Credit card increase

Increase Credit Card Savings By Using Your Cards Wisely

Using debit and credit cards wisely can lead to surprising savings.

Carrying debit and credit cards means having to maintain some amount of debt. But you’ll manage your debt much better with wise credit card use. For instance, with extra planning and research, you’ll avoid incurring pesky fees and leverage your good credit — all effective ways to bring down your card payments.

Here are some of the ways I’ve optimized the use of my debit and credit cards:

With a return guarantee, you’ll get a refund from a credit card issuer for the purchase price of an item that you can no longer return. If a retailer refuses to accept something you’d like to return, you may still be covered by your card’s return guarantee for up to 90 days. I’ve noted that “return guarantee” is also sometimes referred to as “return protection”. American Express cards as well as some Platinum Visa cards carry this benefit. It’s a good idea to check with your credit card company to see if you have this option.

There’s such a thing as purchase protection insurance that many credit cards offer for free, and not many people are aware of this! Purchase protection reimburses you for damaged items or stolen goods that you purchase through your credit card. Again, as an example, American Express protects you against accidental damage or theft for up to 90 days after purchase. Just like with return guarantees, check your current credit card agreement to see whether you’re covered for this. This is why I place big ticket items on credit (which I then pay off in full or as quickly as possible) — so I’ll have additional reassurance should something go wrong.

How do you spend your money? How familiar are you with your spending habits? Well, the more you have a handle on how you spend, the better will it be for you to leverage your spending patterns. For instance, some of the cash back credit cards can provide you with money back on certain spending categories, as a percentage of your purchase. If you drive a lot, perhaps you’d benefit from using gas credit cards.

I only use these cards if I can afford to pay my balance in full each month. Rewards are only worth getting if you’re going to spend on the items anyway and if you’ve got your debt load under control. That said, there are ways to maximize these rewards: say by knowing about the latest points promotions and scheduling your purchases accordingly to get the most rewards points.

In the past we’ve received a CD player, DVD player and gift cards by using credit card reward programs. Even if you don’t need these items yourself, they make great gifts!

Credit card increase

If you own a debit card, why not consider using it as a credit card? We all face that moment when the cashier asks, “Is it debit or credit?” At that moment, instead of entering your debit card PIN number, tell the cashier that you’ll use credit. By using your debit card this way, you won’t end up paying for ATM or bank fees (though the merchant gets a hefty charge). I actually save around $30 in fees every month with this approach. When I use an automated keypad and it requests my PIN number, I simply choose cancel, and the pad gives me the option to ring up my transactions as credit.

At one point, American Express offered price protection, but it’s since been replaced by their return guarantee policy. When your card has price protection, you can get price adjustments if you find a better deal elsewhere within a period of time (usually 60 days). Recently, the Citi Premier Pass Elite card began offering the benefit to provide its customers a refund of up to a maximum of $250, if they found better prices for items within 60 days. The World MasterCard provides a similar benefit. This can mean some serious savings for cardholders who keep their eye on the latest sales.

6. Get discounts with exclusive retailer and credit card brand coupons.

Some credit cards offer discounts, if you buy from certain retailers. I often take advantage of such special promotions to save money. For instance, Visa is currently offering free shipping and 10 percent off at Blue Nile until February 28, 2009; while Discover hikes the Discover credit card rewards (5% to 20% cash back bonus or double miles) that cardholders receive if they shop at Discover’s exclusive shopping site.

7. Check on your credit card’s warranty protection policy.

Did you know that some credit cards will double your warranty period when you purchase a one year warranty? Case in point: When you buy a warranty, World MasterCard gives you up to one year of additional free protection. It’s a good way to get an extended warranty on your pricey home entertainment system or sensitive digital camera!

8. Beware of blocked funds when you use debit cards.

When you use a debit card, some of your funds may be put on hold. More funds than what is needed to make your actual payment or transaction may be blocked to protect against fraud. Consequently, if you’re not aware of this occurrence, it’s quite possible that you may end up overdrawing your account. Transactions such as reserving hotel rooms and purchasing gas at the pump often cause these blocks or holds.

I always recommend using cash more often, as this will likely keep your spending down (according to studies). For the convenience though, debit cards and prepaid cards could help with controlling the amount of money you’ll want to spend. I have two debit cards: one for major credit transactions and another for spending money. This keeps me away from using credit cards without overdrawing my accounts. It’s true that credit cards have many advantages over debit cards (security being one of them), but I prefer to limit my credit card use in order to manage my debt.

Often, people aren’t aware that certain financial transactions can affect their credit scores. Closing your bank account shouldn’t have an effect, but it’s quite possible that closing credit card accounts may lower your credit rating. On the other hand, closing a debit card account shouldn’t affect your credit score either, so such cards give you more flexibility. If you find a debit card with lower fees, you can simply close your debit account and open another with no penalties.

Copyright © 2009 The Digerati Life. All Rights Reserved.

How To Increase Your Credit Score Quickly Without A Credit Card

Credit card increase

It’s so easy to laugh when someone states that their credit card put them into debt. It’s not the card that puts anyone into debt; it’s what you do with the card. The credit cards in your wallet are actually inanimate objects that cannot actually do anything without you. Without your actual hand to pick up the card, swipe it and make purchases with it that you cannot afford, the card is useless and absolutely not a threat to anyone in your household. It’s always just so funny to me to hear people say that they don’t carry credit cards since they put them into debt. It’s just not the truth.

However, credit cards can put you into debt if you are not responsible with them and you do not pay them off in full at the end of each billing cycle. Now you’re in debt, you’re behind on your payments and your credit is shot. You know you need good credit to get a good credit card, a loan, a mortgage or even a job in many instances. What do you do when your credit is shot and you don’t have a credit card to use responsibly and help you fix it? You improvise; you learn that you don’t need a credit card to repair your credit at all. You can thank me for this information now, but you don’t have to.

You’re not going to fix your credit or rebuild it to a nice level if you don’t face the truth. The truth could be many things. You could have made a mistake. You could have been the victim of identity theft. You could have lost your job and been unable to find a new one far longer than you were able to continue paying your bills. There are so many reasons and ways that you and everyone else in the world might have gone into debt, but the truth remains the same. You have to face the truth.

  • You cannot spend what you don’t have
  • You cannot live above your means
  • You cannot make only minimum payments
  • You cannot apply for credit you cannot afford
  • You cannot skip payments
  • You have to be careful with your money

That’s the truth you have to face. You will never get out of debt and make any improvements in your financial life until you face these simple truths. Now that you know this, it’s time to learn how you can rebuild your credit with a credit card.

It is pretty simple, pretty straightforward, and pretty much the simple truth. You don’t need a credit card to build your credit if you have bills in your name and you pay them on time. I mean, it’s really just that simple.

This is the biggest mistake so many people make with their credit; and it’s a bad one. Let’s say that you’ve had a credit history for 15 years. The first 10 years of your credit history, you always made your payments on time, you kept your card balances low and you had excellent credit. You lost your job and you were unable to pay your bills for a few years on time every single time. Now your credit is shot, but it’s only been like that for the past five years.

You might be tempted to dig into your wallet and get those old cards you had when you first gained your credit history 15 years ago and cancel them so you can lower your debt-to-income ratio and up that score. DO NOT DO THIS. Those old cards show a long credit history; and a much better one than the more recent cards. Keep them – you need them. A credit history with a card from 15 years ago with no late payments and a low balance for 10 years is far superior to a credit history with nothing but cards from the past 6 years all with late payments and missed payments.

This is not anything that really affects your credit per say, but it does more so than you might think. When you have an emergency fund that is worth several months of work, you can worry a bit less about missing a payment or making late payments on any of your bills. It won’t help your credit in the least to have a nice savings account with an emergency fund in it, but it will help should anything happen in the meantime.

Listen, you know you messed up and it’s all your fault, but it’s not such a bad idea to take a look at your credit report. After all, most people’s reports do feature mistakes, and you can clean those up and potentially increase your score without doing much else. Perhaps you have a credit card that was written off after you stopped making payments on it 8 years ago. It’s your bad, but the credit bureau’s job is to wipe that card from your credit history after 7 years. If it’s still there, it’s still having a negative effect on your score. Call, dispute it and get it off that report.

credit card increase

Credit card increase

Credit card increase

Credit card increase

Credit card increase

While you go about it, please note that if it is difficult for you to keep your spending habit in check, all the benefits of getting a credit card limit increase will be pointless.

I ncreasing your credit card limit is not about having the extra spending power. It has several long term benefits. First of all, it has a positive impact on your credit score. It will reduce your overall credit utilisation ratio. This means more credit lines will open for you at a much lower interest rate. Secondly, the surplus limit means you will always have extra funds available for emergency.

Lastly, it is always better to get an increase in the credit card limit rather than applying for new credit card, as your credit score is directly affected by the new credit accounts. Here are a few ways in which you can enhance your credit card limit.

Ask for credit card limit increase

Sometimes, it is as simple as asking your credit card issuers for an increase. If you have maintained a good spending and payment record, the issuer is more likely to accept your request. However, do not ask for it too soon.

If your credit card is less than six months old do not try to negotiate with the issuer. Your credit card issuer will view it as a risk.

Instead, wait for a few months and in the meanwhile build a good credit. Also, when making the request, do not ask for more than ten to twenty per cent limit increase. Any amount higher than that is likely to get declined.

Spend money on your credit card frequently and responsibly

Before you start requesting or negotiating with the issuer, you have to ensure that there is a good basis for your request. For this, you will need to maintain a good spending as well as payment history. Make frequent credit card purchases and pay the full amount every month, before your due date.

This will make you look like a responsible credit card user, who can be qualified to get the increased limit. To do this, you will have to hold the cash payments and start using your credit card more often. Use the cash to make full payments on your credit card. It will also positively affect your credit score.

Choose the card on which you want limit increase

This card should be the one on which you get the best rewards or the one which you use more frequently. There is another reason to limit your request to just one or two cards. Every time you request for a credit limit increase, the issuer will pull your credit report.

Too many requests for credit report at the same time can dip your credit score, as it seems to indicate that you are desperately trying to get new credit, which is not a good sign for the credit card issuing company.

Now is the time to put all your negotiation skills to work for you. Start with reminding the issuer that you have had a long history with them as a very loyal customer. Tell them how you have maintained a good spending and payment record on the credit card issued by them. If you are expecting a promotion or a pay rise, make sure that you let them know about that too.

However, if you are considering a job change, never mention that to your issuer. Even if you are getting a 30 per cent salary hike in your new job, your credit card issuer will considered the job change as a risk.

If the issuer is still not willing to increase your credit limit, you can use the last resort of letting them know that though you have other credit card offers, you wish to be their loyal customer.

Photograph: Simon Cunningham/Wikimedia Commons

The author is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India's first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.

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