Credit Card Traps, And How To Avoid Them
Buy it now but pay later. It became the American way. Without any hesitations we can say that a credit card is very useful and powerful tool. However, with the rising amount of American people using credit card or even cards, too much of a good thing can lead to big trouble. Read more... 
by Steve Gillman
'Credit card wealth secrets', the ad read. I assumed it was yet another over-hyped unworkable scheme. It probably was, but it made me remember the times in my life when I have used credit cards to make money.
Credit Rewards Introduction
Increasing competition for customers caused different credit organization to issue cards with various offers for rewards programs, offering cash back and points that can be exchanged for goods and services such as air miles, hotel stays or car rental. With all obvious advantages reward credit cards may not always be the best option among the variety of credit cards. Read more... As Robert Kyosaki says, there's 'good debt' and 'bad debt'. Borrowing for consumer items is bad-debt. You limit your future options, and you get less in life. It seems like more, because you get it now, but with interest, and the tendency to pay more when buying on credit, you'll never be able to buy as much as those who pay cash.
Credit card wealth secrets have to revolve around the idea of 'good debt'. This is any borrowing that increases your income, or produces capital gains. So how do you get your credit cards to start doing that for you?
Fraudulent Transactions
Many banks that are the Issuers and Acquirers installed different fraud detection systems that determine according to special algorithms suspicious transactions on a cardholder accounts or a merchant premises as well. After detection banks have to take the necessary actions to investigate the suspicious transactions and confirm with the legal cardholder if these transactions were made by him. If the response from genuine cardholder is negative that means they`ve got a credit card fraud! Read more... Credit Card Wealth Creation
A good friend once borrowed $6,000 from me at 9% interest. I didn't have the money at the time, but I had a credit card offer for a cash advance for 8 months at 5% interest. I loaned him the money for six months. Okay, a 4% spread meant only a $120 profit in the end, but it was easy.
A better example is when we bought a little house in Montana. A cash offer would get us a great deal, so with our savings and a $2,000 worth of repairs on a credit card, we made it work. We paid less than $100 in interest before selling the house a few months later for a $6,500 profit.
Credit Cards: Security and Fraud
Countless opportunities for fraud are the consequence of the low security of the credit card system. It creates a huge black stolen credit cards numbers market, which generally are used before the cards are reported to be stolen. The goal of the credit card issuing companies is not to eliminate fraud, but to "reduce it to manageable levels", when the total cost of fraud and fraud prevention are minimized. Read more... My money was tied up when my brother found a truck we could make some money on. I put it on a card, and paid maybe $35 in fees and interest. The car was sold ten days later, and we split the $950 profit.
A friend of mine once borrowed $300 at more than 100% annual interest ($50 for two months). Why? To buy the tools he needed to re-start his dry-walling business. He probably made enough the first week to repay the loan.
Bankruptcy credit card
If you have ever been in bankruptcy, it will be difficult to build up your credit score again. The main reason for it is that noone of the major credit cards issuing companies is eager to offer you a credit card due to your past. Now there are only few things you can do to restore your credit status. Read more... The point is that any debt - whether from credit cards or other sources - can be good debt if it creates more than it costs. I have known people that have started successful businesses or 'flipped' houses for big gains with the help of credit cards. Get rich quick? Doubtful, but then my skepticism almost made me forget my own 'credit card wealth secrets'.
Cash Back vs. Rewards Credit Cards
Some credit cards will offer you cash back, others reward points. There are also cards that allow to donate your ‘cash back’ points to a charity and those that put your cash back into a special savings account for college. Read more... |
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