With all things in life, there will be things that you can pay extra for with credit cards. While most people in most circumstances will be looking for a credit card that gives them the absolute cheapest deals and best rates, there will be some people out there who will be looking for that little bit extra with their credit card and will be willing to pay a premium for these extra benefits.
The amount you will have to pay for a premium credit card will vary enormously when you compare the offers from one credit card company to another. By and large, you should expect that the more you are paying for a premium credit card, the better the card will be and the more premium facilities and extra features the card will offer you. There are some credit card companies that will offer relatively cheap premium credit card options. This might be a platinum card or a similar offer that costs just a few pounds per month. There are even companies out there that will charge you nothing for a so-called premium credit card. Other may charge you a significant monthly or annual fee so the differences can be very large.
The fact that you pay nothing for the credit card does not necessarily mean that it does not offer you premium services, as the reason you have paid nothing for it may be due to the fact that you are an exceptional attractive applicant and the credit card company wishes to attract you to their business. You will generally know how good your credit rating is and if you think that you may not deserve a free premium credit card based on your credit rating, and then you should consider the possibility that the card is actually offering you nothing extra.
The services that a premium credit card generally offers will vary. Some will offer you an attractive reward scheme. This may be a cash back option, or some other reward such as redeemable points or airmiles for every pound you spend on the card.
These reward schemes can be very attractive to some customers because if you spend a lot on your card, you can get a significant amount back in cash or reward and may even get a free flight every year. Other advantages typically associated with premium cards are high maximum spending limits and very good rates of interest. For people that carry a high outstanding balance on their card, it may be worth their while to pay for a premium card that will save them money on interest payments. Other charges associated with credit cards such as international transaction costs and cash withdrawals may be free also.
A recent report revealed that many people are not utilising the reward scheme offered by their credit card company. It should be remembered that the reward scheme is an intrinsic part of the credit card and the use of it enables the consumer to save cash, be it through a straightforward cash back scheme or a loyalty scheme that offers points that can be redeemed against goods.
1) DO make a budget listing all your fixed expenses. Rent or mortgage, car insurance, car payments, cell phones, utilities, day care, fixed loans, etc. Then try to estimate a reasonable budget for discretionary items like food, drinks, dry cleaning, etc.
2) DO make a second list of all your outstanding balances and sort by balance, minimum payment, and interest charges if you have multiple credit card debts.
You may think the wisest thing to do is paying off the credit card with the highest interest rate. However, there are 2 preferred methods to follow.
First, you should first reduce the number of credit cards. Pay off the smallest balance first with larger payments until the number of credit cards you have in debt is down to one. Your ultimate goal is zero, or when you can pay your monthly balance in full every month.
The other strategy is to pay the balance on any card exceeding 50 percent of your credit limit because balances above this level may cause your credit score to diminish.
3) DO use cash or a debit card from your checking account. You can't spend what you don't have.
4) DO look for extra income. Most likely your rent or mortgage is your biggest expense, so consider a roommate. If you like your occasional privacy, consider an International student for shorter periods of time.
Consider starting a Blog. Blogger and Wordpress blog platforms are free. If it becomes popular, slap on some Ads with Google Adsense. Your first payout will be issued when you reach $100.
5) DO look for the little things that add up in your expenses. Maybe change your cell phone plan if you are constantly going over the monthly minutes? How about that $2.75 Starbucks latte or cappuccino every work day? That's almost $7,000 a year!
6) DON'T sign up with a new credit card with a 0% APR for the first 6 months.
You probably receive a lot of junk mail enticing you to sign up with a new credit card with a 0% APR for the first 6 months before it jumps to 24% or even higher. Then 6 months later you would transfer your huge balance to another piece of plastic. Unfortunately, the biggest risk is they are simply giving you more credit to spend, and the number of cards and liability increases.
Unless you are extremely disciplined, this doesn't really work as you end up bigger and deeper in the hole! Reducing the number of credit cards is the goal.
7) DON'T get a consolidated bank loan to pay off all your debt.
Logically, a 12% bank loan APR is less than 24% APR on a credit card. It sounds like good advice, because you can't spend what you don't have. You will be asked to have all your cards cut up (except maybe one with a small credit limit) and you have reduced the number of credit cards.
However, your bank may not accept your loan application if they have no collateral, or if your Debt to Service ratio is too high. Often, a co-signer is often required. These types of loans are not like regular loans for a car or house where they can repossess it should you default on your payments.
But if you do choose this method and default on this loan, either your co-signer will end up footing the bill (and really getting them angry!) or losing your assets assuming you own one. The ultimate downfall is you might end up in bankruptcy. It's better to upset one creditor than to lose your entire home.
Research, educate, get creative, and get out of credit card debt now!
Both Peter J Kenny & Jimson Lee are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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