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A good credit card to start out with

5 Must-Know Credit Card Tips For New Graduates

Rob Berger is a litigation attorney and founder of the Dough Roller, a popular personal finance and investing website with a singular focus—to help people achieve financial freedom.

If you’re a recent college graduate, you’re probably concerned about all things financial – from finding a full-time job to renting a home to saving for retirement to dealing with student loan debt.

And in the midst of all that, you’ll have to decide how to use credit cards to better your own financial future.

Responsible credit card use can be part of a healthy overall financial plan. Credit cards, after all, can help you build your credit so that you can someday take out a loan for a larger purchase – like a home or car – and they can even net you some great rewards.

But before you start swiping that plastic, consider these five credit card tips just for new graduates:

1. Pay down debts you racked up in college

Over the past two years, the number of college students using credit cards has declined from 42 percent (2010) to 35 percent (2012), according to a report by Sallie Mae. В This data, however, mask the fact that credit card usage increases as students near graduation. В The result is that 60 percent of graduating seniors used plastic. В For those that graduate with a credit card balance, focus on paying that balance down to $0 as soon as you can. This is a good idea for two reasons.

For one, paying high interest rates on a credit card balance doesn’t make much sense. After all, you don’t want to be paying for your school books or pizza outings for years to come. Second, paying down your credit card balance is a smart credit move. The lower the balance you carry compared with your credit limit, the healthier your credit score.

2. Create a budget, and stick to it

The best way to keep from racking up lots of high-interest credit card debt is to make and stick to a budget. While the majority of college graduates are able to find a job, many are still unemployed or underemployed. In this shaky job market, learning how to live on a budget is an essential skill.

It’s tempting, right now, to live beyond your means, charging all the excess spending to your credit card while you search for a full-time job. The key to avoiding overspending is to create a budget that lets you live within your current means – even if that means crashing in your parents’ basement for a few months.

If you’re struggling to live on a tight budget while you job hunt, having a credit card with you all the time could mean extra temptation. Sure, a latte, pair of jeans, or dinner out with friends may not cost much now. But habitually charging your credit card so that you can overspend will run you into trouble eventually.

So if you do have trouble being disciplined with how you use your credit card, just leave it at home. That way, you won’t have it on you when friends ask if you want to go out for drinks that you know you can’t afford.

4. Consider using credit for set expenses

With all this said, don’t avoid using your credit card altogether. Consistently using and paying down a credit card is actually one of the best and fastest ways to build a good credit history. You’ll want that history behind you when you go to take out a car loan or a mortgage in the future.

To stay disciplined with your credit card use, consider using it for set expenses that you know you’ll pay every month. Some people use a credit card just for gas, and others use it to pay things like rent and insurance payments. As long as you pay off the total balance on time each month, you won’t pay any interest, and you’ll build an excellent credit history.

5. Check out the rewards available to you

Maybe the only credit card you have is still one geared for college students. This was a great fit for you in college, but you may be able to get a better credit card now. Many student cards are formulated to help students build credit, but don’t necessarily come with good rewards.

Now is the time to check out what credit cards are available to you, and to find one or two that have desirable rewards. Whether you drive a lot and prefer a cash back gas rewards card or you want to travel with travel rewards, there’s a good fit for you out there. Just do your research, and make sure you check out all the fine print before signing up for a new credit card.

Living within your means, consistently paying down your credit card, and using the right card for your needs will help you build better credit for the future. This means you’ll eventually have access to even better credit cards, and will also be able to get the money you need to buy a home or a car because you’ve built an excellent credit history right after graduation.

Read the original article on Dough Roller. Copyright 2013.


a good credit card to start out with

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How do Credit Cards Make Money? I Found Out the Hard Way

This post may contain affiliate links. Please read my disclosure page for more info.

A good credit card to start out with

I pulled my new American Express Sky Blue credit card out of my wallet the other day and swiped it through the card reader at Target. I had time to admire my card since my kids were at home with John. (Typically, standing in line at the store is a chaotic experience that leaves me wishing that I’d have enough hands to keep my kids out of all the candy and trinkets in the checkout line and not wondering how credit card companies make money) The card was thin and clear and had a picture of a jet flying across it.

As the checker rang up my items, I imagined myself in that jet, on a trip to my homeland – sunny San Diego. I knew I was earning travel rewards with this purchase that would get us closer to another free trip. I also knew that unlike my spending habits ten years ago, I’d be paying this purchase off when the monthly bill arrives.

This transformation in my buying behavior all came about after I asked myself one day, ‘How do credit cards make money, anyways?’ If you’re wondering how credit cards make money, then today’s post is for you.

To answer this question, I really needed to start with asking myself two questions – namely, ‘Who am I borrowing from?’ and ‘How do credit cards work?‘

Early in our marriage, John and I used credit cards to fund a lifestyle that was beyond our means. He’s talked about it here before, but we made short-sighted, impulsive purchase decisions, and we used our credit cards to fund those decisions. Trips to Vegas, dinners out, new tennis shoes, and movie tickets are just some of the things I remember buying.

Now, there’s nothing wrong with buying those things, or even using a credit card to do it, but our problem was that we didn’t have the money in our budget to afford them. Unfortunately, we didn’t choose to allow reality to temper our purchase decisions and so, on the credit cards they went.

How Do Credit Cards Make Money?

After discovering that the same credit card companies who had been so eager to fund my foolish lifestyle were now not so willing to help me turn over a new leaf and live a frugal lifestyle, I began to look at the cold, hard reality of how credit cards make money. Credit card companies have a number of ways of making money, which include:

  • Fees (annual fees, over-the-limit fees, late fees, cash-advance fees)
  • Interest on the revolving debt we carry with them
  • A cut of the purchase price from the merchants we make our purchases from (ranges from 1 – 4 percent per purchase)
  • Commission from selling cardholders’ names to others so more people can hawk their cards and wares at us

Credit card companies make a lot of money. Total revenue for the credit card industry was nearly $155 billion in 2011. That’s even with the weak economy driving credit card spending down among consumers. In 2010, credit card companies made nearly $164 billion off revenue from credit card accounts. Credit card companies made over $20 million from fees in 2009.

Since the Credit CARD act went into effect a few years ago, that figure has fallen by a stunning $500,000. Now, what you may know that I didn’t at that time, is that credit card debt is unsecured debt. That means there is little that credit card companies can legally do to get their money back if a cardholder refuses to pay off charges they’ve made with that company’s money. You don’t get that feeling though, if you stop making your payments.

How do Creditors Get You to Pay?

Our answering machine filled up with messages from scary-sounding people threatening to come to our home, put us in jail and all other manner of threatening actions if we didn’t pay up. It was at that moment that I realized who I had been borrowing money from all along. My credit card company wasn’t a kind, wealthy benefactor looking to fund the lifestyles of strangers. When my purchases turned from foolish Vegas trips to weekly grocery bills, my lender didn’t care.

Now I know that credit card companies care about one thing – the health of their own bottom line. They will make money off me and all their cardholders at any cost. I have made a silent vow to myself that if we ever get into such financial straits again that we don’t know how we will pay for groceries, I won’t charge my groceries; I’ll go stand in line at a soup kitchen, with all three of my kids, first.

How Can You Turn Their Strategy On Its Head?

Credit card companies rely on our foolishness to make money. They’re counting on their cardholders to let self-control and wise spending go by the wayside. They’re hoping we won’t be able to resist advertising ploys (and I work in the advertising industry, writing the taglines designed to get people to make purchases, so I know how effective they can be). The best credit cards offer rewards designed to entice us to buy, spend, and shop beyond our means. But we can turn credit card companies’ strategy on its head with a little self-control, a budget and a commitment to purposeful spending.

Today, we use rewards to stretch our budget, not bust it. We don’t make purchases that we haven’t already budgeted money for, and we use the rewards creditors are willing to give us to our advantage. Now, when I swipe my American Express card, I’m making money off of my credit card company instead of the other way around, and it all started the day I asked myself the important question – ‘How do credit cards make money?’

I talked today about my experience falling into and getting out of credit card debt and about how the revelation of who was lending to me changed my borrowing behavior forever. What lessons have you learned about credit cards?


The Best Travel Credit and Debit Cards (Updated 2017)

No matter where you go or how long you travel, preparing for how you’ll pay for things overseas is one of the easiest ways to save money while travelling, period.

Currency exchange booths at airports and banks can be convenient, but a lot of your money goes towards exchange fees (e.g. $10 per exchange) and hidden commissions padded into poor exchange rates. With a bit of research and planning, you can save hundreds, if not thousands of dollars in fees over the long-term!

Credit and debit cards are the cheapest, easiest ways to get money and make payments overseas. Credit cards are accepted worldwide, and when you need cash, ATMs are abundant in every country. ATMs are internationally networked through the Visa/Plus and Mastercard/Cirrus networks. You enter your PIN and withdraw your cash just like you would at home, while the exchange rates are automatically handled by the banks.

However, some credit and debit cards are better than others! Hidden in the fine print, banks still try to secretly add commissions and fees to each payment or ATM withdrawal made abroad. Even if you don’t travel a lot, these fees add up quickly.

We’ve rounded up the best credit and debit cards around the world that minimize or eliminate these fees, putting more money back into your adventure funds!

The best travel credit cards: Our Roundup

Credit cards have various features that can make or break your travel savings. Ideally, these are the features to look for in a credit card:

  • Foreign transaction rate of 0%
  • No annual fee
  • Competitive points or cash-back rewards program (at least 1% of the purchase price
  • Included insurance on car rentals paid with the credit card

So what are the best credit cards for travel? Check your country below to see what’s best for you!

The best travel debit cards: Our Roundup

These are the ideal features to look for in a debit card:

  • Foreign transaction rate of 0%
  • International ATM withdrawal fee of $0
  • Competitive points or cash-back rewards program (at least 1% of the purchase price)

Many banks around the world have come together to establish the Global ATM Alliance. If your card belongs to a bank in the alliance, you can make withdrawals from banks at other alliance member ATMs around the world without paying additional fees . Here’s our roundup of the best debit cards for travel.

Essential tips for using debit and credit cards while travelling

1. Pay using a credit card whenever possible.

Foreign ATMs can still inflate their exchange rates and charge withdrawal fees, but a direct credit card payment only involves the credit card you signed up with in your home country. And with a good points or cashback program, this beats any other method of foreign payment.

Bottom line? Always pay with a credit card, but NEVER withdraw cash from an ATM with one. Credit cards charge interest on cash advances from the moment you withdraw it at the ATM.

2. Never take the option of paying in your own currency

Card terminals at shops and hotels will often detect that your card is from another country and offer to bill you in your home currency. Never choose this option – always pay in the foreign currency! The exchange rate offered will be inflated by the card terminal, so if you’re using one of the credit cards recommended above, you will receive a much better exchange rate.

3. Inform your debit and credit card providers of your travels

Credit and debit cards are frequently being monitored by security departments for suspicious activity. If you’re from the U.S. and you make an ATM withdrawal in Thailand when they don’t know you’re overseas, this could appear suspicious to your bank, and your card might be locked the next time you withdraw. Give your bank or credit card provider a call and let them know when and where you’ll be travelling. Take it from us – you do not want to be stuck without cash and a useless card!

4. Obtain at least one debit and credit card on each of the Visa/Plus and MasterCard/Cirrus networks.

Even if you follow the advice in tip #3, it’s possible your card could get locked anyway. On top of that, it’s easy to find yourself in a situation where an ATM accepts only one network and not the other. For example, when we travelled in Japan, the only ATMs we could find that would even accept international cards were at 7-Eleven, and they only worked with cards on the Visa/Plus network. I speak from experience – there’s nothing more stressful than needing more cash and not being able to withdraw it, so be prepared and bring multiple cards on multiple networks.

5. Consider a credit card with included insurance

The jury is still out on whether it’s safe to rely on car and travel insurance that is sometimes provided by credit cards, and unfortunately, the only way to know for sure is to file a claim after the accident has happened. If you’re concerned about insurance, its best to be safe and purchase it from the car rental company, but if not, you might as well pay with a credit card that offers car insurance and hope for the best if you do end up in an accident.

6. Keep backup cards in your hotel room

If you lose all your credit and debit cards while overseas, you’re going to be in quite the pickle. Always keep at least one extra card back at your accommodation in case your main card or entire wallet is lost or stolen while you’re out.

7. Bring $100 USD as backup cash

When all else fails, U.S. dollars are the closest thing to a global currency that we have today. It’s the most commonly accepted currency, not only at exchange booths, but even at shops and restaurants in other countries. If there are no ATMs in sight or your cards have been stolen, an emergency backup of U.S. dollars will get you out an emergency situation.

Do you have another card recommendation? Know something we don’t? Write it in the comments below!


A good credit card to start out with

A good credit card to start out with

A good credit card to start out with

A good credit card to start out with

A good credit card to start out with

A good credit card to start out with

This content is not provided or commissioned by the bank advertiser. Opinions expressed here are author’s alone, not those of the bank advertiser, and have not been reviewed, approved or otherwise endorsed by the bank advertiser. This site may be compensated through the bank advertiser Affiliate Program.

10 Reasons Credit Cards Are Good

Credit cards are good. Seriously. I think just about everyone should have at least one credit card to help build credit, use for emergencies, fraud protection, and a host of other benefits. But I know that not everyone agrees with me, and many people think that credit cards are bad.

When you’re dealing with credit cards, there are several different things that you should know. It’s important that you understand all of the advantages and disadvantages that you should be aware of when you’re handling your finances. Your finances are one of the most important areas of your life, and it’s important that you’re getting the most out of it.

A reader who has had past difficulties with credit card debt challenged me to stop using credit cards:

Ryan, I challenge you to go three months without using your credit cards! Put the $1000 emergency fund in place, freeze your credit cards (better yet cut them up!), and go the entire first quarter of the fiscal year without the plastic.

She believes credit cards are bad and that no one should use them. She has had problems with debt, so I understand where she is coming from. But even though she doesn’t love credit cards, I think her statement takes it just a little too far. Not everyone is in debt, and many people gain benefits from their credit cards.

This article is going to explore the different advantages of credit cards and some of the different ways that you can use them. Hopefully, this post will answer any questions that you have and give you some insight into the world of credit cards. I know that everybody is different, which means that not everyone is going to need a credit card, but I’m speaking for the majority of people.

10 Benefits of Using Credit Cards:

1. Build credit history: Charging small amounts and paying them off is a great way to establish credit history. Without credit history, it can be more difficult to get loans (including good loans such as student loans or a mortgage), secure insurance, or even land a job. If you are able to secure a loan without any credit history, your loan rate may be higher as a result.

Having a good credit history can help save you thousands of dollars on all of the major loans in your life. For example, when you apply for a mortgage loan, the difference in an applicant with a good credit history versus a bad history could be thousands of dollars. Holding a credit card, and making timely payments is one of the easiest ways that you can build your credit history.

2. Emergency source of funds: I mean for a real emergency. A real emergency fund is always best, but not everyone has $1000 cash to buy emergency airline tickets, make car repairs, deal with a natural disaster, etc. And in my opinion, paying 15% interest is much better than taking out a payday loan in an emergency. Some payday loans have interest rates near 1000% if left for an entire year.

As we mentioned, having your emergency fund in cash in a savings account is a much better idea, but if you don’t have that available, a credit card can be one of the best ways that you can pay for the bills that pop up. If something were to break or some emergency pop up, it can be difficult to pay for those bills, but that’s where your credit card will come in. It will give you and your family the money that they need.

3. Fraud / Theft Protection: If your card is lost or stolen, you are only responsible for the first $50 in unauthorized charges. Fraud protection for debit is similar, but only if you notify your financial institution within 2 days. If you wait longer than 2 days, you can be liable for up to $500 on your debit account. Fraud and theft protection is non-existent for cash.

4. Disputed charges: When you dispute a charge on your credit card, most credit card companies remove the charge until the dispute is resolved. With a debit card, the money will not be returned unless you can prove the dispute in your favor. With cash, the money is usually gone.

5. Rewards: Many credit cards offer rewards including cash back, airline miles, discounts, rebates, gift cards and many others. Most of these rewards are designed to get people hooked into using the cards or spending more than they would otherwise, but used properly, rewards points can earn you a lot of money. Some credit cards offer a sign up bonus of several hundred dollars – just for opening an account and meeting a minimum spending requirement.

6. Convenience: I don’t like to carry large amounts of cash with me. If you lose it, it’s gone. If it’s stolen, it’s gone. Credit cards are small, convenient, and carry better consumer protections. They are also convenient to use to buy things on-line, or to buy large dollar items. Another, convenience is travel. I will be going on a cruise next week and if I use my credit cards I won’t need to exchange as much currency. Some credit cards don’t even charge a foreign transaction fee.

7. Car rentals: Some car rental agencies will not allow you to rent a car if you do not have a credit card. Some may allow you to rent a car with a debit card, but may lock up a substantial amount of money in your account until you return the car. You won’t be able to use those funds during that time. Many credit cards also provide additional liability insurance when you rent a car. Debit cards? Not so much.

8. Extended warranties: Many credit card companies provide extended warranties on items you purchase with their card. In some cases, the manufacturer’s warranties are doubled. That’s not a bad feature!

9. Short term loan: Credit cards usually have a grace period, after which your payment is due. This can be several weeks, which allows you to earn interest on purchases you have already made. While this may not be a big deal for a hundred dollars, if you charge a thousand dollars every month and add it up over the course of a year, you can actually earn some decent money with this. With cash or debit cards, the money is immediately removed from your account and you do not earn any interest on it.

10. Budgeting tools: Most credit card companies provide detailed transaction logs which are easily downloaded into Quicken, Mint.com, or other free money management tools. This makes budgeting much easier to track and plan. Yes, it can be done with cash, but it is much more labor intensive. And time, as they say, is money.

Honorable Mention (NOT FOR EVERYONE. )

  • Credit card arbitrage: (Note:this is only for experienced credit card users and not recommended unless you completely understand what you are doing, and are responsible enough to follow through with it). Credit card arbitrage entails taking a cash advance on an introductory 0% interest credit card offer, investing the money in a bank account to earn interest, and paying minimum payments until right before interest kicks in, then paying the card in full. Some people are able to do this to the point of having $100,000 in credit card debt, but the debt is actually cash which is earning them money in the bank. Use this calculator to determine how much you could earn from 0% balance transfers.

Credit Cards Should be Paid in Full Each Month

To get the most out of the benefits listed above, the credit card holder needs to pay the entire balance in full every month. When used properly, credit cards can be a very useful addition to someone’s life. When they are not used properly, credit cards can be BAD! In fact, I am an advocate of not using credit cards if that is not the best financial decision for your situation. Even though they do not have as many benefits as credit cards, I also think using debit cards can be a great way to make financial transactions. Always do your research, and please be financially responsible.

To Finish off My Public Challenge:

The 10 reasons I listed above are benefits for me because I do not carry a credit card balance (I do not practice the “honorable mention” benefit, but it is worth noting). My wife and I have been blessed to have been able to put together a sufficient emergency fund, and we are able to use our credit cards for our purchases and pay them off in full every month. I won’t stop using my credit cards because for me, it is not a problem. In fact, doing so would cost me money.

In my opinion, everyone can benefit from having a credit card if they use it responsibly. The key here is responsible use. If you know you can’t handle it, or don’t think you can, then don’t do it.

If you have any more questions about credit cards or how you can use them, don’t hesitate to contact me today. I would be happy to answer those questions and ensure that you’re getting the most out of your finances. I know that navigating the financial waters isn’t easy, but that’s why I’m here to help. There are dozens and dozens of credit cards on the market, which means that there is one that will work well for you.