When is it better to use a Credit Card?

The average person had credit cards and a debit card and uses the credit card when making big purchases and the debit card to make smaller purchases. Why? What’s the difference? Is it better to use credit cards exclusively? Or, is it better to use debit cards exclusively? When is it really a better idea to use a credit card over a debit card?

imagesCredit Card Points

This is the best reason to use a credit card – points! When you have a credit card that give you points as an initiative to use them usually you will get 1 point for every dollar spent, but, sometimes 2 or 3 depending on the card. Accumulated points can then be used to purchase several different things depending on the card that you have. The downside: Credit cards that offer points advantages generally have higher interest rates and maybe a fee to be a member – remember to pay off your cards to get the most out of its points reward system.

Debit Cards Track Expenses and do not Charge Interest

With a credit card it’s easy to spend excessively, if you have a tight budget this can make it harder to stay on track. If this is the case for you, a debit card is probably a better choice since it takes the money right out of your chequing account, forcing you to keep track of spending.

Another stark difference between credit and debit cards is interest charges. Credit cards charge interest on any accumulated debt on a monthly basis. If you spend excessively on a credit card without paying it off you will incur interest and this may be a substantial amount based n your balance and spending habits. Debit cards on the other hand do not charge interest on purchases since the use your money to make them.

Learning how to use debit and credit cards responsibly is an important skill. If you are someone that cannot use a credit card responsibly then it’s best not to have one, if you frequently pay down credit cards so that interest is not incurred using a points card as much as possible can be beneficial.

How You May Be Paying Too Much in 2014

The New Year comes with scores of resolutions, many related to personal finance choices. Discretionary expenses such as dining out or fancy coffees are easy to identify. However, the savvy to look beyond obvious cuts further improves your personal balance sheet.

Certain items such as insurance are required and practical. Other costs may involve impractical sacrifice, such as living off dollar menus at fast food restaurants or giving up your car.

Low cost living needs planning but does not require excess compromise. This concept applies to areas outside of personal finance, as well. Elliott Broidy, a film financier, used cost effective methods through social media and crowd funding to help innovate movie marketing this past summer.

698567-old-leather-wallet-full-of-credit-cardsHere are common sources of overpayment to slash in 2014:

Cost of Car Ownership:

A sensibly priced car is easily justified as leverage, instead of debt. Your vehicle makes commuting to work easier, which saves time and increases productivity. Cars also open social outlets that have value beyond money. Instead of giving up on cars, try these options:

Adjust Auto Insurance:

As your car declines in value, raising the deductible is a practical choice. Major repairs may be impractical for older cars. Unfortunately, many drivers fail to raise deductibles to match their vehicle’s worth. The result is years of overpayments.

Even if you plan to keep a car, the monthly savings from raising auto deductibles can exceed out of pocket expenses for auto repairs.

Refinance Your Car Loan:

Interest rates are near record lows, which makes auto refinancing an attractive option. This particularly applies to those who bought their cars over a year ago. If credit issues previously limited your auto loan choices, on time payments may have opened new options.

Income Taxes:

Tax refunds do not utilize the time value of money, which states a dollar (or your currency) is more valuable today than in the future. In economics, money’s time value underlies inflation and other concepts.

For your everyday life, increased take home pay helps you start investing or finally put a dent in principal debt balances. The compounding effect of smaller, but more regular, investing or debt reduction provides better results than periodic lump sums, such as tax refunds.

Consider increasing your tax allowances to improve cash flow. Using an online tax calculator helps you increase deductions without owing money to the IRS. If you live outside the U.S., please choose a withholding calculator that is country specific.

Credit Card Balances:

Balance Transfers:

Aside from using compounding to reduce interest expense, balance transfers can accelerate debt payoff. If you have made timely payments for the past year or more, other credit cards may offer lower interest rates to transfer balances.

Be sure to understand the transfer terms. These include transfer fees and how long the lower interest rate applies.

Negotiate with your current card company:

Credit card companies rarely offer proactive rate reductions to current card holders. You could leverage an on time history to ask for a lower rate, especially by mentioning other cards are offering better incentive.

Home Insurance:

Identify Excess Coverage:

Some homeowners pay to cover their house and land. Unless your land is used to generate income, a fire or flood is unlikely to affect its use. By ensuring that only irreplaceable items are covered, your home insurance premiums will be slashed.

Raise Your Home Insurance Deductible:

How much is your home insurance deductible?

Many homeowners carry low deductibles that spike premiums. Upping your deductible by just $500 provides adequate coverage with improved cash flow. The money is disposable income that improves personal finances with little risk to your home.

Improve Your Cash Flow without Sacrifice:

Disposable income is often difficult to increase in the short term. By understanding how to meet legal and personal obligations with less overhead, your cash flow can quickly improve.

How to Shop Smart This Holiday Season

The holidays bring about a lot of cheer, but also a lot of stress for many as the financial burden of giving that perfect gift may sometimes be overwhelming. Here are five tips that you can use to shop smart and save big this holiday season:

santa-online-shoppingAvoid the last minute shopping spree

One of the best ways to not get overwhelmed financially during the holiday season is to buy gifts in advance and to space out your purchases. A great way to do this effectively is to know exactly what you are looking for and to grab it when you see it on sale, or even when you have a few extra bucks to spare that week.

Make a list

Write a Christmas gift list that works with your budget, it’s how Santa does it! This will keep you in check when you do your shopping and prevent you from blowing your budget on impulse shopping.

Buy online

Avoid the crowds and skip the lines by doing your shopping on the internet. Shopping online can help you save a bundle and can prove to be very convenient at the same time. Many retailers offer online discounts that you cannot get in store, in addition shopping on special days like Cyber Monday can save you a bundle.

When shopping online it’s important to make sure that your information is safe and secure. Under the internet sales rules websites should include the retailer’s name, address and e-mail address and the website needs to be secure. In addition, using a credit card for payment is the best way to protect your purchase as it gives you statutory protection under Section 75.

Credit cards can be rewarding

If you are disciplined enough to do it, cash back credit cards can be very rewarding. This isn’t “free money” but by using a credit card that offers cash back rewards, and by being responsible enough to pay it off promptly, you can earn an extra $50 to $100 depending on your budget. This extra cash can be used toward a gift for a loved one or even yourself.

Keep all your receipts

No matter where you shop make sure that you keep ALL your receipts. The reason to do this is that there is always a chance that retailers will discount or mark down an item after you have already purchased it. If you find that a gift that you bought goes on sale you can bring in your receipt and ask for a price adjustment. Most retailers will honour the discount as long as it is within the window of their return policy, this can be for up to 30 days depending on the store.

Being a smart shopper this holiday season can save you a bundle as long as you put your mind to it. Also remember that it’s always the thought that counts. So, even if your budget is tiny, your heart is big and that’s what the holidays are really all about!

Top 5 Free Phone Apps for Managing Personal Finances

Managing your personal finances and expenses doesn’t have to be a chore, especially when you are able to have all the information you need right at your finger tips. We have compiled a list of the top 5 Phone apps for helping you to manage your personal finances.

Manilla

Manilla_App_RemindersManilla is available for free on both iPhone and Android platforms. It is designed to help you keep track of your bills and does this effectively by combining all of your financial accounts. Manilla organizes your information neatly into a digital filing cabinet of statements, bills, and notices.

Expensify

ExpensifyExpensify makes tracking business expenses easy. Designed for the frequent, or not so frequent, business traveler Expensify allows users to scan and archive receipts for expenses, track kilometers traveled, link financial accounts and create easy to read expense reports.

Slice

slice-app-application-for-purchases-1-28-2012-bSlice is the must-have app for online shoppers. Using slice you can link multiple e-mail accounts and sort through them to consolidate and manage all of your online purchases in one easy to find place. Slice makes keeping track of your online purchases easy by providing real-time tracking information, images of your purchase, receipts, shipping information and more. This app is available on both Android and iPhone platforms.

Mint

mintMint is one of the most effective personal finance apps we have ever used, it is available for both iPhone and Android. This phone app allows users to connect their various accounts (chequing, savings, investments, etc) and keep track of spending by automatically categorizing every dollar that is spent. Through using this app users can get insights into how their money is being spent and can adjust their spending habbits to budget goals, this can also help you to get out of debt or to save money by not making unnecessary purchases.

Budget Buddy

budgetbuddy

Available on iOS and Adriod, budget buddy is designed to help you to track and keep track of expenses by taking pictures of your receipts, bills, register totals, etc. The live feature in this app allows users to track spending as soon as it is documented and offers monthly charts of your spending.