This is a Crash Course in Everything You Need to Know About Credit Cards

Credit is complicated, amiright?

OK, maybe not the most confidence-inspiring thing to see on a personal finance site.

But it’s true. Credit cards and other debt come with interest we often don’t understand and payment terms we can’t live up to.

Even if you’re savvy and want to keep on top of your finances, just getting hold of the credit information that’s used to decide nearly everything in your life can feel like a feat.

We’re here to simplify all of this for you. To help you get smarter about credit, pay down debt and put more money in your pocket, here’s a quick rundown of some credit card basics:

(Hint: Bookmark this page to come back to anytime you have questions about using credit cards! You’re welcome.)

How to Build Credit

The weird conundrum about credit is you have to have it to earn it — but you would have had to… have credit to earn that original credit?

It sounds like a disaster, but don’t worry. This isn’t a high school lunchroom. You can totally break into the cool kids’ circle. Here’s how to start building your credit from scratch.

Why You Should Use Credit Cards Instead of Cash

We think Dave Ramsey was wrong when he said, “Responsible use of a credit card does not exist.”

It’s true credit cards are tough to keep under control, and that’s why so many people are afraid to use them. But you can do it. And when you do, you get to reap fantastic rewards!

Here are 10 smart reasons to pay with credit cards — as long as you can pay your balance off at the end of each month.

Which Credit Cards Should You Use?

Not all cards are equally beneficial. With some, you simply run the risk of building a bunch of debt with a high interest rate.

With others, though, you can earn free flights and hotels, points toward food and entertainment, and even cash. Here are a few to consider:

Is an Annual Fee Ever Worth It?

Ever wonder if you should pay to use a credit card? Lots of great credit cards come without fees, so why choose one with an annual fee? Because those are often the ones with the best rewards!

Cash-back rewards could net you a profit over the annual fee for your card. In that case, the fee could be worth it.

But it gets tricky (of course). To help you figure out whether the credit card you’re considering is worth it, our contributor Steve Gilman created this simple formula.

How to Keep Track of Your Credit Score

Once you establish credit, you’re going to want to keep an eye on your activity.

Credit card companies, lenders, landlords and others will use your credit report to determine whether to trust you. You can make sure you understand what kind of impression you’ll make by watching your credit score and report closely.

(Pst. Credit score and credit report are not the same thing.)

First things first: What the F*CO is a credit score? In plain English, we explain credit score basics and why you need to know yours here.

And we compared two common apps that show your free credit score: Credit Sesame versus Credit Karma — which is best for you?

How to Read a Credit Report

You want more than just that grade. You want to understand what earned you the grade.

That’s why you’ll want to see your credit report — the statement that lists information about your credit activity and current situation, like payment history and status of your credit card accounts.

Here’s how to get your free credit report (no sneaky tactics here) — and how to understand the financial mumbo jumbo it contains.

One bummer: You might find mistakes on your report. Lenders and reporting agencies are far from perfect, so they might neglect to update your credit report when you pay off debts, for example. Or someone will hit the wrong key at the office, and your credit will be marred with some debt you never touched.

Here’s how to fix those mistakes on your credit report.

What Affects Your Credit Score?

I’ve noticed an odd phenomenon: When you visit any site that lets you check your credit score, it always has a big note that says, “This won’t affect your credit score!”

That’s true: Checking your credit score won’t hurt it. When you think about it, wouldn’t that be ridiculous? That’s like if your professors docked your grade when you ask to see your test scores.

But people still believe this myth, because the algorithm that determines your credit score is as confusing and scary as the one that determines what you see on Facebook (and nearly as life-altering…).

Here’s what’s actually included and how much each weighs into your score:

  • How much of your available credit you use: 30%
  • How old your credit accounts are: 15%
  • The variety in types of credit you’ve taken out: 10%
  • How often you’re applying for new credit: 10%

Here’s a more detailed overview of the types of activities that can affect your credit score (and those that can’t).

On a similar note, here’s exactly how closing an old credit card can affect your score.

And one more thing: What happens to your debt when you get married? A lot of bad information makes the rounds on that front, so let’s clear it up. Here are six myths about debt and marriage you should stop believing right now.

How to Pay Off Credit Card Debt

To redeem Dave Ramsey, we do like the debt-payoff method he pioneered called the debt-snowball method. (Click that link to learn all about it.)

While it’s not the most perfect way to pay off credit cards — because it lets debt sit and gather interest — it’s a smart way to get moving when you feel immobilized by how much you owe.

Experts would recommend what’s come to be known as the debt-avalanche method of debt repayment.

This method eschews the instant gratification you get with the snowball method, but it’ll probably save you more money in the long run.

How to Consolidate Credit Card Debt

Another option to consider when you have a lot of debt to pay off is consolidation. This basically means you’ll take out one big loan to pay off your smaller credit card debts.

Ideally, that loan has a lower interest rate than your credit cards, so you’ll owe less long term. Plus, you’ll just have the one monthly payment to worry about instead of a bunch of payments with a bunch of due dates.

If you want to consider debt consolidation, here are six steps to get you started.

What to Do When You’re Out of Options

Sometimes life gets the best of you. We understand that. If you’re already up to your ears in debt and not sure what to do next, we’ve got a few final pieces of advice.

Those folks on the late-night commercials who promise to help you pay off debt quickly? They spin a good yarn, but their promises are often way too good to be true.

If getting help seems like the best route for you, here are four things to consider when choosing a credit-repair company.

If you’re dealing with debt-collection agencies, you don’t have to put up with harassing phone calls. Know your rights.

Any More Questions?

Credit cards and debt are sort of ginormous issues in the world of personal finance. They’re becoming ubiquitous in our lives, even though most of us barely understand how any of this works.

We hope these basics help untangle some of the confusion — but we know there’s plenty more to cover.

What more do you want to know about credit cards and repaying debt? Send us your questions, and we hope to answer them in a future post!

Advertiser Disclosure: Many of the credit card offers that appear on this site are from credit card companies from which The Penny Hoarder receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). We do not feature all available credit card offers or all credit card issuers.

Dana Sitar ( is a senior writer/newsletter editor at The Penny Hoarder. Say hi and tell her a good joke on Twitter @danasitar.

This was originally published on The Penny Hoarder, one of the largest personal finance websites. We help millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. In 2016, Inc. 500 ranked The Penny Hoarder as the No. 1 fastest-growing private media company in the U.S.

Bitcoin vs. Gold – Differences, Similarities and Trading Approaches

Bitcoin is emerging as a lucrative investment that provided both traders and investors spectacular returns. Some traders and investors consider it the new “Gold”, some consider it a hedge in times of uncertainties. Stances vary but one thing is obvious, Bitcoin is more and more present in investors’ and traders’ portfolios.

In this article we compare Gold to Bitcoin and discuss trading approaches to benefit from both.

Similarities Between Bitcoin and Gold

Bitcoin and Gold have multiple similarities. They are both portable and convertible into fiat currencies, offer anonymity and are decentralized.

This decentralization and lack of governmental control makes them both appeal to investors concerned about the following:

  • The state of Governments’ finances and how they can repay their debts
  • Banks’ exposure to sovereign debts
  • Governments weakening currencies to encourage exports
  • Inflation

Therefore, both Gold and Bitcoin appeal to investors with a similar sentiment of “distrust” in the current economic system and looking for alternatives that could offer a certain “safe haven” aspect.

In addition to appealing to investors with a similar sentiment, both Gold and Bitcoin achieved a wide and universal acceptance. In fact, Bitcoin is starting to be considered a commodity in many countries because of its interchangeability.

In Japan, it is officially recognised as a currency and a store of value. Hence, Bitcoin, just like Gold, is considered a commodity, a store of value and even a currency depending on the country, the context and the parties involved in the trade.

Differences Between Bitcoin and Gold

One of the main differences between Bitcoin and Gold is the tangible aspect of Gold versus the virtual aspect of Bitcoin. The maturity level of these markets varies rather significantly, which is one of the reasons Bitcoin’s price is extremely volatile.

Unlike Gold, Bitcoin also tends to fluctuate in response to positive or negative technical developments in the underlying technology as well as the sector. This is another factor leading to wide price variances in a rather short horizon. Compared to Gold and even the conventional stock market, Bitcoin is very volatile. This is an aspect both traders and investors need to consider when thinking of how to trade Bitcoin. For if it is used to their advantage, volatility can yield superior returns.

In general, trading Bitcoin or investing in Bitcoin requires at a minimum a basic understanding of the technical aspect of Cryptocurrencies. Because the underlying technology is relatively new, this is an aspect that makes Bitcoin and Cryptocurrencies more appealing to traders and investors that are comfortable with the risk of investing in a rather new technology such as Cryptocurrencies. In this aspect, Bitcoin differs from Gold as the latter remains the top choice for conservative investors.

All in all, Gold’s general acceptance and trust levels were established over centuries as it was always considered a “safe haven” asset. Nowadays, it is impressive to see how Bitcoin is also shaping up to have its distinct place in many portfolios. Especially considering the multitude of options available today to both investors and traders to gain exposure to this booming market.

Bitcoin Trading approach

How to trade Bitcoin and how to maximise returns? A key question with varying answers. What is important for traders to consider: what is the goal they are trying to achieve, how much capital they have allocated or that they could access using leverage, and most important their time horizon.

Answering those questions will help them choose the trading style and approach that will help them achieve their goals. We have identified 3 winning approaches to trading Bitcoin:

Approach # 1: Bitcoin as a long-term investment

Buy and hold for the very long term (year or more). To get the maximum returns on investment using this approach, scoring an entry at a low-cost price is very important.

Once a position is initiated, investors need to be able to monitor the investment and overall Bitcoin performance and at the same time withstand the sharp price fluctuations.

Think of those who bought Bitcoin in 2013 and sold it in 2014 or those who bought in 2015 and sold in 2016 or 2017.

A good way to mitigate risk is a scaling approach so instead of one entry, investors could split the funds allocated for the trade into 2 or 3 tranches. This approach is known as Dollar Cost Averaging.

Approach # 2: Swing trading Bitcoin

This approach consists of buying important dips in bitcoin price and selling when the price has a major run then wait for the price to revisit the breakout level to re-initiate a position. If executed successfully, it could yield major returns in a relatively short timeframe especially when comparing these returns to conventional stocks or event ETFs.

Because Bitcoin is likely to respond to technical news (both positive and negative ones) this tends to cause volatility in the sector and could be lucrative for disciplined traders. Shorting the tops is also an option but comes with a higher risk level.

Approach # 3: Day trading

Day Traders will try to capture Bitcoin’s daily price swings and close their positions daily. For many traders, this is a preferred approach as they can manage to make decent profits without the risk of being caught in an overnight price retrace or even a flash crash.

A mastery of price support and resistance levels, discipline and closely monitoring the price is key when it comes to how to day trade bitcoin successfully. Day traders can also initiate long or short positions and benefit from upwards and downwards movements.

The daily Bitcoin Chart below shows clearly how Bitcoin’s Price can be very volatile and if traders have a good strategy, they can score very decent returns.

Gold Trading approach

The trading approaches mentioned above for Bitcoin could be applicable for Gold with the major difference being that Gold price doesn’t offer as many sharp price movements for day or swing traders.

As for the investing approach, it has been traditional way to invest in gold for centuries. Gold is also used as a hedge for some investors in case of political uncertainties, risk of a market crash of inflation.

Gold responds to different triggers and catalysts although some analysts are starting to say that both Gold and Bitcoin are starting to be correlated.

Unlike Bitcoin, Gold can be traded using multiple vehicles currently not available for Bitcoin. These vehicles range between the physical metal, certificates, ETFs, leveraged exposures such as gold miners and Gold miner’s ETFs and many more.

To trade Gold or Bitcoin successfully, traders have access to competitive swap rates, margin trading and are able to trade both Gold and Bitcoin 24 / 7. They can also initiate long and short positions on Gold and Cryptocurrency pairs including Bitcoin.

The post Bitcoin vs. Gold – Differences, Similarities and Trading Approaches appeared first on Home Business Magazine.

How to Easily Recession-Proof Your Finances

How to easily recession-proof your finances

How did your money do when the 2007 -2008 recession hit? It wasn’t good for a lot of people. Many had to declare bankruptcy or make very tough financial decisions just to stay afloat.

It’s not a matter of if a financial recession will strike, it’s when it will happen. While nobody can accurately predict when the next recession will finally arrive, there are certain steps you can take to “recession-proof” your finances so you will not have to worry about making ends meet when the current bull market finally ends.

Set Aside At Least Three Months of Living Expenses

Did you struggle to make ends meet during the Great Recession a decade ago? Thousands of people suddenly lost their jobs as companies downsized or went out of business in the largest American economic downturn since the Great Depression. One day, these workers were earning a steady a paycheck and the next day they weren’t.

Could you afford suddenly losing your job or at the very minimum taking a steep pay cut? If you would have to max out your credit cards and go into debt because you didn’t have enough money in the bank to make ends meet, the first step you need to take is to save at least three months of living expenses. During the Great Recession, it took three months to find a replacement job on average.

If you don’t know where to begin funding your emergency fund, here’s a step by step guide:

  • Open a high-interest online bank account (never pay bills from this account)
  • Schedule automatic monthly transfers of at least $100
  • Set mini-milestones of $500, $1000, etc.

At first, it might be hard finding an extra $100 a month to set aside. These quick money hacks can instantly help you save at least $100 a month. You may also have to trim your non-essential spending like going on a cheaper vacation or not going out to eat as much.

Make Extra Loan Payments

If you are having a hard time trying to build an emergency fund, another trick to lowering your monthly expenses is to pay off your existing loans. Once you pay off a credit card balance, car loan, or home loan entirely, that’s one less monthly payment you are required to make. Instead of sending a check for $400 each month to the bill collectors, it can be deposit it into your emergency fund instead.

Having fewer monthly expenses also means you have to save less money overall to meet the three months of living expenses goal. Let’s say for example that your living expenses are $2,000 with a car payment and $1,500 without the car payment. No longer having a car payment means you can save 1,500 fewer dollars and still have enough to survive three months without a paycheck. Of course, if you can set aside the extra $500 as if you still need $2,000 a month in your emergency fund, the extra $1,500 that would have been your car payment for those three months is now your emergency savings for the 4th month of living expenses.

The easiest way to calculate your monthly expenses and savings balance is to use Personal Capital. It’s free and will automatically link to your financial accounts and send you weekly status updates.

Boost Your Income

While there are still plenty of side hustle opportunities, you might consider one of the 101 awesome ways to make extra money. Even in a recession, there will still be ways to make extra money, but there might be fewer opportunities as individuals and companies initially tighten their spending. If you can network with long-term clients now, then you can have a steady income stream during the recession as you shouldn’t lose every existing client.

Shop More Efficiently

Recession or not, you should always be a smart shopper. For starters, that means not saying “Yes” to every impulse purchase or borrowing money for every large purchase. It also means waiting to buy items on sale, only buying what you will truly use, and using a rewards credit card or a cash back app like Ebates that can give you 1%-40% cash back on every purchase.

Being an efficient shopper will stop you from overpaying or buying items you don’t really need. That’s money you will have a hard time getting back, even if you sell your items on Craigslist or eBay. The money saved can be saved for a rainy day or used to pay down your loans.

Have a Diversified Investment Portfolio

When the bull market finally does arrive, the stock market will stop having the current record highs and will have a correction (negative growth). Your first tendency might be to sell and wait for the market to improve before you begin investing. While you should follow the axiom of “buy low and sell high,” not investing at all and trying to time the market can be a terrible mistake.

Yes, investing in a recession can be frightening as it’s harder to predict which investments will lose money and which ones will profit. However, recessions are an ideal time to buy because most investments will eventually increase in value and you will profit. For instance, the stock market indices have doubled since the Dow hit bottom in March 2009. Today, a $10,000 investment can be worth $20,000 (or more)!

To avoid panicking and not investing during a recession, you can invest with Betterment. This automated investing platform will create a diversified portfolio that will have the appropriate risk tolerance for your age and investment goals. A diversified portfolio will minimize your potential losses so you don’t end up “losing it all” and will put you in a good position to earn consistent, positive returns when the market finally rebounds.

If your employer offers a 401k match, you should also continue to meet the entire match. You should do this in any market, but, that money is even more valuable in a bear market when stocks trade at a lower price. As a tip for 401k diversification, never invest more than 10%-15% of your portfolio in company stock. For a brief history lesson, just ask any former Enron employee.


Recessions can be downright scary if you are not financially prepared. While we don’t know when the next one will hit, we know it will come eventually. Use the tips above to help prepare now before you get taken by surprise. You will be surprised how much more peaceful your sleep can be this time around compared to the last recession.

The post How to Easily Recession-Proof Your Finances appeared first on Debt RoundUp, the content owner.

Money Concerns and People That Financial Advisers Ignore

In a time when so many people in their 50s and 60s sorely need financial advisers, a new report finds that money pros are often ignoring many of their goals. The result: bad advice or no advice on key financial planning issues for boomers. And wives who aren’t breadwinners get especially short shrift. The report,…

The post Money Concerns and People That Financial Advisers Ignore appeared first on Next Avenue.

Making America’s Workplace Savings Plans Work Better

(The following is adapted from From Here to Security: How Workplace Savings Can Keep America’s Promise, published by McGraw-Hill.) Boomers approaching retirement are participating in the late stages of a 40-year financial experiment: the first generation to finance retirement with assets accumulated in “defined contribution” workplace savings plans like 401(k)s, 403(b)s and Individual Retirement Accounts…

The post Making America’s Workplace Savings Plans Work Better appeared first on Next Avenue.