Credit Card Rewards: Do's and Dont's

Credit Card Rewards: Do's and Dont's
Credit Card Rewards

In my last article, I told you what to look out for when applying for a new credit card. Now, one of the things that I said you should avoid is paying an annual fee, but I must admit to you that I do have one credit card with an annual fee and the reason why I made the decision to apply for that card is because it's got some really great rewards and perks.

If you are missing payments or carrying a balance over from months to month on your credit cards then I would say you are not ready just yet to pay annual fees for rewards program, wait till you are really close to being debt-free or until you are completely debt-free and then you can graduate up to paying an annual fee for a really great rewards program

There is a lot of credit cards that offer rewards programs for free, so I would suggest you look into some of those 

Read: Top 5 Cash Back Credit Cards

Credit Card Rewards: Dos

Apply for a credit card with rewards that align to your needs and interest, this one's going to be pretty obvious but it's really important
If you don't eat out at restaurants a lot, then it doesn't make sense for you to apply to a credit card that offers you rewards at restaurants.
  • Gas?
  • Groceries
  • Restaurants
  • Travel Rewards
  • Cashback
Think about what it's that you need and spend the most money on or what it is that you are interested in and then apply for a credit card that offers you rewards and perks in that specific area.

Credit Card Rewards: Dont's

Don't spend money that you don't have just to get rewards. This one is really hard because as soon as you open up a brand new card the credit card issuers put pressure on you to try to spend more to get perks

For example, they will say spend $1,000 in the first 90 days and you will get 20,000 bonus points, but if you don't usually spend $1,000 in 3 months you shouldn't go on a shopping spree just so that you can get to $1,000 to get those reward points

Because in essence what you are doing is just paying extra money for them. 
Don't apply for lots of different cards that offer lots of different rewards, it's going to take forever for you to get any of the rewards from any of those cards
It makes more sense for you to be strategic put all of your typical expense on one major credit card so that you can really maximize the rewards that it's being offered. This way you are going to get the most bang for your buck in the form of your most preferred reward

Credit Card Rewards: Dont's

Don't apply for a credit card with rewards that expire, lots of different credit cards have actually eliminated the expiration date but it's not the case with every credit card, so be really careful and make sure that you read the terms and conditions of your credit card
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5 Things to Consider When Applying for New Credit Card

5 Things to Consider When Applying for New Credit Card
Applying for New Credit Card

I got my 5th credit card in the mail so I'm really excited that I was approved for that card because of 2 really big reasons. My utilization is pretty much always going to be under 10% now because of my total credit available increase to about $40,000

Read: How To Improve Your Credit Score Quickly

Because of that it makes it really easy for me to maintain a really good credit score over time without having to do much, I'm really excited about that and I just wanted to share this article in honor of my fifth card, 5 things to consider when you're applying for a new credit card.

Let Get Started

1. Does The Card Have An Annual Fee?

If you're new to credit cards or just starting to build credit then I especially encourage you to stay away from credit cards that charge an annual fee. There are hundreds if not thousands of different credit cards available to you that won't charge you an annual fee

Read: Best Credit Cards for Beginners
Why should you pay for a service when you can get it for free.

2. What Is The APR or Interest Rate?

The average interest rate in the US right now 15 to 20%, so for those of you who have good to excellent credit, you should be really excited because you qualify to get a pretty good interest rate, somewhere between 15 and 20%

Read: How Does Credit Card APR Work

But if you have fair or poor credit then you're probably going to be more in the 20 to 25% interest rate range.

3. What Are The Penalty Fees And Rates This Credit Card Has?

For example, If you make a late payment you are going to charge a late payment fee and your interest rate is going to be bumped up to a penalty interest rate

Read: How Do Credit Cards Work

You have to know what is the penalty interest rate and the late fee. You really have to understand what those fees are so that you're clear about what kind of contract you're entering into

4. How Long Is The Grace Period

Traditionally a grace period is about 25 days and that is how much time you have from the day that you get your bill to the day that it's due where you can make payments on your credit card interest fee

But a lot of credit cards have cut down the grace period to around 20 days which decreases the amount of time that you have to make interest repayments and increases the chances of you making a late payment

Which only means you are going to get smacked with a late payment fee. 

5. What Type Of Billing Cycle Does This Credit Card Use?

Most credit card issuers use single cycle billing which is the best thing for you as a consumer, but some credit card issuers try to be slick and used 2 cycle billing and that is what you want to avoid

Credit card issuers have to determine how much they are going to charge you in interest each month, so they find your average daily balance

What they do is they add up the amount that you owe each day in the cycle and then divide that by how many days are in that cycle

But if they get to use two cycles to do that and you carry a balance from one cycle into the next then your average daily balance for both cycles is going to be higher which means at the end of the day you are going to get charged more interest.

You really want to avoid any kind of credit cards that use 2 cycle billing.
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Top 5 Cash Back Credit Cards

Top 5 Cash Back Credit Cards
Cash Back Credit Cards

Are you looking to get a high-value cash back credit card, I'm going to tell you the 5 best cash back credit card right now. When it comes to earning credit card rewards it doesn't get any simpler than cash back.

Usually, I talk about a travel credit card with earning miles and points but you just want to get cash back it's a really straightforward system, you spend money and you get a percentage back which can be used for a statement credit really easy

When the problem lies is there are so many cash back credit cards that it could be overwhelming, some cash back credit cards are good for a grocery or gas or offer high signup bonuses or some have annual fees and it can be really overwhelming to sift through all that date and see which is the best cash back credit card

Well, you don't have to worry I did all that research for you no headaches involved for you I'm going to share with you the 5 best cash back credit cards for different categories and by the end of this article, you will know which credit card is the best one for you.

Let Get Started

Be Responsible With Credit Cards

Before we get started I just want to say it's really important to have good credit card habits. 
If you plan on getting in debt with any of these credit cards or to pay interest, I don't recommend getting any of these cash back credit cards or credit cards in general, credit cards are just a tool to get really good rewards and that is pretty much it
You don't want to get any debt or spend more money than you have in the bank, I recommend getting the auto pay feature anytime you get a credit card, so if you go into your credit card account online you could do the search auto payment

And you will have an auto payment option where you could actually automatically pay your credit card every single month in full, so essentially you are turning your credit card into a debit card.

1. Citi Double Cash Credit - For EveryDay Spending

Let's start with our first category of general everyday spending. 

With this card, it's really simple and straightforward, 
  • You get 2% back on everything
  • You get 1% every time you make a purchase
  • 1% every time you pay the bill
  • If you spend a thousand dollars and pay off that thousand dollars, you get 2,000 point
  • No annual fee with this card.
basically, if you just want to earn 2% on everything you make, you don't want to have to worry about certain categories like grocery or gas and you don't want any headache and trying to redeem these point, the city double cash is definitely for you because it has no annual fees

If you make a purchase of $1,250, that comes out to 2,500 points and then you could redeem it for $25 cash back

2. American Express Blue Cash Preferred Card - For Groceries And Gas

  • You get 6% on groceries and supermarket
  • You get $6,000 to spend for the calendar year and then anything after that is 1% cash back
  • 3% cash back at US gas stations and certain department store then 1% cash back on everything else
  • You get 6% cash back if you spend $1,583 in us supermarket in a year. That is $95
This card does come with a little sign-up bonus, you get a $200 statement credit after spending $1,000 in 3 months and there is an annual fee of $95, so you want to make sure you do the math and you're getting more value out of this card than the $95.

To give you an idea of how you could get $95 cash back, if you spend $1,583 at US supermarkets in a year then you could get the $95 cash back and that is 6% back from the grocery store and you would be able to pay off your annual fee

3. Capital One Savor Card

This is the best cash back credit card with the big sign up bonus and waived annual fee. The capital one saver card is perfect for this category because
  • You get a $500 statement credit bonus after spending $3,000 in 3 months and the annual fee of $95 is waived the first year
With the annual fee of $95 is waived the first year that means you get to use all the benefits of capital one savor card if you eat at restaurants this card is perfect for you because you get 4% cash back at restaurants

2% cash back on groceries and 1% on everything else, and there is no cap or limit to the amount of cash back you could earn with this card.

4. American Express Wells Fargo Propel Card

This card gives you a signup bonus of $30,000 point or $300 after spending $3,000 in 3 months. And there is no annual fee.
  • There is no annual fee with this card, there is a bunch of great cashback categories 
  • 3 point per dollar spent on travel purchases such as flights, hotel, home stays like air B&B and car rentals
  • 3 point per dollar spent on eating out and ordering in restaurants
  • 3 point per dollar spent on gas stations
  • 3 point per dollar spent streaming services like Apple music, Hulu, Netflix and 
  • 1 point per dollar spent everywhere else
My favorite thing about this card is you get free cell phone insurance with it, up to $600 covered. There is no other no annual fee card that offers cell phone insurance like this

5. Chase Freedom Card

This card offering a sign-up bonus of 15,000 chase ultimate reward points or $150 after spending $500 in 3 months and no annual fee ever

With the chase freedom card, you earn 5 points per dollar spent on bonus categories which change every single quarter or every 3 month

That means what you would have in this quarter will be different from the next quarter, so this quarter it could be PayPal, groceries or supermarkets

Next quarter it could be gas stations, warehouse stores like Costco, so every quarter is changing to get that 5% bonus and there is a limit of 7,500 points which you could earn per category which is $1,500 capped that you could earn at the 5% rate, after that it's just 1% back

Those are my top cash back credit card hope you find them useful
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How To Improve Your Credit Score Quickly

How To Improve Your Credit Score Quickly
Credit score

In this article, I am going to focus more on how you can improve your credit score quickly. Most people will talk about making your payments on time and that is a very important part of your score, but I find that utilization is something that will impact your score much quicker

Let Get Started

Keep Your Utilization Low

What does that mean? in order for you to understand utilization first, you need to know how your credit score is calculated
  • 35% of your credit score comes from you making payments on time.
  • 30% of your credit score is your utilization
  • 15% of your credit score comes from how long you have had credit for.
  • 10% of your score is based on the mix of credit that you have
  • Last 10% of your credit score comes from new credit that you have
We're going to focus on talking about utilization because it's worth 30% of your score, that is a big chunk of your credit score.

There is a lot of points that you can lose if your utilization is not good.

What Exactly Does Utilization Mean?

Utilization is how much of your total credit you are using or your spending right now.

Let's say you have a credit card and your total credit limit is $500, you are allowed to spend a certain amount out of that $500 each month without losing too many points from your credit score

How exactly are you going to know if the amount that you are spending is too much, in order for your utilization to be considered excellent, you need to have 0 - 9% utilization
  • Excellent: 0-9%
  • Good: 10-29%
  • Fair: 30-49%
  • Poor: 50-69%
  • Very Poor: 70% +
If you spend between 30 and 49% of your total credit limit then your utilization will be considered fair, here is your credit score is going to take a very big hit if you spend 70% or more, your utilization is going to be very poor

At this point, your credit score is really going to take a hit. Remember utilization is worth 30% of your total credit score, so that is going to impact your score
  • The first thing you have to practice using a credit card is self-control, keep in mind how much you should actually be spending regardless of what your credit limit is and that is the amount you should be thinking is each month
Here's a trick that I like to use that I find to be really helpful, I'd divide by 10 then spend.

Let me give you an example, my credit card has a total credit limit of $500 I'm going to divide that by 10 and I'm going to get $50, that is 10% but I want to be between 0 and 9% because I want my utilization to be excellent so I can get the most points in that category

In my mind even though that credit card has $500 I can use each month I'm never going to spend more than $46 a month. That can be really hard.

If I see something that I wanted that cost $100, I'll be like I've got $100 on this card I'll just pay it little by little, that is how you end up with a bad credit score over time, that becomes a habit and then you end up paying just the minimum towards your payments and you end up paying interest in all other things

You really don't want to get into those habits. Start strong, divide by 10 then spend.

One thing that I do want to talk about when it comes to utilization is that it doesn't just apply to one credit card or 2 credit cards individually, it actually applies to the total credit available to you

If you have 2 credit card what you are going to do is take the limit of each of the cards and combine them, let's say the first card has $500 but the second cards have $200, when you add those together now you have $700 is the total credit available to me

That is what I'm going to go ahead and divide by 10, let's say $700 divided by 10 is $70, I'm never going to spend more than $70 a month on both cards combined
Find out what your total credit limit is then divided by 10 and that will give you an idea of what the maximum amount of money you should be spending each month
Go ahead and check online look at all your credit card bills as they are right now, and see what can you do

Start making an aggressive payment towards those cards and get your utilization down to be between 0-9%. That will impact your credit score in a good way by the time you check your credit next month I guarantee it'll be much higher than it is now.
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Investing In Stocks For Beginners

Investing In Stocks For Beginners
Investing In Stocks For Beginners

The word of the stock market is very complicated so in this article let's try to simplify as much as possible. Before we move on let's first understand what stock market it

What Is The Stock Market?

Stock Market is a place where all companies come together to trade their stocks, and stock is a piece of a company, so when you own a stock you actually own a piece of the company

One Way To Make Money With Stock Market

Like any other business, if your business makes money, you would take the profit. But in this case, since you only own a piece of the company so you will get a piece of the profit. And The is called dividend.

The more stock you own the more dividend you would be paid. And that is one way to make money in the stock market.

Second Way To Make Money With Stock Market

Businesses actually try to expand to go bigger and bigger, and as they grow, the value of the company grows as well and the stock price goes up.
  • For example, If you buy Apple stock for $20 then they will list the new iPhone and if it becomes successful and the stock price jump to $30, that means you have made a profit of $10. And that is the second way to make money with stock.
  • But that is also a way to lose money, if the stock price goes down let's say to $15, then you making a loss of $5. The stock market is a little bit like game playing, you make money if you make the right prediction.
Accept that stock can be predicted based on their performance not always of course, but they usually, for instance, the company like coco-cola worth 70 billion dollars and it's stock has been increasing for the past 30-years, of course, it has its ups and downs but overall it was growing up. Is very unlikely that is going to go down in the future

Whoever if it's a technology company, that becomes more predictable because technology is changing very fast

Let take a look at the 2 types of investors out there

1. Active Investors

Since stock jump up and down every single day this type of investors try to predict which stock would go up today, so they buy them and then sell them once they go up. Usually on the same day or the next day

But for that, you have to be very well financial educated and spend hours every single day analyzing the stock to make the right prediction, which is why a lot of people can't.

2. Long Term Investors

They put their money into stock and let it goes for a year so that in the long run they make a fortune. 

You might be thinking what if you invest all of your money into one single company and then it crashes, that can happen, of course, that is why is the first rule of investment is never put all of your eggs into one basket

Diversify Your Investment

Never put all of your money into one single company, instead, invest them into many different companies so that if one company goes down you are not going to lose a lot of money

Investment Fund

The way to do that is to invest through investment fund because investment fund usually invests in a hundred different companies, so when you invest in one of them you are actually investing in many different companies

If one out hundred of companies crash, that is not going to affect your investment significantly 

The best fund is probably the one that invests in the S&P 500 which are the top 5 biggest company in the US, starting from Apple, Coca-cola, and so on, the average total return over the past 90-years for S&P 500 has been 10% which is not really bad if you invest your money in the bank where you might be given less than 1%

Anyway, 10% isn't really a lot of money that is why you have to follow the second rule of investment

Use Compound Interest

The great investor of all time Warren Buffett asked, what is the secret of his success? He simply replies, my world as came from Living in America, some lucky genes and compound interest
Compound interest work if you always withdraw your return every year and invested it back
Let's say you are in your 20s and you invest only $100 every month, by the time you reach 45-years it would grow to almost a $916,023.24. On the other side, if you have saved that into a bank deposit, it would be only $54,000
Can you see the difference? That is the power of compound interest

Now, imagine if you invest $500 every month, that would grow to a $4.6 Million dollar, just with a 10% of returns.

The Key Of Investing

The key is to start investing as early as possible if you are in your 20s and you are reading this article then start learning about investing more and more and start doing it as soon as possible.

Some of you might say, I don't want to wait for 30-years until I make a million dollar, well, you don't really need to wait for such a long time, you can withdraw your money at any moment, but the longer you keep it the more it would grow.

Stock is way much complicated than what I explain in this short article so if you are serious about investing then I highly suggest to further study the subject before making any move and of course you can go to our investing category here for more article about investing
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How Does Credit Card APR Work

How Does Credit Card APR Work
Credit Card APR

Are you a credit card beginners or you have been using a credit card for a long time but when it comes to something called credit card APR, is seem very confusing. But don't worry because in today article what I will be talking about today is a question that keeps coming up anytime I open my email

The question goes like this

  • What is APR, 
  • How does an APR work? 
  • Do I get to choose my own APR, 
  • Does my APR affect my credit score?

Let jump in

APR stands for Annual Percentage Rate, and it's used to calculate how much interest you are going to pay each month. I know that's misleading because it says annual, but stick with me here

If you pay back your entire credit card balance on time each month not just the minimum then you won't pay any interest so APR is not going to matter to you at all

Read: How Do Credit Cards Work

This is what we should all be doing, credit card companies call people like this freeloader because you never let them get an extra penny off of you
  • Freeloaders: 
  • Always pay the full balance
  • Never pay interest fees
But if you choose to carry over a remaining balance from one month to the next month, the APR is a big deal to you. You are going to be called a revolver because just like a revolving door you are going to let credit card companies make more money off you each month
  • Revolvers:
  • Only pay the minimum
  • Pay interest
  • A major source of income for a credit card company
Now, the APR is determined by your credit card company based on your credit score and your credit reports when you apply for credit. The better your credit score is then the lower the APR is going to be which means you will pay fewer interest fees over time

But the lower your credit score is then the higher your APR is going to be which means you will be paying more interest over time.
If you are not sure what your APR is you can check out the fine print on your credit card statement or you could just call up your credit card issuer and ask them over the phone

Even though APR stands for annual percentage rate, the credit card companies actually calculated daily and then they add up all the day in the month and put that number on your bill
For purchases that you made with your credit card in your billing period the credit card company is basically going to see how much money you owed on average each day from the first day of the billing period to the statement closing date on the billing period and then that is going to get multiplied by your daily APR
  • Which is basically your APR divided by 365 days, that is going to tell them how much to charge you each day so they would take that and multiply it by how many days are in the billing period and that is the number that they charge you in monthly fees
  • Average daily balance X daily periodic rate X number of days in period = amount of interest charge
If this formula is confusing for you then just make sure that you understand the concept. When you are shopping around for credit cards you really want to make sure you build up your credit as much as you can so that you can qualify for the best interest rate, that means that you will get the lowest possible APR, because remember the average APR is about 15 - 20%

If you can get an APR that's lower than that it's pretty good. if you get something that is higher than that it's not so good.

I hope this article helps you have a better understanding of what credit card APR is and how it works, but if you still have questions you can definitely drop your comment below
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Best Credit Cards for Beginners

Best Credit Cards for Beginners
Best Credit Cards for Beginners

This is the time of the year people usually applied for a lot of credit cards to put their holiday spending on, so today we would be talking about 3 best credit for beginners

Read: Top 5 Best Travel Credit Card

1. Bank of America Cash Rewards Credit Card 

Bank of america cash reward credit card

This card usually has a $150 signup bonus after you spend $500 in your first 3 months from account opening. But recently they have bumped it up to $200 of sign up bonus after you spend $500 in 3 months

This card has no annual fee, so if you're not using it you could just throw it in the drawer and not have to worry about it, not have to pay for something that you're not using
  • The card gives 3% on gas stations
  • 2% on groceries
  • 1% on all other purchases. 
But starting from January 14th of 2019 they would let the cardholder choose the 3 person category and you can choose from 
  • Gas stations, 
  • Online shopping, Dining
  • Travel
  • Drugstores
  • Home improvement stores.
If you are living somewhere like new york where you don't have a lot of gas spend, you could switch that to something like online shopping, this day almost everyone shops online
  • Another interesting thing about this card is that Bank of American would give a 10% cashback on top of what was earned, the cashback can be redeemed to a bank of America checking or savings account
For example, let say you get this card and you get the $200 sign up bonus and you spend it throughout the year, you will get another $100, so you got a total of $300 of cashback
  • If you redeem that $300 to a bank of America checking or savings account, Bank of America would add an extra 10%, in this case, $30. So instead of $300, you will get $330.
But as with most checking accounts, there is a minimum balance that you would have to maintain, but if you're a student and you provide your student ID, bank of America sometimes ways that minimum balance requirement for their checking accounts

2. Chase Freedom Credit Card

chase freedom credit card

This one also offers a $200 sign up bonus after you spend $500 in your first 3 months from account opening., this also has no annual fee and earns a flat 1.5% cash back throughout all the spends

The cashback rate does not vary depending on the category, something to keep in mind is that chase credit cards ultimate reward points, so depending on which credit card you use to redeem these chase points, you can get significantly higher value 

Also, your value depending on how you redeem these points whether you're using it for cash back or travel

3. Chase Freedom Unlimited Credit Card

chase freedom unlimited credit card

This one has a $150 sign up bonus after you spend $500 in your first 3 months from account opening. This one also has no annual fee and this one gives 5% cash back on select categories each quarter
  • Every 3 months the categories in which you could earn 5% cash back changes. For example, for the first quarter of 2019 which is January, February, and March of 2019, those 5% categories would be gas stations, tolls, and drugstores
Something I do want to point out for all chase cards is that they are affected by the 5:24 rule

For those of you who are unfamiliar with that is that chase would automatically deny your application, despite your credit history, despite your high credit score, if you have taken more than 5 credit cards in the past 2 years

My recommendation to people interested in the chase cards discussed in this article is to apply for them first, once you have received them then apply for the bank of America card as the bank of America card is not affected by 5:24 rule

Now, what makes these credit cards best for beginners is the fact that they have no annual fee and they have very high approval ads which mean that you don't need a perfect credit score or a very high income to qualify for these cards.

These are great to get you started and build a credit history and then eventually move on to better cards.

You can also keep these cards for a life-time because it doesn't have an annual fee as you move on to better cards with better rewards and better point 
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