that’s not yours, but is in your name, you can have them send proof of the debt.

The process through which you request proof of a debt collection is called debt validation and must be done within the first 30 days that you’re contacted by a debt collector. The debt collector is supposed to send a letter to you within five days of its first contact letting you know about your right to have the debt validated.

To have the debt verified or validated by the collection agency, all you need to do is write a letter (within the first 30 days) stating you do not believe the debt is yours and request the collector send proof the debt is yours. Not only that, you can request proof that the collector is authorized to collect the debt.

While the debt is in dispute, the debt collector can’t contact you about the debt. It’s also prohibited from including the debt on your credit report.

If you wait past the first 30 days to dispute your debt collection, the debt collector doesn’t have a legal obligation to provide you with the proof you request. It can continue collecting the debt including, but not limited to, calling you and listing the debt on your credit report.

What Things Are Debt Collectors Not Allowed to Do

Debt collectors must follow the Fair Debt Collection Practices Act, FDCPA, when they’re collecting a debt from you.

• They can’t charge you more than you owe and can’t charge interest and fees that aren’t allowed by law.
• They can’t harass you by calling repeatedly, using obscene or profane language, or call you at times that are inconvenient for you.
• They can’t threaten to use violence against you nor can they threaten to take any action they can’t or won’t take. For example, they can’t threaten to have you arrested for a debt.
• They can’t call you at work after they’ve been told your employer doesn’t approve.
• They must send a debt validation notice and must comply with the request for validation as long as it’s sent within the first 30 days of the collector’s initial contact.
• They can’t continue contacting you after you’ve sent a written request to that they no longer contact you.

What About Collectors Who Break the Law?

If a debt collector violates your rights under the FDCPA, you can report them to the Federal Trade Commission, which is the Federal agency who regulates debt collectors. You can also report the agency to your state Attorney General who is also responsible for overseeing the collection agency at the state level. Finally, you can file a civil suit in your state or federal court. The amount of the suit can be $1,000 plus any damages you received. If you have evidence that the collector violated your rights, this will help prove your case against the agency.

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