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How to fight credit card budget woes

It turns out that less than a third of Americans keep a detailed budget, according to Gallup.

Gallup also found last year that if you went to college or have a household income of at least $75,000, you’re a little more likely to keep a budget — a little under two-fifths in those categories said they kept a budget.

So, what is our hang-up about budgeting? Gallup surmises that Americans might not feel the need to budget because they can check their bank account balance at any time via mobile banking, as well as online banking, the most popular mode of banking, according to American Bankers Association. But, budgeting is about more than reviewing your checking account regularly.

If you keep a detailed budget, you can plan for big expenses, such as visiting Aunt Mae over the holidays. Perhaps more important, you can plan for the unexpected, such as the $3,000 in car repairs my husband incurred when he recently went in for “routine maintenance.”

Because I set aside part of my take-home pay for unexpected bills, we have not suffered from any recent, unplanned expenses.

While I have my family on a strict financial diet, there is one thing I struggle with when it comes to keeping a realistic budget — budgeting for credit card bills. I’ve wondered if credit cards are actually a major reason why people do not budget adequately. Do we hide our heads in the sand because we are going over budget every month with our credit cards?

My husband and I pay our card bills off every month, a habit I highly recommend, but I still always struggle with keeping the credit card part of the budget under control. And I have put off itemizing my cards by category on my budget spreadsheet, because I know the news won’t be good. Head in sand, you say? But some people actually use credit cards as a budgeting tool.

Hank Coleman writes on DailyFinance.com that he and his wife have found that charging expenses primarily on a credit card has simplified their budgeting, because there is a paper trail. Coleman suggests that you use a charge card if you are concerned that you’ll go over budget with a traditional credit card — with a traditional card, you can simply pay a minimum payment each month. A charge card requires you to pay in full each month.

But what if you already have credit card debt?

Louise Balle advises on TheNest.com that if you owe on your cards, pay off the card with the highest interest rate first. She suggests that you make up a budget of all your expenses, including your minimum payments on your cards, then subtract that figure from your take-home pay. That sum is what should go toward your credit cards until you pay them off, she says.

Benjamin Chambers writes on Money.StackExchange.com that you can get your bank to send you a text when you reach a certain balance threshold. He actually uses his card for groceries, paying off the bill each month. Benjamin says personal finance is about behavior, rather than knowledge, and if you practice, you can learn to manage the credit card aspect of your budget, and it will become as natural as using cash.

I like the idea of getting alerts on my phone if I go over a certain amount, but the alerts allowed on my favorite card, which is with Bank of America, don’t include that option. I looked at my Capital One, and it does have an option to alert you if your balance goes above a certain amount.

I set up an alert with Capital One; I want to see if I can curb my card spending this way. It will be interesting to see if I can change my behavior, as Benjamin says you can.

 

How to Protect Yourself from Credit Card Skimming

Before you stick a credit or debit card into a gas-pump slot, an ATM or another unattended reader, it might pay to look for signs of tampering from skimming.
Itís happening often enough to prompt another warning to consumers from the Better Business Bureau. ††††
Skimming is the crime of capturing information stored on a magnetic stripe by tampering with the hardware or software of card reading devices, and it can happen in several ways.
It could be a device stuck inside the actual reader; it could be a fake reader installed over the real reader; or a camera set up near the slot to record the information; or someone using wireless technology†to intercept signals that some gas stations use to transmit card data from pumps to computers. It could even be a corrupt employee in a bar or restaurant who may use an illegal reader and sell the information to thieves.†
The criminals download the information and often encode it to a blank card, which they can then use to pull money from the victimís account. ††
NACS, an international trade association for retailers and suppliers, offers one way to help gas stations detect the fraud. NACS has developed a WeCare security label to be used on fuel dispensers near the credit/debit card transaction area. If the label is lifted to insert a skimming device, a ďvoidĒ message alerts customers and store employees. ††
But detection relies mostly on consumer awareness and sharp attention. Experts offer these tips to help protect yourself:
  • Avoid using ATMs in poorly lit or low-trafficked areas. Experts often recommend choosing an ATM inside a bank over standalone ATMs. Look for new or suspiciously placed cameras and unusual signage.
  • Pay inside a gas station where you can deal with a person and sign for the transaction.
  • Pay attention to what the card reader and keypad normally look like on the ATMs you use most frequently.
  • Donít use an ATM if the card reader appears to be added on, fits poorly or is loose. Look for glue marks or residue around the reader.†
  • When entering your PIN, cover the keypad with your other hand to hide information from any cameras. Also, periodically change your PIN.
  • Donít let a store employee walk away with your credit card to swipe it if you can help it.
  • Monitor your statements and keep a close eye out for suspicious charges. Through your financial institution, you can also sign up for alerts that will notify you when certain types of transactions occur.
  • Report any fraudulent activity to your bank as soon as you discover it. Consumer protections for debit and credit cards vary, but depend largely on when the fraudulent activity is reported.
 

Not Fixing That Error Can Really Cost You

Credit ReportDid you know that around 70% of all credit reports contain at least one error? In many cases, these errors go unnoticed until the consumer applies for a loan, and in many cases is turned away. This is the same when you apply for a credit card. When evaluating credit card applications, credit card issuers rely deeply on the information presented in credit reports. Not only does it help in the decision to extend you credit, but it is also one of the main factors in the interest rate you will be paying on your purchases. With that said, it should be easy to understand that obtaining and fixing any errors on your credit report and before you apply for a credit card could increase the chance of getting the card of your choice, and getting you a interest rate that you are comfortable with.

 

 If after reviewing your credit reports you have found errors, you should send a separate letter to each credit reporting agency (Equifax, Experian, and TransUnion) in which the error was found. In these letters you must explain in detail the situation and why this is an error. With each letter you must also include a copy of that credit report with the erroneous information highlighted. Any additional paperwork that you have showing why you are disputing (receipts, contract, etc.) is always good when disputing. By law, credit reporting agencies must investigate any errors that are found, and will speak with the creditor that supplied the data which is in dispute. If the creditor admits to the error the reporting agency will remove that error from their report promptly and without damage to your credit rating. If the creditor does not admit to error, then you will need to file a statement detailing your account of the situation, which will be filed in future reports that other creditors receive. Bankrate provides a great form letter for fixing any credit report mistakes.

 

When it comes to your credit report you must remember that you do not send in the information that comprises your credit history, your creditors do. But, you are accountable for the accuracy of the information contained in each of your credit reports. This is why it is very important to check your credit report regularly and before requesting a loan of any size. If you do find a mistake please remember it is not difficult to get rid of the errors. It is just time-consuming, but well worth it. There may be weeks or months of phone calls and or sending out mail, but the end result could be getting a loan with an interest rate that you can handle.

 
 
     


 
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