With all the credit card debt out there, it seems like it would be helpful to define what appropriate credit card usage is.

This begins with a preliminary observation. That is simply this – credit card usage is a choice. Thus, if you’ve proven to yourself that you can’t use them appropriately, then you’re better off (and so is your bank account) if you simply stop using credit cards.

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1. Always pay off your balance in full every month.

Good guidelines always have good consequences. In this case, I suggest that if you ever go beyond this rule that you should either stop using credit cards for a six month period, or stop using them all together.

Credit cards in the hands of people who don’t pay off their bills are a very dangerous thing.

2. Never purchase anything over $100 (or a similar threshold) on a credit card unless you decided to buy it before you left the house.

This has been a long standing rule in our home. If I’ve left home with the plan to buy a TV for $300, then I can use the credit card because it is not a spontaneous purchase. If, however, I’m standing in front of a nice new TV, I cannot use the credit card because I may be tempted to go beyond my budget.

3. Never purchase anything over $100 (or a similar threshold) on a credit card without discussing it with your spouse.

Discovering a larger than normal purchase when looking over the bill at the end of the month is not an appropriate way to find out about a household expense. Communicate with your spouse beforehand.

4. Always review your monthly statement.

One of the keys to credit card usage is paying attention. I remember a few years ago when I noticed a charge on our credit card bill. I came to find out that I had signed up for something that would continue charging me every month until I cancelled. By reviewing my statement I was able to catch this discrepancy.

5. Always purchase electronics on your credit card.

One of the nice benefits of credit cards is that they offer certain purchase protections and warranties. You can review the terms and conditions on your card to see what benefits you have. If you pay with cash, you’ll lose out on this benefit that is included with your card. Remember, you should follow this in line with the other appropriate usage tips above.

6. Always maximize your credit card rewards.

If you are responsibly using credit cards as I’ve outlined above, you may as well be getting some credit card rewards out of your spending. This can be in the form of cash back rewards, travel rewards, or both. As an example, the Chase Sapphire Preferred card allows you to earn Ultimate Rewards points. Those points can be used to buy gift cards, purchase travel, or transfer to select frequent flyer mileage programs.

What guidelines do you use to help regulate your credit card spending?

This is a guest post by Craig Ford. At Help Me Travel Cheap Craig teaches people how to find the best travel credit card sign up bonuses so they can get free travel.

Identity theft is when someone uses your personally identifiable information (like Social Security number, financial account numbers, credit card numbers, etc.) to commit crimes or fraud.

Identity theft is a growing crime these days, and it’s important to know about identity theft protection so you can guard against unwanted compromises with your financial information.

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Below you’ll find stats on identity theft and some ways the Federal Trade Commission is encouraging you to protect yourself from identity theft.

Statistics on Identity Theft

Here are the  latest statistics on identity theft according to Identity Hawk:

• There were more than 11 million ID Theft cases in 2009
• 66% of stolen personal information is used to open new credit accounts
• 28% is used to buy cellphone subscriptions
• At least 33% open new checking accounts to write bad checks
• An identity theft victim spends on average 330 hours and $1,000 clearing his or her name
• 70% are unsuccessful in removing negative credit information from their credit reports
• 47% of victims experience difficulty getting any kind of credit
• 40% report profound stress in their personal lives as a result of identity theft
• 11% say that the theft has impaired their ability to get jobs (with more employers looking at applicants’ credit information when making hiring decisions, this trend is expected to increase)
• 43% of victims think they know the thieves who stole their personal information

Helpful Identity Theft Protection Tips

The FTC has a catchy way to remember identity theft protection tips. You can view the document here.  Here’s what it says:

Deter

• Shred financial documents and paperwork with personal information before you discard them.
• Protect your Social Security number. Don’t carry your Social Security card in your wallet or write your Social Security number on a check. Give it out only if absolutely necessary or ask to use another identifier.
• Don’t give out personal information on the phone, through the mail, or over the Internet unless you know who you are dealing with. Avoid disclosing personal financial information when using public wireless connections.
• Never click on links sent in unsolicited emails; instead, type in a web address you know. Use firewalls, anti-spyware, and anti-virus software to protect your home computer; keep them up-to-date.
• Don’t use an obvious password like your birth date, your mother’s maiden name, or the last four digits of your Social Security number.
• Keep your personal information in a secure place at home, especially if you have roommates, employ outside help or are having work done in your house.

Detect

• Be alert to signs that require immediate attention:
  • Bills that do not arrive as expected
  • Unexpected credit cards or account statements
  • Denials of credit for no apparent reason
  • Calls or letters about purchases you did not make
  • Charges on your financial statements that you don’t recognize

• Inspect your credit report:
  • Credit reports contain information about you, including what accounts you have and your bill paying history.
  • The law requires the major nationwide consumer reporting companies—Equifax, Experian, and TransUnion—to give you a free copy of your credit report every 12 months if you ask for it.
  • Visit www.AnnualCreditReport.com or call 1-877-322-8228, a service created by these three companies, to order your free annual credit reports. You also can write: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
  • If you see accounts or addresses you don’t recognize or information that is inaccurate, contact the credit reporting company and the information provider. To find out how to correct errors on your credit report, visit ftc.gov/idtheft.

Defend

• Place a “Fraud Alert” on your credit reports, and review the reports carefully. The alert tells creditors to follow certain procedures before they open new accounts in your name or make changes to your existing accounts. The three nationwide consumer reporting companies have toll-free numbers for placing an initial 90-day fraud alert; a call to one company is sufficient:
  • Experian: 1-888-EXPERIAN (397-3742)
  • TransUnion: 1-800-680-7289
  • Equifax: 1-800-525-6285

  Placing a fraud alert entitles you to free copies of your credit reports. Look for inquiries from companies you haven’t
  contacted, accounts you didn’t open, and debts on your accounts that you can’t explain.

• Contact the security or fraud departments of each company where an account was opened or charged without your okay.
  • Follow up in writing, with copies of supporting documents.
  • Use the ID Theft Affidavit at ftc.gov/idtheft to support your written statement.
  • Ask for verification that the disputed account has been dealt with and the fraudulent debts discharged.
  • Keep copies of documents and records of your conversations about the theft.
• File a police report. File a report with law enforcement officials to help you correct your credit report and deal with creditors who may want proof of the crime.
• Report the theft to the Federal Trade Commission. Your report helps law enforcement officials across the country in their investigations.
  • Online: ftc.gov/idtheft
  • By phone: 1-877-ID-THEFT (438-4338) or TTY, 1-866-653-4261
  • By mail: Identity Theft Clearinghouse, Federal Trade Commission, Washington, DC 20580

Ever feel like you are your own worst enemy!

I confess I do.

In college I definitely was!

In fact, a free t-shirt is all it took.

It was as if the smiling face on the other side of the table assured me that a credit card would be the first step toward freedom for an 18-year-old college student.

I signed on the dotted line, and after two weeks I received my very first piece of plastic.  I had no experience, so it didn’t take long to rack up debt. And since I was only paying the minimum balances, it piled on even faster.

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I decided it was time for a change.

I need to fight my own worst enemy.  So, I took out what little money I had saved in my mutual fund and paid off the debt.

“I’ll never do that again!”, I said to myself.

But I was wrong.

This would happen two more times over the next several years where I took IRA withdrawals and depleted my savings just to manage the debt.

I ended up entering marriage with a load of debt!  My wife (who brought no debt and all the assets to the marriage), and I came up with a toilet-cleaning plan to knock out debt.

Through hard work and perseverance we did it.  For years I dealt with the aftermath of my own worst enemy!

Ever Feel Like You Are Your Own Worst Enemy?

I often am.  There are so many times I get in my own way and impede my progress spiritually, physically, and financially.

Maybe you can relate?

Let me illustrate my point. How many times has this played out in your life?

I need to change my spending habits so I can save money.

I will stop going out to eat so much.

One week later:

I’ve had a stressful day and don’t feel like making anything.

I deserve to go out to eat…just this once.

Another week later:

I forgot to pull something out of the freezer for dinner.

I’ll just order a pizza.

And this continues, week after week, month after month, until we realize once again we haven’t changed anything.

Substitute whatever goal you have in the above scenario, and you’ll know what I mean.

How to Overcome Your Own Worst Enemy

1. Develop a written plan – Write down what exactly you want to change, and how you will do it.
2. Share it with someone – Let someone know exactly what you are trying to do.
3. Ask for accountability – This is the key. Find someone who will make sure you do what you say you will do.
4. Review regularly - Check the progress regularly so that you can build momentum, or make tweaks.
5. Celebrate little “wins” – Have fun! Set short-term goals that you can reach quickly and then celebrate to continue the momentum.

How Have You Been Able to Reach Your Goals?

What are some helpful tips you’ve found in making changes with your money?

This was an original post on ChristianPF.com. You can check it out here.

A recent article on Yahoo Finance referenced 7 credit card traps to watch out for.  It was a good article outlining a few of the traps out there with credit cards.

Personally, I find credit cards to be extremely helpful as a business owner, and in our personal finances, but that comes only after a toilet-cleaning campaign wiped out $10,000 of credit card debt and after much-needed self control was applied to my use of credit.

Credit cards can be a slippery slope, and I can assure you that if you want to become a millionaire, you’ll have to get the plastic under control quickly!

These first seven credit card traps are the ones referenced in the Yahoo article by Tal Boldo, and the last three are my additional traps to avoid.

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1. Application and Balance Transfers

Tal says, “There are two credit card traps to avoid here. Be sure to include your balance transfer request with your application, and be sure to transfer funds from a credit card in your name, rather than a spouse, as the loan officer reviewing your application will see that your debt-to-income ratio will remain unchanged, which will increase your chance of being approved.”

2. Fixed Promotional Rates

Tal makes a great point to understand the promo rate.  Sometimes the card company can pull one over on you without you even knowing it.  She says, “To avoid this credit card trap ask the customer service representative helping you with the balance transfer whether the fixed rate applies “for the life of the loan.” Otherwise, find out when the rate will expire and what the new rate will be.”

3. Variable APR Rates

Variable rates are the bane of any credit-card-debt-carrying consumer!  A simple nudge upward in the rate can send your payments skyrocketing.

Tal says, “This credit card trap can be avoided by applying for a credit card with a fixed APR, or balance transferring to a fixed APR promotional rate.”

4. Transaction Fees

Fees, fees, fees. It seems like every company has enacted a fee for something.  Tal says, “Most credit card companies that offer attractive balance transfer offers also often charge a transaction fee of between 3% to 5% of the total amount transferred. This fee is added to your total debt at the moment of transfer.”

The sneaky part used to be that the card company wouldn’t apply any future payments to your high rate existing debt, but rather to the new low interest rate balance transfer. What that meant was essentially that you were racking up interest charges at a rapid pace.

5. Membership Fee and Cash Back Bonuses

Tal says, “Avoid credit cards that require membership fees unless other services like life insurance, travel insurance or higher cash back bonuses make the membership fee worthwhile.”

I refuse to pay a membership fee for any card.  I don’t care how great the rewards are, it just doesn’t seem worthwhile to me.

6. Hidden Information

Tal mentions, “A common credit card trap involves the confusing presentation of information.”  Just like with the sneaky balance transfer payment method, there can be hidden tricks these cards are using to get you to keep spinning your wheels with your debt.

7. Pay Off High Interest Debt First

Tal says, “Until the Credit Card Accountability Responsibility and Disclosure Act of 2009, credit card companies would apply your monthly payments to your lower interest rate loans first. Many consumers are not aware that this is no longer the case. You can now make use of balance transfer promotional rates even if your credit card has a high interest balance on it already. When you send your monthly payments in they will apply to the higher interest balance.”

8. Extended Credit Limit

Card companies have tightened up with the credit limits since the 2008 meltdown.  This is still something to watch out for – where the card company extends your credit limit because of your great payment history.  If you don’t have the self-control to handle such a move, you’ll find yourself thinking you’ve just gotten a raise!

9. Minimum Monthly Payment

This might be the trickiest trap of them all!  Card companies love when you only pay the minimum payment.  And that amount looks so attractive doesn’t it? I mean, who wouldn’t want to just pay $50 on a large debt amount!? But, if you continue paying the minimum, it will oftentimes take decades to pay off your debt!

This is what suckered me when I first used credit cards in college. I ended up paying the monthly payments thinking I would just pay it all off when I earned more money. Two IRA withdrawals later, which resulted in IRS penalties and the wiping out of my savings, I learned my lesson.

10. Free “Checks” Received in the Mail

I remember the first few times I received these in the mail thinking I had just won some promotion or contest! I nearly cashed a check until I read the fine print. That’s when I realized they essentially counted the check as a cash advance (which naturally has higher interest rates), which results in your charges adding up faster than a Paris Hilton shopping spree!

Credit cards are not for everyone. You need to have the self-control and ability to pay the debt.  But, if you’re able, credit cards can be a great tool.  Either way you slice it, watch out for these 10 traps!  Card companies are just waiting for you to trip up!

What other credit card traps would you include?

This was a post originally posted on Christian PF. You can view it here.

You don’t have to be a millionaire to be happy with your finances.

Being content with your personal wealth is as much about being in control of your money as the actual amount you have in your account: having a comfortable, well-managed budget, spending wisely, and keeping on top of any debts you may have.

Let’s look at some of the best ways to improve your personal wealth.

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Keep an eye on your money

It can be very easy to lose control of your finances if you don’t know where you’re up to with them. Keeping a close eye on your money – how much income you receive every month and what your outgoings are – can be the first step to improving your control over your money.

Most banks now offer online and telephone banking services, which can make checking your balances quick and easy – even when you’re on the go. Checking over paper statements can also help you keep track of what you’ve spent – and help you make any changes to your spending habits which you think could improve your finances.

You could also think about keeping your receipts every month and/or keeping a ‘spending diary’ to record all your monthly outgoings.

Manage your debts well

Many of us have unsecured debts on things like credit cards, personal loans, and overdrafts – and though having debts doesn’t have to be a bad thing, paying them off as quickly as possible can give you peace of mind, minimize the interest you pay, and reduce the risk of facing money worries in the future.

Some practical tips for managing debt include:

• Consider reducing the number of credit cards you have to just one – making it easier to keep track of
• ‘Overpay’ your unsecured debts wherever possible by making more than the minimum monthly repayments
• Try and repay your credit card balance as fast as you can to reduce the amount of interest you’ll repay in the long term.

And remember – if you’re really struggling to repay any of your debts, it’s important to get professional advice. For a look at a few different approaches, here’s a quick guide to help you get out of debt.

Increase your income

We’d all like to have a bit more money in our pockets – whether it’s to make paying the household bills a bit easier every month, to save up towards a holiday, or to treat ourselves to something nice once in a while. There are several possible ways of boosting your income and giving your budget a bit more flexibility.

You could think about:

• Working some extra hours if your boss is looking for people to do over-time
• Selling clothes, CDs or electronic equipment you no longer use
• Taking in a lodger and charging them for monthly rent and bills.

Remember that being secure in your personal wealth is about finding the right approach for your situation – so always set yourself realistic goals that you’re confident you can commit to, and that will make you feel happier about your finances in the long term.

Useful webpages:

• http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre19.shtm
• http://www.mymoney.gov/category/topics/managing-debt-and-credit.html

This has been a guest post from Melanie Taylor at ThinkMoney.com

We all know there are tons of credit cards on the market which offer extra rewards for certain types of spending, such as gas and groceries.

However what you may not know is that a handful of rewards programs give you extra rewards for charity donations, too.

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Here are the 3 most popular rewards programs that I am aware of:

1. U.S. Bank FlexPerks Travel Rewards Visa

As the name implies, this is a travel rewards program. It gives 1x points on regular spending, 2x on the category you spend the most (gas, groceries or airline travel), and 3x points on charity donations. Its annual fee is $49.

This has a tiered redemption structure when you cash out your rewards program. Let me demonstrate this by showing you the first two tiers:

20,000 FlexPoints = Up to $400 ticket value
30,000 FlexPoints = Up to $600 ticket value

As you can see, your rewards program has the potential to be worth up to 2 cents per point (which is amazing) but if you are stuck with a plane ticket that costs, say $405, the value you get per point drops dramatically.

Regardless though, this rewards program will still probably give you a reward value that’s significantly above 1.0 cent per point. That means the 3x points on charity donations will essentially be earning you at least 3% and possibly much higher (up to 6%).

2. Chase Freedom

Chase heavily promotes this credit card so there’s a good chance you already know quite a bit about it. The Chase Freedom rewards program gives 5% cash back in categories which change every quarter. After you exceed $1,500 in spending for the 5% categories during a given quarter, the payout drops to 1%.

During the 4th quarter of 2011, one of the 5% categories is charities. That means in theory, you could earn up to $75 on a $1,500 charity donation, assuming you didn’t spend any money in the other 5% categories that season (which are dining, movies, and department stores).

Because it only offers 5% on charity donations for one quarter out of the year and it imposes a rewards cap, I would say this is not the best choice for a rewards program for charity donations. The card from U.S. Bank would be a much better idea.

3. AAdvantage Mileage Program

Although it’s catered to those who have the AAdvantage credit card, you don’t actually need it to earn these rewards. To the best of my knowledge, you can use any credit/debit card! You will earn miles for every dollar donated to participating charities, when you use this link.

Right now, the USO, Susan G. Komen for the Cure and the National Foundation For Cancer Research are offer 10 miles/per dollar. This is quite good, considering the fact that each mile is usually worth more than 1 cent. The U.S. Fund For UNICEF is also listed but I do not see mention of how many miles are awarded for it. If you are passionate about these particular charities, then getting up to 10 miles per dollar is certainly a very generous incentive.

The Pros and Cons of Rewards Programs for Charity Donations

We’ve gone over the rewards programs, but now let’s review the possible drawbacks that may be involved by using these programs for your charity donations. Let’s look at the pros and cons…

The Cons

1. Processing fees
Without a doubt, the biggest drawback will be the cost incurred by the charity. If they have to pay 2.5% to process your cards, then that means only 97.5% of your donation is going to the charity.

2. Distortion of organization’s financial picture
Like many people, the most important thing to me when considering a charity is its efficiency. Which percentage goes towards the cause and which percentage goes towards administrative and fundraising?

My concern here is that depending on the accounting method used, it might make an organization look slightly less-efficient than it actually is (by increasing the fundraising costs). In turn, this could affect its ratings on CharityNavigator, GuideStar, etc.

With that said, if payments are handled 100% entirely by an intermediary company, then maybe it won’t affect the charity (because the charity would only count the money they get from the intermediary as the donation amount). Ultimately, this is something you will need to investigate if it concerns you, because I do not have the answer.

The Pros

1. Might be more efficient
For smaller charity donations made via check, the amount of time it takes for the charity to open the envelop and manually process the donation also costs them money. So for larger donations I would say check is always the way to go. But for small amounts, credit cards might be more efficient.

2. Rewards encourage giving
Some people say rewards programs encourage spending. Well, if that spending is on donations to good charities, that probably isn’t a bad thing. If the higher rewards plus the added convenience of a credit card means you will be more inclined for charity donations, then in my opinion that’s a positive thing.

This guest post was written by Mike, who is the founder of CreditCardForum. He has been writing credit card reviews for years, including a recent review of the Freedom card by Chase. On the topic of charities, his favorite is World Vision.

In our last article, we talked about 5 money myths about housing and taxes.

That was based on an article posted by Investopedia, which discussed various money myths that can end up being costly.

Today, we will talk about misconceptions surrounding investing and money.

5 Money Myths About Investing And Money

I Don’t Have Enough Money To Start Investing

There are many online brokers that will allow you to start an account with less than $50! That means that there really isn’t much of a barrier left to begin investing.

Of course, you can’t buy a lot of anything with $50, but getting started is usually the hardest part.

If you are saving for retirement or some other goal, starting today – even with small, monthly deposits – can make a huge difference when you need to rely on that money!

Once you get a little momentum, you’ll be motivated to take advantage of both 401k contribution limits and IRA contribution limits. But the key is to start today.

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The Stock Market Is Tanking, So I Should Sell My Investments And Get Out Before Things Get Any Worse

This is one that really bugs me because it shows complete panic and a failure to think rationally. Let’s take a look at how this usually plays out…

People get fearful and panic when stock prices fall. That causes them to sell at or near the lowest possible point. Then when the market starts to recover and prices rise quickly, they jump back in and buy at a very high price – the price is usually pumped up by irrational exuberance, and will drop to a more reasonable level shortly.

So, what usually happens is that they buy at a high price and then sell at a low price. In order to be successful at investing, we need to be disciplined enough to do the opposite. That means that we can’t just follow the crowd during times of panic or excess excitement. We need to embrace a contrarian strategy!

I’m Young – I Don’t Need To Worry About Saving For Retirement Yet. / I’m Old – It’s Too Late For Me To Start Saving For Retirement

Even though it is now harder for a creditor to garnish Social Security benefits, it would still be wise for you to set up other means of retirement savings now! There are two things that you can take advantage of in your youth – compound interest and time to recover from mistakes. You will need both if you plan to maintain a decent standard of living in retirement.

If you are closer to retirement, then you can still take advantage of catch-up contributions and your employer 401k match. Keep in mind that there is no rule that states that you can’t save for retirement outside of a traditional “retirement” account. You just might not get the same tax breaks, but you can still put money aside for your golden years.

If you are getting a late start with your retirement savings, this may end up being the best retirement plan for you!

You Get What You Pay For

Considering the fact that people end up paying different prices for the same item/service, this idea can’t be completely true. If you follow this line of thinking, you will be stuck paying the highest price for every thing that you buy, or be willing to pay for maintenance and/or replacements often.

This money myth is usually given by those who wish to justify a huge purchase. They claim that being careful with your finances and looking for a bargain, will cause you to buy a cheap product that will need replacing often.

As with anything in life, you can’t just assume something is true just because you hear it often. As you can see, doing so can have a tremendously negative effect on your finances!

Carrying A Balance On My Credit Card Will Improve My Credit Rating

When I first got a credit card, I heard this money myth a lot. Unfortunately, it is still going strong. Many people think that in order for a credit card to have a positive effect on your score, you need to carry a balance each month, and if you pay it off at the end of the month, it will negate that positive effect.

This thought has caused many people who had the money to pay off their credit card at the end of the month, to only pay a portion of it, and having to pay interest on the rest!

When we talked about ways to increase your credit score, we mentioned that your credit card balances play a part in determining your rating. However, the most important things to know about your balance is that you should pay it off each month, and you should keep it under 30% of your available credit.

You can even use your card to cover your living expenses – in order to take advantage of certain credit card benefits – but just be sure to pay it all of at the end of the month! This will have the most positive effect on your credit score.

Reader Questions

1. How many of these money myths have you believed at some point in the past?
2. Which ones do you still think may be true?
3. How do myths that have been proven wrong time and time again, continue to stay popular across generations?

Starting a business necessarily involves significant amounts of capital spending. The industry, and the product or service the business seeks to provide, may dictate purchasing equipment, factory or office space and hiring employees.

Entrepreneurs who want to start a business and work at building it full-time have little choice but to go into debt. The alternative is to issue shares of stock to investors in anticipation of future dividends. Since a new business is not likely to attract venture capitalists, financing the creation of a business through debt is the only option.

A new business has access to several potential sources of credit. The business owner can apply for a business loan from a bank, preferably one with whom the owner has a prior relationship. This is risky because the owner may be turned down and have to look elsewhere for credit.

Credit cards may be the answer to his dilemma. Charles Huang of Harmonix maxed out his credit cards to finance the business in 2007. The popular video game series, “Guitar Hero,” grew of his efforts. The founders of the search engine Google, Sergey Brin and Larry Page, also used their credit cards to fund the start-up in the mid 1990s.

[Side note from Jason: There are hundreds of examples of credit cards backfiring as well.  A business credit card can get you through times when cash flow is tight. As always, you must have a solid business plan to grow your sales and increase your revenue]

Personal Credit Cards

The quickest way to starting a business is to use personal credit cards. This route is a fast track to either success or failure, depending on the start-up idea and execution. The trade-off is to go into debt now in order to make enough money to pay it off later. The entrepreneur borrows from his future success in order to start the venture and get it going. The primary motivation for these businessmen is the chance to try something big and turn a hobby or a crazy idea into a profitable enterprise.

Using personal credit cards to do this is fraught with pitfalls. Creditors may get jittery when faced with rapidly increasing debt loads and suddenly lower credit limits. Alternatively, using so much available credit increases the credit utilization ratio, which can also trigger negative consequences. The ratio is a useful indicator of the risk of default. The higher the ratio, the higher the risk of default, at least in the minds of creditors.

Small Business Credit Cards

The differences between personal credit cards and business credit cards do not mean that entrepreneurs should treat them differently. For a start-up with no capital and no history, creditors view it as indistinguishable from the owner. The owner’s credit history becomes the business’s credit history. All the steps borrowers can take to clean up their credit report will help them get approved for a business credit card.

The risks are different with small business credit cards than with personal credit cards. The regulations and rules of the Credit CARD Act of 2009 do not apply to small business credit cards. Entrepreneurs have more flexibility for their funding needs at the cost of increased risks, like a sudden rise in interest rates or lower credit limits. The advantages of small business credit cards can help compensate for these risks. Some cashback credit cards are specifically tailored for business purchases and can offer as much as 3%.

But with anything, you must be sure to weigh the costs, and make an informed decision.

Anothony Benedict writes for CreditDonkey.com, a credit card comparison site.

There are so many scams out there that claim to be able to fix or repair your credit. Many of them will actually charge you an outrageous fee and pretend to wipe all negative information from your credit report. Finding and fixing problems with your credit is easier than it seems. Learn how to increase your credit score with these simple, yet effective techniques.

How To Increase Your Credit Score:

Get A Copy Of Your Credit Reports

Before you can improve your credit score, you need to know exactly what makes up that score. That is why the first step in this process is to request a copy of your credit reports. We can’t look at how to increase your credit score without first seeing the details!

Although there are many credit bureaus, you really only need to focus on the three major players (Equifax, TransUnion, and Experian). Everyone is entitled to one free copy of their credit report from each of the 3 major bureaus each year. Simply go to AnnualCreditReport.com (this is the official site…don’t fall for those other emails and pop-up ads) to request free reports from each of the three credit bureaus.

One thing to note, is that you are only entitled to see a copy of your report for free, if you want to see your score, then you’ll have to pay a small amount (around $7 or $8 for each report).

Dispute Any Errors

Once you have a copy of each of your credit reports, check them thoroughly for any errors. If you find an error on your credit report, you have the right to dispute it.

This would mean writing a detailed letter to the credit bureau, explaining what the error really is, and requesting an investigation. Annual Credit Reports makes this entire process really easy.

When exploring how to increase your credit score, this is one of the easiest ways to have a huge impact.

Pay Your Bills On Time

Your ability to pay bills on time makes up 35% of your credit score! This is why having just one late payment reported to a credit agency, can be detrimental! Make sure that if you are already late on a payment, you become current as soon as possible. If your late payment was made recently, call your creditor and ask (or beg) them to forgive your tardiness – this will help you to avoid the late payment fees as well as the hit to your credit score.

If you already have a late payment on your report, the best thing that you can do is to be current on all your accounts from now on. The further away in the past your delinquent payment is from today, the smaller the negative impact on your finances.

Pay Down Your Balances

Having balances that are close to your credit limits does damage to your credit score. The amount of debt that you have constitutes 30% of your score!

Look through all of your accounts and immediately pay down any one of them where your debt to credit limit ratio is more than 30% (this would be more than a $300 balance on a $1,000 limit). Once you have done this, then go through the same exercise, but this time aiming for 10%.

If you are looking to have a sudden impact on your credit score, this is probably the best way. It may require a huge sacrifice (like a temporary 2nd job, or selling some of your “stuff”), but it probably be worth it.

Don’t Close Old Accounts

The age of your accounts also has an impact on how creditors view you. The more “old” accounts on your report, the better your credit score will be (holding all else equal).

This means that you must try to keep open old accounts – even if you don’t use it anymore. Actually, you may want to get a little use out of your older credit cards – buy a tank of gas each month and pay it off right away – this way, they won’t be tempted to cancel your account due to inactivity.

Don’t Apply for New Accounts

Another implication of account ages, is that you should avoid opening any new accounts (with possible exceptions…see below). This is because once you get these accounts, they will bring down the average age of your credit!

Also, every time you apply for credit the bank has to pull your credit report, which is noted as an inquiry. These types of inquiries will reduce your credit score, and they account for 5% of the total. So even if you see a bank offering great credit card benefits, don’t apply!

Take Out An Installment Loan

Most of us – especially when we’re young – tend to focus solely on revolving credit (such as credit cards). However, banks and other lenders like to see how you handle installment loans as well. These are typically mortgages, auto loans, student loan repayments, and personal bank loans.

I remember when I tried to borrow money to buy a car when I was younger. I was told that I couldn’t get a loan for a used car because my credit score was too low. To me, this didn’t make sense because I handled my credit cards very responsibly up to that point. However, they then explained to me that since I didn’t have an installment loan, my credit score still wasn’t as high as they wanted.

So, I had to buy a new car in order to qualify for a loan – I actually needed a cosigner in order for everything to go through.

If you are in a similar situation, then try to take out a small personal loan from your local credit union or small bank – they are usually easier to work with – then be faithful to pay it back on time. Your credit score should see a nice improvement after this.

Reader Questions

1. What things have you done to increase your credit score?
2. Have you ever been denied a loan because you haven’t borrowed enough in the past?
3. Do you think we should focus on our credit score as much as we do?

When selecting a credit card or a charge card there are myriad options and features to consider. You must compare rates and fees, decide what type of rewards you want (in any), and determine from which issuer and on what network your card will be.

The breadth of this process is ever-changing as features, products and even credit card companies emerge and fade away. One feature that has surfaced and garnered significant attention recently is called No Preset Spending Limit (NPSL). Visa Signature credit cards, World MasterCard credit cards, and the charge cards from both Chase and American Express all have this feature, but what is NPSL exactly and should you get a credit card with it? Let’s find out.

No Pre-Set Spending Limit (NPSL) Defined

NPSL merely means that a card’s limit is variable, changing on a month-to-month basis in accordance with spending habits, demonstrated payment responsibility and trends in the overall economy.

Therefore, contrary to popular belief, cards with NPSL do not have limitless spending capabilities. In fact, NPSL card limits really only differ from those of standard credit cards in that they change regularly and users don’t know what they are.

Credit card companies don’t release their NPSL cards’ limits because doing so would bust the myth of unlimited spending power that serves as one of the primary reasons many people get such products. Therefore, in terms of spending capabilities, all an NPSL card will really provide relative to a standard credit card is uncertainty.

You never know exactly how much available credit you have at your disposal with an NPSL card, which increases the likelihood that your card will get declined unexpectedly and makes it difficult to budget or feel confident in making large purchases.

Pure spending utility is not the only measure of a credit card though. It is also important to evaluate the NPSL feature’s effect on a user’s credit standing. According to an NPSL Card Study by CardHub.com, in most cases, NPSL issuers report proxies to the credit bureaus in place of their card’s true spending limits, again with the intent of preserving the myth of unlimited spending.

NPSL Cards and Your Credit Score

This practice is significant because FICO (the most widely used credit score) and lenders both incorporate information from the credit bureaus into credit-risk evaluations. As a result, proxy limits can provide a misleading sense of your fiscal responsibility.

For example, a proxy limit that is lower than your actual credit limit will make it seem as if you’ve exhausted more of your available credit than is really the case. Since high credit utilization is negatively regarded by creditors, using an NPSL card could thus result in your credit score falling through no fault of your own.

NPSL issuers also use a variety of different proxy limits, making the effect they have on your credit often unpredictable. In addition, they sometimes simply choose not to report information about their cards’ limits, making it seem as if your card doesn’t provide any revolving credit. In contrast, for their non-NPSL cards, issuers tend to report actual credit limit information, meaning that if you have one, your credit score will only reflect your usage, not a credit card company’s secrecy.

NPSL Cards Not Worth the Hype

By now, it’s becoming pretty clear that the NPSL feature provides no real benefit. This sense is elucidated even further when you consider the fact that excellent credit is required for NPSL card approval.

In comparing NPSL products to other spending vehicles for people with excellent credit, such as traditional rewards credit cards, the answer to our original question becomes quite obvious: No, you should not get a credit card with NPSL.

This article was written by Odysseas Papadimitriou, CEO and Founder of CardHub.com, a website that helps consumers compare credit cards and buy discount gift cards.