Now that you've determined your cash flow,it's time to figure out your net worth. What is this? It's what you own,such as your house,car,savings,and stocks (known as assets),minus what you owe,such as your mortgage,car loan,student loans,and credit card debt (known as liabilities).
What's the point of such calculation? Think of it as an annual physical exam,except this test measures your fiscal fitness.While your cash flow tells you how much money comes in (your earning) and how much money goes out (your expenses),you net worth tells you what kind of financial shape you are in overall.And this will help you set realistic budgeting goals.Foe example,if you have a positive cash flow but a negative net worth (due to car loans and credit car bills),a good budget will help you direct some of that extra income to paying down your debts and building financial security.
Calculating your net worth is important for other reasons,too.You'll need to this information when applying for a loan,writing a will,or buying insurance.Lenders,for example,will check your debt-to-income ratio when you apply for a mortgage.And universities ask detailed questions about parents' assets and debts when a teenage applies for college financial aid.Your net worth also serves as a benchmark with which to compare your financial progress.Do you have more credit card debt today than you did 10 years ago?Has your home increased in value?Have you borrowed against your assets?Your goal,naturally,is to raise your net worth over time,which a budget will help you do.But before you can draw up this all-important budget,you must first have a clear idea of what you own,how much it's worth,and how much debt you currently owe.
Tuesday, May 24, 2011
7 Tips On Ways To Save When Getting A New Car
Here are some additional ways to save when it comes to getting a new car:
1. As you look at makes and manufacturers,consider a new electris hybrid car or one that uses an alternative fuel source.Not only are these cars much cheaper to operate in the long run,they are much better for the environment.And some models allow you to take a tax credit.
2. Start at the low end of your budget and work your way to the car of your choice.It's too hard to go from looking at $35,000 vehicles to making do with a $22,000 one.
3. Try to get preapproved for a car loan before you go shopping.It's better to know up front how much you can borrow and what the terms are before you lose your senses over that new car smell.Talk to your bank to see what they can do for you.Also check with several car dealers to see what kinds of loan terms they offer.
4. Learn about the current range of interest rates on new and use car loans.Check out the national averages at http://www.bankrate.com/
5. When you're working out the total cost and payment terms with the dealer,remember that getting a low interest rate and a shorter repayment period is more important than having a low monthly payment.
6. Ask your banker or car dealer about taking out a simple interest loan instead of an installment loan (also called a front-end loan).With a simple interest loan,you pay interest only on the remaining principal.With an installment loan,you pay interest on the entire principal throughout the term of the loan.This means that even if,for example,you have paid $8,000 on a $15,000 installment loan,you will continue to pay interest on the entire $15,000!
7. You can take out s home equity loan to finance your car if you are a homeowner and have enough equity.The rate may be cheaper,and the interest you pay is usually tax deductible.
1. As you look at makes and manufacturers,consider a new electris hybrid car or one that uses an alternative fuel source.Not only are these cars much cheaper to operate in the long run,they are much better for the environment.And some models allow you to take a tax credit.
2. Start at the low end of your budget and work your way to the car of your choice.It's too hard to go from looking at $35,000 vehicles to making do with a $22,000 one.
3. Try to get preapproved for a car loan before you go shopping.It's better to know up front how much you can borrow and what the terms are before you lose your senses over that new car smell.Talk to your bank to see what they can do for you.Also check with several car dealers to see what kinds of loan terms they offer.
4. Learn about the current range of interest rates on new and use car loans.Check out the national averages at http://www.bankrate.com/
5. When you're working out the total cost and payment terms with the dealer,remember that getting a low interest rate and a shorter repayment period is more important than having a low monthly payment.
6. Ask your banker or car dealer about taking out a simple interest loan instead of an installment loan (also called a front-end loan).With a simple interest loan,you pay interest only on the remaining principal.With an installment loan,you pay interest on the entire principal throughout the term of the loan.This means that even if,for example,you have paid $8,000 on a $15,000 installment loan,you will continue to pay interest on the entire $15,000!
7. You can take out s home equity loan to finance your car if you are a homeowner and have enough equity.The rate may be cheaper,and the interest you pay is usually tax deductible.
Reaching Your Financial Goals
The cost of most things doesn't remain stable over time.Prices go up thanks to inflation.How will this affect how you price your goals? For short-term goals,inflation isn't really an issue.The amount you determine to save today for furniture you won't actually buy for another 18 months will not be affected.(Not by much,anyway.)
Medium and long-term goals are different.Let's say you are saving to put a down payment on a house in five years.Using today's prices,you figure you need $30,000.Over those five years that you'll be saving,though,housing prices may rise sharply.At the end of your five-year saving period,you may discover that the down payment needed is now $40,000.You will have reached your original goal,yet you still won't have enough money for a down payment on a house.
To guard against this situation,you may want to factor in inflation when calculating the cost of your goals.This isn't quite as complicated or confusing as it sounds even for those among us who are severly math challenge!Simply scan the financial pages of the newspaper or listen to the news on TV for an inflation forecast.(Financial experts love to forecast the rate of inflation.)Take that number,let's say its 3% annually,and multiply it by the current cost of your goal.Add the result to the current cost.Repeat for every year that you need to reach your goal.The result is your inflation-adjusted price.
Medium and long-term goals are different.Let's say you are saving to put a down payment on a house in five years.Using today's prices,you figure you need $30,000.Over those five years that you'll be saving,though,housing prices may rise sharply.At the end of your five-year saving period,you may discover that the down payment needed is now $40,000.You will have reached your original goal,yet you still won't have enough money for a down payment on a house.
To guard against this situation,you may want to factor in inflation when calculating the cost of your goals.This isn't quite as complicated or confusing as it sounds even for those among us who are severly math challenge!Simply scan the financial pages of the newspaper or listen to the news on TV for an inflation forecast.(Financial experts love to forecast the rate of inflation.)Take that number,let's say its 3% annually,and multiply it by the current cost of your goal.Add the result to the current cost.Repeat for every year that you need to reach your goal.The result is your inflation-adjusted price.
Are You Drowning In Credit Card Or Student Loan Debt
1. I am drowning in credit card and student loan debt. How do I get a debt consolidation loan to pay it all off? How much can I get?
First,sit down and figure out how much you owe altogether,then go to your bank and talk to a loan officer.Assuming your credit is acceptable,the bank will loan you a lump sum of money that you can use to pay off your credit cards and other high-interest debts.Keep in mind that you must begin paying back the loan immediately,with interest,in agreed-upon monthly installments.Typically,however,the bank's interest rate and fees should be lower than your credit card interest,so you can end up saving a lot of money.
The amount the bank will lend you depends on your income.Usually,a bank assumes that you will be able to put aside up to 36% of your gross income (before taxes) to pay your debt. So,if your salary is $45,000,the bank will assume you could use up to $18,000 of your annual net income for loan payments.That's the amount the bank will probably loan you (unless they subtract existing debts,such as a mortgage or car loan,out of your gross salary before calculating that 36%,in which case the amount of your loan will be lower).
2. If I get a debt consolidation loan,isn't this just going to put me deeper in debt?
Not necessarily.While at first glance going deeper into debt seems like the last thing you would want to do,it actually makes a lot of sense to get a debt consolidation loan,but only if you can borrow the money at a lower interest rate than what you are paying on your other debts,and only if you stop racking up new debt in the meantime.
3. Is it better to pay off my credit cards first before I start putting money into my company's 401(k) plan?
Many experts suggest that you do both at the same time.Enroll in the 401(k) as soon as possible,up to the amount the company will match (assuming there is a match),then apply all surplus cash flow toward knocking down your credit card debt as soon as possible.
First,sit down and figure out how much you owe altogether,then go to your bank and talk to a loan officer.Assuming your credit is acceptable,the bank will loan you a lump sum of money that you can use to pay off your credit cards and other high-interest debts.Keep in mind that you must begin paying back the loan immediately,with interest,in agreed-upon monthly installments.Typically,however,the bank's interest rate and fees should be lower than your credit card interest,so you can end up saving a lot of money.
The amount the bank will lend you depends on your income.Usually,a bank assumes that you will be able to put aside up to 36% of your gross income (before taxes) to pay your debt. So,if your salary is $45,000,the bank will assume you could use up to $18,000 of your annual net income for loan payments.That's the amount the bank will probably loan you (unless they subtract existing debts,such as a mortgage or car loan,out of your gross salary before calculating that 36%,in which case the amount of your loan will be lower).
2. If I get a debt consolidation loan,isn't this just going to put me deeper in debt?
Not necessarily.While at first glance going deeper into debt seems like the last thing you would want to do,it actually makes a lot of sense to get a debt consolidation loan,but only if you can borrow the money at a lower interest rate than what you are paying on your other debts,and only if you stop racking up new debt in the meantime.
3. Is it better to pay off my credit cards first before I start putting money into my company's 401(k) plan?
Many experts suggest that you do both at the same time.Enroll in the 401(k) as soon as possible,up to the amount the company will match (assuming there is a match),then apply all surplus cash flow toward knocking down your credit card debt as soon as possible.
13 Tips On Cutting Cost While Budgeting
Need to spend less? The possibilities are endless.Here are some ideas to get you started:
1. Cut down on your dry-cleaning bills by buying only machine-washable clothes.
2. Bring rented videos back to the store on time. Those late fees can really add up. Ditto for overdue library books.
3. Want to see a movie? Catch the matinee show. It's often cheaper than the later show times.
4. Take a defensive driving course. In most state, you'll get a discount on your car insurance.
5. Stop with the expensive gifts,give of your time instead. Watch your brother's kids for a weekend or give a friend a homemade dinner.
6. Cook at home instead of ordering take-out dinners.
7. Cancel the premium movie channels on your cable service.
8. Cancel the premium services on your home phone. Instead of using voice mail,for example,buy an inexpensive answering machine.
9. When looking for a phone number,use the phone book instead of directory assistance.
10. Do it yourself,as in cut your own lawn; polish your nails; paint the house; wash the car,rather than paying someone else to do it for you.
11. Cancel some magazine subscriptions. Trade magazines with friends,relatives,and colleagues.
12. Buy used books or paperbacks rather than new hardback releases. Or better yet,use your local library or borrow books from friends.
13. Next vacation,camp in the great outdoors instead of staying at a pricey hotel.
1. Cut down on your dry-cleaning bills by buying only machine-washable clothes.
2. Bring rented videos back to the store on time. Those late fees can really add up. Ditto for overdue library books.
3. Want to see a movie? Catch the matinee show. It's often cheaper than the later show times.
4. Take a defensive driving course. In most state, you'll get a discount on your car insurance.
5. Stop with the expensive gifts,give of your time instead. Watch your brother's kids for a weekend or give a friend a homemade dinner.
6. Cook at home instead of ordering take-out dinners.
7. Cancel the premium movie channels on your cable service.
8. Cancel the premium services on your home phone. Instead of using voice mail,for example,buy an inexpensive answering machine.
9. When looking for a phone number,use the phone book instead of directory assistance.
10. Do it yourself,as in cut your own lawn; polish your nails; paint the house; wash the car,rather than paying someone else to do it for you.
11. Cancel some magazine subscriptions. Trade magazines with friends,relatives,and colleagues.
12. Buy used books or paperbacks rather than new hardback releases. Or better yet,use your local library or borrow books from friends.
13. Next vacation,camp in the great outdoors instead of staying at a pricey hotel.
Friday, May 20, 2011
Saving For A New Baby
So you're going to have a baby!As excited as you are ,you probably also know that along with those adorable smiles will come a steady stream of bills for at least 18 years.So,the sooner you can start putting money aside to fund the new arrival,the better shape you will be in once the baby arrives.
What kind of cost can you expect?Even before the baby arrives,there is the obstetrician's bill,which ranges from $2000 to $10000.Then there is the hospital bill and the pediatrician's bill.By the time your bundle of joy is ready to go home,you could be handed a bill totaling around $15000.That is why it's a good idea to check your health insurance policy to see exactly what it does and does not cover,then start saving accordingly.
Many people mistakenly assume that the birth itself is the most expensive baby-related cost,and they think that a baby doesn't eat much or need many things.The best way to manage these costs is to try and save for the expense of children before you have them.If you are in the family frame of mind,start rethinking your monthly expenses.Maybe forgo expensive entertainment items or put off a vacation.In other words,you need to scale back now,and certainly after your bundle of joy arrives,to accommodate baby's need now and in the future.
What kind of cost can you expect?Even before the baby arrives,there is the obstetrician's bill,which ranges from $2000 to $10000.Then there is the hospital bill and the pediatrician's bill.By the time your bundle of joy is ready to go home,you could be handed a bill totaling around $15000.That is why it's a good idea to check your health insurance policy to see exactly what it does and does not cover,then start saving accordingly.
Many people mistakenly assume that the birth itself is the most expensive baby-related cost,and they think that a baby doesn't eat much or need many things.The best way to manage these costs is to try and save for the expense of children before you have them.If you are in the family frame of mind,start rethinking your monthly expenses.Maybe forgo expensive entertainment items or put off a vacation.In other words,you need to scale back now,and certainly after your bundle of joy arrives,to accommodate baby's need now and in the future.
Your Emergency Fund
There is one financial goal that should be a high priority on everyone's list: building an emergency fund.This money will help you cover the cost of those unexpected rainy days,such as when you lose your job,the roof starts leaking,or you are seriously hurt in an accident.An emergency fund is a financial safety net.It gives you peace of mind,and it means that you won't have to stop saving for your other goals,or worse,reach for those credit cards and go into debt when a crisis come.
Most financial experts recommend that you set aside three to six months income.For most people,that is enough money to repair a problem or to cover their living expense if they are out of work for a while.This money should be kept seperate from other savings.Don't lump it in with college savings,retirement savings,or even regular checking accounts.If the funds are not kept seperate,you might be tempted,or simply forget,and use the money for a nonemergency.In addition,an emergency fund should be liquid because you may need to get your hands on cash quickly.But just because the fund is liquid,don't get into it unless it is an emergency.
Most financial experts recommend that you set aside three to six months income.For most people,that is enough money to repair a problem or to cover their living expense if they are out of work for a while.This money should be kept seperate from other savings.Don't lump it in with college savings,retirement savings,or even regular checking accounts.If the funds are not kept seperate,you might be tempted,or simply forget,and use the money for a nonemergency.In addition,an emergency fund should be liquid because you may need to get your hands on cash quickly.But just because the fund is liquid,don't get into it unless it is an emergency.
Thursday, May 19, 2011
Making Every Dollar Count
You have curbed those impulse buys.Set up a livable spending plan.You can track every cent that comes in and goes out.So,what's next? If you are committed to enjoying life and living well,but doing so within your means and not with the help of credit cards,you need to make every dollar count.It's time to s-t-r-e-t-c-h your imagination and wallet and figure out how you can get the most out for your money. This process will involve some quick adjustments to your discretionary spending.It might mean borrowing books from the library instead of buying them at the local bookstore.Switching from incandescent to flourescent lightbulbs.Hanging your laundry on the clothesline instead of using the electric dryer every day.Using grocery store coupons.Traveling in the middle of the week.Jogging around the park instead of paying for a gym membership.
In many instances,you can stretch your hard earned dollars simply by being more creative.Trade babysitting services with another parent,for example.It won't cost either of you a penny,and you will both get a free afternoon to attend yoga class or run errands.
However,these kinds of adjustments can stretch your dollars only so far.To really put some bounce into your budget,you need to play with your fixed expenses,too.That may mean refinancing your home mortgage,lowering your insurance rates,or consolidating your credit card debt with a home equity loan.
The bottom line is:Whatever you do,make the most of every dollar you spend.
In many instances,you can stretch your hard earned dollars simply by being more creative.Trade babysitting services with another parent,for example.It won't cost either of you a penny,and you will both get a free afternoon to attend yoga class or run errands.
However,these kinds of adjustments can stretch your dollars only so far.To really put some bounce into your budget,you need to play with your fixed expenses,too.That may mean refinancing your home mortgage,lowering your insurance rates,or consolidating your credit card debt with a home equity loan.
The bottom line is:Whatever you do,make the most of every dollar you spend.
Borrowing to pay Debt
Going deeper into debt may seem like the last thing you would want to do.But taking out a loan to pay down credit card debt may make sense.Why?Often,you can borrow money at a less expensive interest rate than you are currently paying to the credit card company.It will also simplify your bill paying,and if you're being nagged by collection agencies,it will get them off your back.One of the most popular borrowing options for this purpose is what is called a debt consolidation loan.
Here is how it works: A bank agrees to loan you a lump sum of money,which you use to pay off all your credit card debt.You then pay back the loan(with interest) in agreed-upon monthly installments.You'll save if the interest rate that the bank is charging is lower than the various rates you are paying on your credit cards.You will also save money if you get a loan with a fixed interest rate rather than an adjustable one.
To consolidate your debts,you can take out a personal loan from your bank.(The bank will typically ask for collateral that's an asset,such as your home or a car,to back up the loan.
Another option is to borrow against the equity in your house by taking out a second mortgage or an equity line of credit.A second mortage works much like a first mortgage.You borrow a fixed amount of money which you will receive in a lump sum,using your home as collateral.An equity line of credit,on the other hand,works more like a credit card.Upon approval,you are granted a maximum credit line that you draw on over a certain period of time.Both of these home equity options give you extra cash and let you pay it back at a rate lower than most consumer loans.In addition,the interest paid on these types of loans is tax deductible.The interest paid on credit card debt is not.
Please keep in mind that if you CAN'T CONTROL your credit card spending do not consolidate credit card bills.Armed with a fistful of zero balances,you are likely to just run up those credit card balances and that consolidation loan.Instead try consider your accounts altogether.
Here is how it works: A bank agrees to loan you a lump sum of money,which you use to pay off all your credit card debt.You then pay back the loan(with interest) in agreed-upon monthly installments.You'll save if the interest rate that the bank is charging is lower than the various rates you are paying on your credit cards.You will also save money if you get a loan with a fixed interest rate rather than an adjustable one.
To consolidate your debts,you can take out a personal loan from your bank.(The bank will typically ask for collateral that's an asset,such as your home or a car,to back up the loan.
Another option is to borrow against the equity in your house by taking out a second mortgage or an equity line of credit.A second mortage works much like a first mortgage.You borrow a fixed amount of money which you will receive in a lump sum,using your home as collateral.An equity line of credit,on the other hand,works more like a credit card.Upon approval,you are granted a maximum credit line that you draw on over a certain period of time.Both of these home equity options give you extra cash and let you pay it back at a rate lower than most consumer loans.In addition,the interest paid on these types of loans is tax deductible.The interest paid on credit card debt is not.
Please keep in mind that if you CAN'T CONTROL your credit card spending do not consolidate credit card bills.Armed with a fistful of zero balances,you are likely to just run up those credit card balances and that consolidation loan.Instead try consider your accounts altogether.
Getting Out Of Debt
One of the most fundamental financial goals that many people have is getting out of debt.As unexciting as it sounds,this is the first step to building real financial security.Once you have your debt under control,then you start thinking about fun financial goals,such as saving for the Caribbean vacation,and goals that give back over time,like retirement saving.
Getting out of debt does not necessarily mean paying every cent you owe.For most people,this is simply impossible,especially if they have a mortgage.What it does mean is paying off as many debts as possible,starting with those that have the highest interest rates,such as credit cards.It also means settling any delinquent debts to prevent further damage to your credit report and to get the creditors off your back.
If getting completely out of debt is impossible because you have a mortage or other major debt,such as student loans,concentrate on reducing your debt to a level you can live with.According to financial experts,your total debt should be less than 25 percent of your annual salary,although this varies depending on your age,income,total assets,and total liabilities.
However,if your debt consists of a few credit card balances,a car loan,and perhaps a small bank loan,then paying off all of your debt in the next few years should be a reasonable goal.But,you need to make sure you don't add new debt as you pay your old debt,or you won't get anywhere.This means putting credit cards in the deep freeze,passing up a new car loan and paying cash for a decent used car,and being aware of all the other debt traps you can fall into,then avoiding them.
Just as with any other financial goal,if you goal is to get out of debt,you need to settle on the amount you want to apply toward your debts,give yourself a deadline,and then save a set amount every month.With a little determination,you'll probably be able to wipe your debt slate clean much sooner than you expected.
It's a good idea to get out of debt before you retire.Living on a fixed income after retiring can be a strain,creatiing more temptation to abuse your credit cards.Ideally,while you're still young,you should start socking away some of your savings in a retirement plan,to ensure that your golden years are comfortable and worry-free.
Getting out of debt does not necessarily mean paying every cent you owe.For most people,this is simply impossible,especially if they have a mortgage.What it does mean is paying off as many debts as possible,starting with those that have the highest interest rates,such as credit cards.It also means settling any delinquent debts to prevent further damage to your credit report and to get the creditors off your back.
If getting completely out of debt is impossible because you have a mortage or other major debt,such as student loans,concentrate on reducing your debt to a level you can live with.According to financial experts,your total debt should be less than 25 percent of your annual salary,although this varies depending on your age,income,total assets,and total liabilities.
However,if your debt consists of a few credit card balances,a car loan,and perhaps a small bank loan,then paying off all of your debt in the next few years should be a reasonable goal.But,you need to make sure you don't add new debt as you pay your old debt,or you won't get anywhere.This means putting credit cards in the deep freeze,passing up a new car loan and paying cash for a decent used car,and being aware of all the other debt traps you can fall into,then avoiding them.
Just as with any other financial goal,if you goal is to get out of debt,you need to settle on the amount you want to apply toward your debts,give yourself a deadline,and then save a set amount every month.With a little determination,you'll probably be able to wipe your debt slate clean much sooner than you expected.
It's a good idea to get out of debt before you retire.Living on a fixed income after retiring can be a strain,creatiing more temptation to abuse your credit cards.Ideally,while you're still young,you should start socking away some of your savings in a retirement plan,to ensure that your golden years are comfortable and worry-free.
Understanding Your Credit Card Terms
Most people carry a wallet full of credit cards and say "charge it" faster than the dollar signs can ring on the cash register.But few people read the fine print as in the cardholder agreement that accompanies these pieces of plastic.The following are common terms you are likely to see on your credit card bill.Read them carefully.Misunderstanding them can cost you a bundle.
Interest Rate: Wen you borrow money,you pay a certain percentage on top of the loan for the privilege of borrowing it.That is called interest.With credit cards,your interest rate(also known as a finance charge) is the amount you are charging on the debt if you do not pay off your balance in full.Rates can vary from a low 4.5 percent to 22 percent ,or higher.Credit cards also charges compund interest.That means you pay interest on your initial purchase as well as any subsequent interest if you don't pay off the purchase right away.And remember:Credit card interest interest is not tax deductible,which makes this type of debt very expensive.
Annual Fee: This is the amount some companies charge you just to keep your credit card account active for one full year.Even if you did not make a single purchase during the year,you would still have to pay this fee.It ranges from $20 to about $75.If you pay your credit card balance in full each month,it does not make sense to use a credit card that carries an annual fee.Thanks to increased competition among borrowers,most banks don't charge annual fees anymore.
Grace period: This is the number of days you have until you are charged interest on your purchase.The annual grace period is at least 25 days.If you carry a balance from one month to the next,you generally forfeit your grace period.New purchases are hit with finance charges immediately.The only time you get a grace period is when the previous balance on your statement was zero or you paid last month balance in full.
Minimum payments: Every month,your credit card bill lists a minimum payment due.No matter how much money you actually owe,all you must pay this month is that amount.Typically minimum payment payment is based on a percentage of your total balance due.Sounds like a good deal,right?As long as you are making those minimum payments,you've got those bills under control?Wrong.Lower minimum payments just keeps you in debt longer.
Penalty Fees : Paid less than the minimum amount due?Missed due date?Went over your credit card limit?You could be slapped with a penalty fee of up to $35.Some issuers actually raise your interest rate if you make late payments or if your credit rating drops due to nonpayments or late payments of other debt.
Notes: Credit card issuers are permitted to change interest rates,add late payment charges,and even shorten grace periods as they see fit.They must send you a new agreement outlining these changes,so make sure you review this information when you receive it.
Interest Rate: Wen you borrow money,you pay a certain percentage on top of the loan for the privilege of borrowing it.That is called interest.With credit cards,your interest rate(also known as a finance charge) is the amount you are charging on the debt if you do not pay off your balance in full.Rates can vary from a low 4.5 percent to 22 percent ,or higher.Credit cards also charges compund interest.That means you pay interest on your initial purchase as well as any subsequent interest if you don't pay off the purchase right away.And remember:Credit card interest interest is not tax deductible,which makes this type of debt very expensive.
Annual Fee: This is the amount some companies charge you just to keep your credit card account active for one full year.Even if you did not make a single purchase during the year,you would still have to pay this fee.It ranges from $20 to about $75.If you pay your credit card balance in full each month,it does not make sense to use a credit card that carries an annual fee.Thanks to increased competition among borrowers,most banks don't charge annual fees anymore.
Grace period: This is the number of days you have until you are charged interest on your purchase.The annual grace period is at least 25 days.If you carry a balance from one month to the next,you generally forfeit your grace period.New purchases are hit with finance charges immediately.The only time you get a grace period is when the previous balance on your statement was zero or you paid last month balance in full.
Minimum payments: Every month,your credit card bill lists a minimum payment due.No matter how much money you actually owe,all you must pay this month is that amount.Typically minimum payment payment is based on a percentage of your total balance due.Sounds like a good deal,right?As long as you are making those minimum payments,you've got those bills under control?Wrong.Lower minimum payments just keeps you in debt longer.
Penalty Fees : Paid less than the minimum amount due?Missed due date?Went over your credit card limit?You could be slapped with a penalty fee of up to $35.Some issuers actually raise your interest rate if you make late payments or if your credit rating drops due to nonpayments or late payments of other debt.
Notes: Credit card issuers are permitted to change interest rates,add late payment charges,and even shorten grace periods as they see fit.They must send you a new agreement outlining these changes,so make sure you review this information when you receive it.
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