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How to Save Money in College: Students can Achieve Financial Freedom by Saving Money in College

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How to save money in college

Average student loan debt increased to $30,000, reports the US News. The numbers were based on a report provided by the Institute for College Access and Success. Average debt amounts ranged from $2,500 to $71,0001 The numbers tend to be higher for private colleges and top-ranked institutions with higher tuition costs. In addition to actual student loan debt, college students also accumulate a large amount of debt on credit cards and other loan instruments, including help from family members.

Even with a well-paying job, it could take years to repay these loans and become completely debt free. What college students don’t recognize is that a lot of this debt can either be minimized or avoided. Consider this: If the average debt is $30,000, you need to either save an extra $7,500 every year (of a four-year degree program) or earn an extra $7,500 every year in order to come out debt free. That works out to an extra $625 in way of either increased income or lower expenses.

Be sure to use that amount to setup a debt repayment account or a savings account. Don’t touch it for any other purpose if you are truly serious about coming out of college debt free. It might sound like a sacrifice now, but you will thank yourself later.

Another alternative would be to secure financial aid, scholarships, grants, tuition waivers, or other arrangements that would allow you to study without paying a single dime — yes, there are plenty of programs that allow you to do that.

Not sure if you can save that much as a college student? Read our entire post How to Save Money in College: Students can Achieve Financial Freedom by Saving Money in College and you will come away with some creative ways to save money in college.

[You can also read our post on ways to pay for college.]

Here are some best ways to save money in college

Money Management 101

A complete money management guide is beyond the scope of this article, but we will provide some basic ideas to help you manage the money you will be saving by following our tips.

1. Earn as much interest as possible. Setup savings accounts, Certificate of Deposits (CDs), and credit union accounts that will offer you some interest on your savings and make it a habit to deposit your monthly savings in these accounts. Do not touch the money until you graduate — and that too to repay your debt.

2. Create an automated savings schedule. Many banks will allow you to automatically deposit a pre-determined amount in your savings account. As soon as you receive your pay check, the pre-designated sum will be transferred to your interest-bearing account. This will keep you on track and prevent any lapses.

3. Steer clear from the debt trap. It might be tempting to use your credit limit to buy those fancy shoes or that game you just can’t resist, but eventually these small purchases will add their way and put you in “debt prison” for a very long time to come. Sure, you need to build your credit and use that college student credit card once in a while, but be sure to pay it off as soon as you can. This will not only prevent debt accumulation and credit issues, it will also save you a bunch on interest rates and exorbitantly high financial charges levied by credit card companies.

4. Use credit cards that offer incentives. There are plenty of rewards credit cards that offer either cashback or points or incentives in some shape or form. Use these cards for larger purchases. Be sure to track your points or rewards balance as they do have an expiration date. As pointed earlier, steer clear from debt but if you do have a little debt, transfer the balance to either a 0% APR or low APR credit cards and reap the rewards of a lower interest rate for the initial balance transfer. Again, be very careful because once the “honeymoon phase” is over, your interest rate will jump to a very high amount. Don’t be tempted to sign-up for additional cards just to keep transferring balances. Ultimately, you will end up in debt prison. You can research and compare credit cards here.

5. Use a debit card. Despite the lure of rewards points and other incentives, credit cards do have a tendency to be mis-managed. It is much easier to keep your finances in track by using a debit card. It works just like a credit card, but restricts your purchases to the amount you have in the bank.

6. Setup automatic payments. Utilities, phone bills, and other recurring expenses — all of them need to paid every month. If you skip even one payment deadline, the fees, interest expense, and penalties could have a huge impact on your finances. Free automatic bill payment services are provided by most banks and credit card companies and it takes just a minute to sign-up.

7. Learn to differentiate between needs and wants. Needs are something we can’t do without (such as food, water, shelter, clothes, and the like) whereas wants are items that we desire. The needs have to be taken care of first while the wants can wait a little. When you learn to differentiate between the two, you will make wiser spending decisions and save a lot of money every month.

8. Create a simple budget and stick to it. Account for the inflow of money (such as money from allowances, waiting tables, working at the library, etc.) and outflow of money. Make sure the outflow is lesser than the inflow. Go through your spending patterns with a toothcomb and throw out as many expenses as possible. Anything unnecessary could wait until you are out of college.

Create a budget and try to find creative ways to outperform your budget goals. When you achieve a victory and beat your budget, reward yourself with a small incentive, such as a movie ticket or game ticket. If you don’t meet your budget, don’t hesitate to create a small dis-incentive, such as cutting away on cell phone minutes or “cook at home nights” for the next seven days.

9. Maintain a log. If you don’t maintain receipts, spending logs, and other information that will help you track your income and expenses, you are never going to make progress on the money saving front. Don’t be misguided to keep everything in your head. There is enough text book material to store there. Let the log do its job.

10. Document everything. Have a shoebox to store all receipts, pay stubs, logs, spending spreadsheets, and other documents. They might help you at tax time and if you end up starting a small business (we’ll get to that a little later in our post “How to Save Money in College”), you can use the documents to claim expenses as well.

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Money saving tips for college students: How to save on living and food-related expenses

11. Room and board. Living in a dorm is one option to save money as a college student, or you could consider sharing a small studio apartment with a friend. Both parties will save on living expenses — almost half. You can also look for jobs in the college dorm itself. Some college dorms will waive your living costs and save you thousands every year in exchange for some dorm maintenance duties.

In recent years, a lot of college students are opting to stay with parents or family members to cut on living expenses. Some students have managed to live in a car or van and save money that way, but we don’t recommend that. College education could be an intense endeavor and it is important that you to stay healthy in order to focus on your studies.

12. How can college students save money on food expenses. Eating healthy is important during every stage in life, but even more so during college. Unhealthy eating could not only harm your health, it may even impact your grades and overall performance in college. There are several ways to save on food expenses. First, create a healthy and balanced meal plan and follow it to the T. If you need help choosing the right foods, please visit ChooseMyPlate.gov for free tips and nutritional advice.

Cooking on your own is best. Once in a while, you can take advantage of free meal opportunities offered through food tasting events, on campus food fests, and the like. If there is a restaurant you particularly like, speak to the owner to offer some service such as maintaining their website/Facebook Page, or performing some small administrative tasks in exchange for free meals. Waiting at the restaurant is another option to get free meals. If your parent or family member is a member at one of the large wholesale outlets, ask them to buy an extra membership card for you. You can buy your food supplies from there and also take advantage of free samples that are handed out on a regular basis.

Other options to save on food could include places of worship, food banks, soup kitchens, and non-profit initiatives that cater to low income individuals.

Junk food, sodas, chips, and other food items that are absolutely discretionary could cost you your health and wealth. Avoid them.

13. Collect coupons. There are plenty of coupons on campus, but you could also speak with neighbors, friends and relatives, and others who regularly throw away coupons they don’t need. If you can save even $50 by collecting coupons, you are adding an extra $600 to your piggy bank account.

14. Cut travel costs. The easiest way to slash your travel expenses is by living close to campus. You eliminate the need to travel, save time, and eliminate the need to own a car (that just gets rid of gas, insurance, maintenance, car payments, and a host of other expenses). Public transportation is also an effective way to get from A-B. Many cities have special plans for students. And why not bike to school? It is good for health, environmentally-friend, and, hey, very cool!

15. Entertainment expenses. Many young adults express regret for having splurged on entertainment expenses. Sure, you need some way to entertain yourself, vent the stress associated with college life, and, of course, have fun. For starters, there are plenty of entertainment opportunities on campus itself. Movie nights, dance galas, sporting events — there are plenty of ways to take advantage of the best of college life. Besides entertainment opportunities, college campus have many programs that will challenge, involve, and motivate you to progress in life. If you are busy, entertainment expenses will automatically go down.

No need to cut down on healthy fun. Just make sure you know what you are doing. Avoid bad choices and, especially, intoxicants.

16. Choose your friends wisely. What do friends have to do with saving money? This may sound like an old grandma’s advice, but your friends will determine how your life will turn out. If you opt to hang out with big spenders, you will not only do poorly in school but will also come out with a huge debt burden.

17. Brand names versus generic. Expensive clothes and the latest accessories might impress some friends, but they will also drain your wallet. If you look at many expensive brands, they are often manufactured overseas. Should you bear the responsibility for a brand’s marketing expenses and image building exercises? You decide.

18. Save on utilities, phone, and Internet. When you choosing your living area, make sure there is plenty of natural sunlight in your room. This way, you can cut on electricity costs during the day time. There are plenty of small solar-powered appliance for less than twenty bucks. These could save you on utilities, especially electricity.

Own a cell phone? Consider purchasing one of the prepaid plans. There are plenty of cell phone plans that offer you unlimited minutes, data, and text features for under twenty bucks. If a parent, sibling, or family member is subscribing to a new cell phone plan, they will receive a free or low-cost phone. Perhaps, their earlier phone could be passed on to you. Hey, it stays within the family!

Another option would be to add your name to a family plan and pool cell phone usage. Everyone saves this way.

Depending on what’s available you may be able to do away with Internet subscription altogether. Your college campus or a local public library might offer Wi-Fi. There are plenty of cafes and fast food joints offering the same as well. Why pay for a land line. A low cost cell phone plan is all you would probably need.

Save on educational expenses

19. Consider renting text books. Law school was expensive and text books were a huge cost driver. I found a way to economize on reading materials in one of several ways:

(a) Rent books;

(b) Purchase used books — If you keep your eyes open, you might find a bargain online or on campus. At times, I have had great success with used books. Once, a $200 book (same edition) was available for $9;

(c) Borrow from the college (or school) library;

(c) Share your book with a college buddy;

(d) If you own a book and don’t need it anymore, sell it away.

20. Print on campus. Saves you a bunch on paper, toner, and other expenses.

21. Avail of student discounts. From newspapers to shopping outlets, students have an edge when it comes to saving money. Make best use of all student discounts available to you.

22. Find ways to save on classes. Ask your financial aid office if there are any tuition waivers available. Never compromise on education, simply find a more efficient way to do things. Consider this example: You can get certain classes waived if you pass certain exams. Often, the exams cost much less than a full semester of class. Ask your dean to advise you on these matters. They understand. Remember, they were students too.

23. Learn comparison shopping. Shopping around pays. From student loans to everyday expenses, a little extra effort will save you a lot of money in the long run.

24. Use the campus gym. You don’t have to pay for it.

25. Take advantage of programs. Regularly fill out applications doled out by FAFSA, private foundations, grant-giving intuitions and the like. Some will require annual applications but they will save you a lot of money.

25. Work with a professor. Many professors receive grants for their research and academic pursuits. In exchange for part time work, you may be able to make extra money and also earn scholarships and the like. Not to mention, networking opportunities and the potential to advance in your field of interest.

26. Use the 99 cents stores for basic needs (not food, though).

27. Setup a registry. Parents and family members often wish to provide you with gifts. Ask them to buy you a wish list item from your registry instead. Text books, food items, toiletries — anything you need. Cash is a very welcome option as well.

Earn while you learn

28. Take up a job that will allow you to study and work at the same time. Remember, your primary goal is to study so be careful in that department. On campus jobs, internships, work-study opportunities – there are so many opportunities for those who seek them.

If you are the entrepreneurial type, try your hand at a small-scale business such as fixing computers, baby-sitting, cleaning, tutoring, gardening, or any service you feel capable of providing. If you do things right, you might build some equity in the business before you graduate — not to mention “brag rights” for your resume. If you decide to engage in a business, be sure to seek out professional assistance from a tax expert and an attorney.

Small mistakes on the tax or legal front could cost you much more than you earn. If you don’t have the resources to pay for such expert, seek out a local non-profit organization’s help. Family members might be able to introduce you to their friends and associates as well.

In addition to traditional jobs, you can also freelance on sites such as Elance to make some extra money and also gain valuable experience. If you write well or an expert in a particular field, consider participating in competitions that offer cash prizes for “best entry”.

Most important: Ask for expert advice from family, professionals, and on campus resources. Help is always a phone call away and most individuals love to help students. You should not feel any shame in seeking assistance from all available resources.

1. US News

Three Ways You Could Kill Your Credit Score

By Dr. Kavita

I am sure that you decided to read this post, not because you want to really know tips to kill your credit score, but because you realize the importance of credit score to your finances. You know that higher your credit score, higher will be your chances at securing loans, credit cards with benefits, and so many other financial conveniences.

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But the reason I elected to elaborate on ways to kill your credit score is that many people are unknowingly or unwittingly killing their credit score with their own actions. Let us take a detailed look at the issue and learn from our mistakes. Let us learn about ways to kill credit score with an intention of steering clear away from those ways ever in our lives.

Closing out credit cards

Most of us do not realize how much damage this single action could create in terms of our credit scores. But on first impression, it seems counter intuitive to even suggest that closing out your unused credit cards can damage your credit score. The fact is that when you close out, the reports related to that credit card will fall off your credit report and that is not going to prove any credit worthiness to your lenders.

Instead if you choose to keep the credit cards, despite not using them, the reports connected to them will be shown in a positive manner and will have a good impact on your overall credit score.

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Defaulting on payments

This one is pretty simple to understand. No matter how small the outstanding bill is, if you defaulted on paying them, then it will leave a blemish on your credit score. You will be labeled as a high risk customer, one who is a highly risky person to trust your money with.

Overshooting your credit limits

Limits are meant to be stop people from overshooting them. If you have a constant tendency of maxing out your credit card or overshooting your limit, your credit score is in for trouble. A safe rule of thumb is to limit your credit card usage to 10% of your actual credit limit.

Too many credit card inquiries

When people become too desperate to get a credit card, the first blunder that they commit is to put in many applications with different credit card companies, thinking that if they apply for 10, they might get approval for 2. Well, your desperation is showing and getting reported back to the credit bureaus as well. This desperation is considered by the bureaus as a lack of credit worthiness and hence reflected negatively by pulling your credit scores further below.

Stop and think for a while if you have been committing any of these blunders and if the answer is yes, you now know that you were killing your credit score with your own hands!

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Basic Steps to Fix your Credit Score

By Dr. Kavita

Your credit score could have plummeted due to several reasons that were out of your control. Maybe you were hit by the recession. Or you just went through a divorce or you lost your job.

These reasons have no way of being controlled and modified by you, but try saying that to your credit reporting bureau. Even if you were in no way responsible for what happened, you will still be held accountable for your poor credit score that has resulted from these occurrences.

Here are some basic steps that you can take to fix your poor credit score.

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Do a quick assessment

Any situation needs to be studied properly before you can apply any remedial measures to rectify the problems. So, take a quick view of your financial affairs and see what can be fixed and what needs to go. In case you find yourself to be incapable of paying your credit card bills on time, you will have to say so frankly and intimate your credit card company.

They will agree to accept a certain amount (that is lower than your current outstanding amount) and end the matter there. But they will send a report to the bureau which reads ‘not paid as agreed’. If this is the case you will be hurting your score all the more. Instead, get the company to send in another report which reads ‘now paying as agreed’. But the nature of the reports will depend hugely upon your negotiation skills.

Use the notes section

Your poor credit score can hurt your prospects of finding a new job. Employers usually run a credit check before employing anyone. You must make use of the notes section on the credit reports to inform your prospective employers about the reason that led to your poor credit score. You can even attach proof like a doctor’s note to prove that you were ill or hospitalized and that was what affected your job and score.

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Apply for secured credit cards

Secured credit cards are a boon for people like you who are struggling to build back their credit reputation after it was butchered by a poor credit score. Apply for one and use it to slowly build back your credibility. Secured cards are prepaid cards that offer only a certain percentage of credit against your deposited amount.

Try out credit unions

Credit unions do entertain people with poor credit scores. They usually have a variety of packages to help people out like free counseling, credit cards specifically designed for people with low credit scores, options for starting a rebuilder or credit builder loan etc.

Whatever you do to tackle poor credit scores must be aimed at building back your creditworthiness.

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Six Credit Card Secrets you Did not Know

By Dr. Kavita

Argue as much as you want to, but there are many secrets about your credit cards that you still do not know. Despite using this plastic money for years together, credit card companies still manage to keep many important facts hidden from the general consumers. So, what are those secrets? Read through this post to find out now.

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Rate of interest charged on your credit card

You signed up for your credit card expecting a certain rate of interest to be charged by the credit card company when you put the card in to use. But these rates are not permanent and can be hiked to any level.

The top ten banks that are issuing credit cards are under no obligation to follow the CARD act that limits the hiking of interest rates beyond a certain level. This is because these banks are federally chartered.

You can refuse interest hikes

If your credit card provider decided to hike your interest rates, then you are not under any obligation to pay it. This is because you are protected by the CARD Act. Though the credit card company can charge higher rates and then when you refuse to pay up, they could take stringent measures like hiking the minimum amount to be paid on your credit card bills each month, closing your credit limit or closing your credit card, they still can’t force you to use the card at higher interest rates.

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Credit card protection for purchases

This is a benefit that most of the credit card users tend to forget and overlook. Whenever you make purchases with your credit card, you are protected. What does this mean? In case you made a purchase and it did not turn up the way it was meant to be or never was delivered at all, you can claim a refund

Your cards may not work internationally

Most of the credit cards in the US have a magnetic strip in them. But many international locations have credit card reading machines that do not recognize these magnetic strips. Only those cards that have a computer chip may work here.

Before travelling abroad make sure that your cards will be accepted there or else ask your credit card issuer to provide you with an EMV version that chip recognizing credit card reading machines can acknowledge.

The rules for card balance are complicated

There are some cards that offer a great benefit called ‘no spending limit’. A huge number of consumers are using these kinds of cards too. But what these cards do not reveal is though there is no limit on spending; there definitely is a limit to how much balance you can carry forward to next month. When you overshoot this limit, this could reflect badly in your credit report.

Don’t panic about late payments

People think that they will be reported to the credit bureaus if they miss the payment before the end of the grace period, which is usually between 20- 30 days. But the act is that your credit card company cannot report your late payment unless you have not paid for one whole cycle, which is 30 days after the end of grace period.

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How to Obtain a Credit Card with Bad Credit

By Dr. Kavita

Having to live with bad credit is equal to go through life branded as a person with a bad character. At least that is what the current attitudes of banks, credit card companies and almost every financial institution says.

People who are faced with bad credit are often at a huge loss when it comes to obtaining credit cards. But do not worry as there are still some loopholes for consumers like you and today’s post is all about those loopholes that anyone with bad credit can use to get credit cards.

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Secured credit cards save the day

Secured credit cars are simply awesome when it comes to getting a credit card with bad credit. The way these secured credit cards work is that you deposit some amount of money in to a bank account. The lender will then extend a credit for either the same amount that you deposited or an amount that is slightly higher than it, via a secured credit card.

So, basically you are being given the option to use your own money on credit and in case you do not pay the credit card bills, the company can always confiscate the deposit that you have placed in the bank. Remember that you are not using a secured credit card for credit benefit. You are using it merely to establish a blemish free credit report and build your credit score, so that after about six months to one year, you can apply for regular credit cards and get approved too.

Apply for a sub-prime credit card

Sub-prime credit cards are not recommended except as a last resort for the reason that they charge interest through the roof. But if you look at the situation from the point of view of the credit card company, they are taking a huge risk by lending credit to a person who has a history of not managing his/her finances properly. In other words, the chances of you not being able to pay back their dues are very high. That justifies the high interest rates that sub-prime credit cards charge consumers.

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Search for credit cards for bad credit

Certain banks and credit card companies have come out with credit cards that are specifically meant for people with a poor credit score. These credit cards may not come with any frills and advantages, but at least you can obtain a credit card for your necessities. Be warned that these cards will have a much higher rate of interest than the regular credit cards

The best thing you can do when you have a bad credit score, is to take immediate measures to improve your score. Otherwise you will be stuck for life without any chance of obtaining good credit card offers.

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Amazing Ways to Improve your Credit Score

By Dr. Kavita

Your credit score is a crucial factor that can be a determining factor in so many things in your life. Having to live with poor credit score is nothing short of a nightmare because you start realizing that a major part of your financial life gets limited and restricted.

Thankfully you do not have to go through your entire life bemoaning a poor credit score. Here are some amazing ways to improve your credit score, and regain your life back again.

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Double check for errors

It is amazing how common it is for errors to creep up in to your credit score and demolish your credit score for no reason of yours. The payment history of your credit card and other dues makes up for almost 35 % of your credit score. If this gets riddled with errors then your credit score can take a nosedive.

According to FICO, the commonest reason for errors in payment history is when there is an identity theft or interchanging of credit report details with someone who shares your name. So always check your credit report for errors and intimate the credit reporting agency so that they can get the errors rectified. Rectification of errors will improve your credit score in a huge way.

Pay your bills more than once a month

Most credit card users wait until the end of the month or the last day of the grace period to pay their outstanding dues. Even if you are paying all your outstanding bills without keeping any balance, still you may be hurting your credit score.

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This is because the report is sent to the credit bureau on a day that is chosen by the bank and not on the day after you complete your payment. In case you make a payment after the report is sent to the bureau, then it reflects your outstanding balance and this contributes towards a poor credit score.

So always try to pay your bills in two or three divided installments throughout the month.

Use less of credit

Even though your credit card comes with a certain spending limit, it is not necessary to make use of that entire amount every month. Suppose your credit limit is $ 5000, do not use a credit of the entire $ 5000. Instead aim for a safe amount like 10 % of your limit, which is equal to $ 500. Using more of your available credit hurts your credit score, so avoid doing that.

Keep your cards active

Sometimes people think it is safer to totally avoid using the credit cards, in order to improve their credit score. But beware of doing this as an unused credit card is a reason for a poor credit score. Instead of total avoidance of credit card usage, use it wisely (use the card no more than 10 % of the credit limit) and build your credit score by proving to the reporting bureaus that you know how to handle your debts responsibly.

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Credit Card Fees Explained

By Dr. Kavita

Anyone who has been using plastic money for even a short time already knows that there are several kinds of credit card fees that are involved with it. But not all of the credit card users understand what these fees stand for and why and how they are charged. Let us take a quick look at some of the fees and then try to understand how they are calculated and applied to your credit card.

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APR or annual percentage rate

This is by far the most important type of credit card fees that every user should understand. Basically APR denotes the rate of interest that you will be charged in case you have some balance amount outstanding on your credit card bill. While it is denoted as annual interest, yet the deductions happen on a monthly basis. So if you have opted for a credit card that has 2% APR, and you have an outstanding payment balance of $2,000 towards the credit card bill month of January, then you will be charged APR fee of $40. So now the total due for month of January is $2,040.

Balance transfer fees

This is another equally important kind of credit card fee that you should know about. Balance transfer fees are applicable only when you shift your outstanding balance on a credit card that is currently in use to a new credit card.

There are many offers that credit card companies love to attract you with, like 0 % balance transfer fees and low balance transfer fees etc. But remember that the process is a bit complicated and not as simple as you would be inclined to think.

The basic idea behind transfer of balance to a new card is to save yourself from the high APR being charged every month on your current card. But you should read the fine print closely because the 0 % interest rate offer is not going to last forever. Your new card will also charge you a certain APR 9which could most of the times be higher than the old card) in about 6 to 12 months after completing the balance transfer. So use this option only if you are sure that you can indeed complete the dues within the interest free offer period on the new card.

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Cash advance fees

Cash advance fees are those fees charged for every cash withdrawal that you do using your credit card. You should realize that when you withdraw money from your credit card you are actually taking a credit/loan. That money is not in your bank account and you are actually asking your credit card company for a loan. So it is obvious that the money will be available to you only at a certain rate of interest.

There are two ways in which these fees are calculated. The first is based on the rate of interest applied on the total amount of cash withdrawn. The second method is to charge a fixed amount irrespective of the cash amount. The company will either charge you a rate of interest for amount withdrawn or a fixed amount, whichever of the two turns out to be higher.

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What Does APR Mean For Cars?

By David

Though most of us are familiar with what APR is from using credit cards, many of you may still be wondering “what does APR mean for cars?” To answer this question, we will take a look at exactly what APR is and how it will affect your next car loan.

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APR

If you are unfamiliar with APR, we must first get you up to speed before we can answer the question “what does APR mean for cars?” APR is an abbreviation for Annual Percentage Rate and as the name suggests it is the percent rate that you will pay on a loan each year. This term is used interchangeably with interest rate, so do not be confused by the different terms.

How it is determined

The next thing to know when pursuing an answer to the question “what does APR mean for cars?” is how your APR is determined when you apply for a car loan. This is typically based on a few different factors

1)      Credit Score – the most influential criteria is going to be your credit score. The higher your score is, the more likely that you will be able to get a loan with a lower APR

2)      Type of Car – the type of car you are getting (either new or used) will also affect your APR for the loan. Getting a loan for a new car will typically result in a lower APR than getting a loan for a used car assuming you are borrowing the same amount.

3)      Amount & Duration – The amount you are borrowing and the length of time you are borrowing it for will have a big impact on your APR. The more you borrow and for longer, the higher your APR will typically be.

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How it is calculated

Now that you know what your APR is and how loan issuers go about figuring out the appropriate rate for each individual, we can take a look at how your APR will be used to add interest to your loan. With a typical car loan, your interest will be applied once a year at the start of the year on the remaining balance of your loan and then divided up into twelve equal segments that you will pay with your principle each month. For example, let’s say you got a car loan for $30,000 that you intended to pay off in 36 months with an APR of 2%. Your first year monthly payments would be calculated by multiplying the outstanding balance of your loan, $30,000 in this case by your APR, which is 2% for this example. The equation will look like this: 30,000*0.02=600 and as you can see this yields a result of $600. Now divide this result by twelve: 600/12=50. Next divide your principle by the total number of months remaining on your loan which will look like this: 30,000/36=833.33. Finally add your two results together: 833.33+50=883.33 yielding a monthly payment of $883.33 for the first year.

Now that you know how APR works for cars, you are ready to start shopping for your perfect ride.

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Are You Looking For A Credit Card With No Interest? Discover Hidden Secrets

By David

As a matter of fact, the use of credit cards has helped many people meet their basic needs, most especially when they do not have enough cash to do so. Today, a lot of users are looking for the possibility of getting a credit card with no interest rate, simply because they want to be able to buy goods without having to make an upfront payment, and without having to pay an interest on their balance.

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Credit cards versus interest rates

Sometimes, you might see an advertisement from an issuer that you could obtain a credit card with no interest. Could it be true? Obviously, some are just marketing tactics, but then again, there are lenders that offer genuine 0 percent interest credit cards. Sometimes, the zero interest rate on credit cards may be an introductory offer upon which you can build a balance after applying for it. When the introductory period finally comes to an end, your credit card would revert to the initial interest rate associated with it. So, you would have to start paying interest if you have a balance on your card, and the rate can vary from 7% to 30%, depending on your current balance as well as the issuer of the card.

Standards of providers offering zero % credit cards

As noted earlier on, getting a credit card with no interest is beneficial to those who have a balance on their other lines of credit as they could afford to pay it off by balance transfer. Similarly, such cards are ideal for individuals who typically only make their minimum monthly payments.

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However, most credit card providers are pretty strict when it comes to determining who qualifies for a 0% credit card. Factors considered include:

  • Records of late payments
  • Opting for balance transfers
  • Switching from one card to the other as a way to enjoy low or 0% interest
  • Applicant’s financial history
  • Job security or employment stability

Generally, they do not want people who would have a hard time meeting their monthly obligations.

Factors to consider when looking for an offer

Here are a few things you should do when looking for a credit card with no interest:

  • Find the details on charges, including the penalties on offers.
  • Find the details about annual fees. Ensure that it is no more than a 2-digit figure.
  • Properly check if there are hidden charges.
  • Find out the Annual Percentage Rate (APR).
  • Find out whether the card is useful for both purchases and transfers or either of the two options.

In all cases of your quest for a credit card with no interest, it is quite crucial that you pay up your bills when due so as to stay in control of your debt. Before making a decision, be well-informed on the terms and conditions that are associated with all existing credit cards on the market.

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What Does Finance Rate APR Mean

By David

If you have been trying to get a loan or credit card, you have probably wondered what does finance rate APR mean? In order to answer that question, we will take a look at what it is and what it does in terms of your loan.

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What is APR?

APR stands for Annual Percentage Rate and understanding it is absolutely vital for answering the question “what does finance rate APR mean?” As you have probably assumed from the name, your APR is the percent rate that you will pay on your loan each year and will play a large part in determining how much you will end up paying back on your loan each month. It is also important to note that your “finance rate” and your “APR” are essentially the same thing so do not allow the different terminology to confuse you.

How is APR determined?

Your APR is determined by a few different factors that will be considered together to determine your rate and help you answer the question “what does finance rate APR mean?”

1)      Credit score – Your credit score is going to play the largest role in determining your APR on your loan. The more credit worthy you are, the higher your score will be, and thus the lower the APR on your loan will be.

2)      How much you are borrowing – The amount you are borrowing will also have a decided impact on your loan. The greater the amount, the higher the risk for the lender and thus the greater the APR.

3)      How long you are borrowing it for – The length of time you are borrowing the money for also has an effect on your APR. The longer you intend to borrow for, the higher the risks to the lender and thus the higher your APR

4)      Special circumstances – Sometimes, other factors will influence your APR like where you live, special offers from the lender, or in the case of a car loan the type of car being purchased. These will vary from situation to situation and have different effects on what your APR will be.

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How is APR calculated?

Since most loans are going to be for more than a single year, your APR will be applied to only one year at a time and will use the balance remaining to be repaid at the start of the year as the amount to determine your interest from. For example, if you got a home loan for $50,000 that you intended to pay off over 10 years with an APR of 5% the interest on the first year would be a total of 50,000*0.05=2,500 or $2,500 for the whole year. This of course would be split up equally over the 12 months of the year and paid along with a chunk of the principle each month. If you wanted to figure out your interest for the second year, you would do the same thing, but with the second years’ starting balance.

Now you know what APR is and how it will affect your next loan.

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