Money Green Life

I was catching up on my daily finance news today and it appears that Americans are doing pretty well for themselves in terms of eliminating their credit card debt. According to the news, the average such debt fell to $4,951 from %5,719 from a year ago. It means that more people are aware of their debt and making their payments on time! Perhaps, financial blogging sites, such as Money Green Life, have contributed to the success of helping people eliminate their debt. I believe that decreasing debt is virtually the same equivalence to saving money. They both will ultimately help you increase your overall net worth. When you save money or decrease your debt, your net worth naturally goes up, the outlining motto for Money Green Life.

So, what have Americans done right to help themselves decrease their credit card debt? The answer to this question is obvious and simple.

1. More borrowers made their payments on time. This is key. If you don’t make your payments on time, late payment fees on top of the interest fees are accrued and add on to your overall debt. By paying on time, you avoid such late payment fee.
2. People are spending less and borrowing less. With the current economic condition, people are becoming aware that they need to be more frugal in their spending to survive. They’re also borrowing less money because of the same reasons. On top of that, banks aren’t really lending as much as before, such as home equity line of credit loans.
3. Home foreclosures, ironically have also contributed. When people don’t make their home mortgage payments, they have a sudden cash boost, allowing them to make extra payments on their credit cards instead. Sounds pretty silly, but for short-term solution, this has been the case for many Americans.
4. If you have fewer overall credit available by carrying less cards, then the likely outcome of that is to spend less. Credit card applications have decreased drastically over the past year, forcing Americans to depend more on their cash than credit.

Personally, I have never carried a balance on any of my three credit cards. Carrying a balance implies that you’re spending more money than you can afford. When you spend more money than you can afford, it usually leads to debt. Some people just can’t help it and they will be in debt no matter what they do for the rest of their lives.  So, if you carry credit card debt now, transfer your balance to a new 0% balance transfer credit card, and try spending less money. Then you’ll be on your way to having a positive overall net worth.

I remember back when I was a freshmen in college signing up for my very first credit card. It was so easy. There were booths everywhere, everyday for credit cards for college students. Not only that, they would give out t-shirts and other gifts when you sign up. It was so easy and tempting for any college student to simply go ahead and sign up for one. I think i signed up for 5 cards that year.

Having too many credit cards as a college student can be very dangerous. With no regards to saving and lack of proper money management education, this is where credit card debt started for many of us. Follow these guidelines when opening a credit card and you should be credit card debt free when you graduate.

1. Don’t use credit card often. Use cash as often as possible. If you can’t afford to buy something with cash, then you can’t afford to buy it with credit card.
2. Don’t tell your friends about your new credit card. When there’s opportunity, they’ll take advantage of you and your card.
3. Pay your bills on time and in full. Interest rates on credit cards are sky high and if you’re not careful, fees can accumulate quicker than you ever imagined.
4. Have only one card, with $500 minimum balance. As a college student, you don’t need anything more than that.
5. When you need cash, don’t take cash advances. Going hungry is better than taking cash out with your credit card. Interest rates on cash advances are typically higher than on purchases.

With that said, Citibank offers two credit cards for college students. You must be at least 18 years old with a valid social security number. You must also be a college or graduate student as you must enter your school information on the application.

Citi Dividend Platinum Select For College Students

• 5% cash back on  eligible purchases at supermarkets, drugstores, gas stations, convenience stores & utilities including cable for 6 months, and 2% thereafter
• 1% cash back on all purchases
• 1% cash back on cash advance transactions
• 5% cash back on balance transfers transactions for $1,500 or more
• Identity theft protection
• No Co-signer required
• Photo option
• No Annual Fee

Citi mtvU Platinum Select Visa Card For College Students

• 2,000 bonus points for having a 4.0 gpa. 250 points for 2.50 gpa. These points may be redeemed up to 2 times per year
• 10% discount on music and entertainment at shop.mtv.com
• 5 rewards points for every $1 spent on books, movies, restaurants, and music. 1 point per dollar on every other purchases
• 25 bonus points for paying bills on time and not exceeding the credit limit.
• 0% APR for 7 months on purchases
• Cash Advance Fee is: 5% of each cash advance: $10 minimum
• Balance Transfer Fee is: 4% of each balance transfer: $5 minimum
• No Annual Fee

I was watching TV one day with a few friends and they asked me what an APR was as we finished watching a Toyota commercial. I explained to them what it meant and then it dawned on me that not everyone understands the meaning of some of the key financial terms we toss around everyday. So I took it as an opportunity to make it into a blog post to define some of these key terms. As I was even writing this post, I had to look up a few terms myself just to make sure I had it right.

1. APR

Annual Percentage Rate refers to an interest rate that’s tacked on to the borrowed money. For instance, if you borrow $10,000 and the APR is 5%, then you would end up paying $500 in interests at the end of one year. However, if you borrow $10,000 and the interest due is 5% at the end of one month, then the APR jumps to 79% (1.05^12).  On the flip side, if you borrow $10,000 with an APR of 5% and pay back in one month, you would only end up paying 0.42%. Read the rest of this entry »

If you have credit card debt with high interest rate, consider transferring your balance to a brand new credit card that offers 0% APR on balance transfers. Capital One Platinum Prestige Credit Card is one of the market leaders in 0% balance transfer credit cards. Currently, when you sign up for Capital One Platinum Prestige card, you receive 0% APR on balance transfers until June 2011 and also 0% APR on purchases until June 2011. There is no annual fee for this card.

Alternatively, you can sign up for Citi Platinum Select Mastercard which also offers 0% APR on balance transfers for 18 months and 0% APR on purchases for 12 months. Refer to Citi credit card review for additional information.

Discover just upped their cash back bonus from $50 to $75 when you sign up for Discover More Card and make $500 in purchases within the first three months, effective starting July 1. This is probably due to heated competition from Chase Freedom Card, which gives $100 cash back bonus. The More Card offers these other features as well:

Read the rest of this entry »