There’s no time like the present to start thinking about your finances for the New Year. You don’t even have to come up with a New Years Resolution to get on the right track. Instead, you can just avoid doing some of the things that often end up damaging your finances. Check out our list of 5 things that you should not do in 2013.

1. Apply for a bunch of offers: With the New Year comes lots of tempting credit card deals. Each time you apply for one of these juicy offers the card company checks your credit to determine your eligibility. Every time this is done it puts a ding on your credit and can lower your credit score. When you apply for multiple offers then there are multiple credit checks done and your score could suffer. This is not a good way to start off 2013.
2. Max out your credit cards: Charging up your cards up to the limit doesn’t just get you in credit card debit, but does something even worse, it lowers your credit score. Your credit score is the most important piece of your financial stability. Without a good, solid credit score life becomes much harder. You can’t get approved for a loan or you are paying a much higher rate.
3. Be a co-signer: Being a co-signer is risky. Everything that happens on the card account is linked directly to you. That’s right, if there’s a late payment it belongs to you. When you are a co-signer (or even authorized user) everything that gets reported to the credit bureau is under your name too. This could wreck havoc on your credit score even if you aren’t the one using the card.
4. Fall for the juicy offers: It always boosted my self esteem a little when I received an amazing card offer in the mail and it said I was pre-approved. What I quickly realized was I still had to apply for the offer and actually be approved. That sweet deal I thought I already had in my pocket was really reserved for those with the best of credit scores. You might be eligible for the card, but there’s no guarantee it’s the version with the great bonus offer and low rate.
5. Skip the fine print: Let’s face it, nobody really wants to read the fine print, especially for a credit card. It’s long, boring, and half the time you don’t understand what you’ve read. The problem is when you don’t read this information you don’t really know what you’re getting into. This is the place where all the “real” details of the offer are kept. This is where the truth comes out. The flashy, to good to be offer is revealed in the fine print so read it!

Photo Credit: marc falardeau via flickr

We often view credit cards as a way of potentially ending up in debt. While it’s true that being a credit card users comes with a certain amount of responsibility, it’s also true that a credit card can be an effective tool for your small business. If you are a responsible user, having a business credit card can offer your small business a variety of benefits.

Keeping Your Expenses Separate

In my opinion, one of the most important reason to have a credit card for your business is because it will allow you to easily track and view your business expenses. If at all possible you should avoid using cash for business expenses and also avoid using the business card for personal expenses. A common mistake for business owners is to combine personal and business expenses which makes determining the business profits and losses difficult. Having a business credit card is a very easy way to keep all your business expenses in one place.

Makes Tax Time More Manageable

Most people I know dread tax season, especially if you are a business owner. It can take a great deal of time, energy and even stress to get all your paperwork together in order to file your taxes. If you are a small business owner, you are even more put off with taxes because you have to complete both business and personal taxes. To make tax season easier on yourself, you should have a dedicated business credit card. This will minimize the time it takes to sort through various paperwork and you will have all your business expenses in one place. All you have to do is get a copy of your annual statement and easily see what money was spent and on what.

Earning Rewards

Business credit cards have come a long way. There are numerous cards that offer rewards, special rates and beneficial perks. If you leverage your card right, you can save yourself money by earning cash back. If you have authorized users on your business account, you can use their spending to earn rewards as well. Cash, miles or points can be earned through spending on business credit cards and be applied to free business travel, profit, or given to employees for personal use. If you’re always using your card for business spending, the rewards can accumulate much faster than on a personal card as business purchases are likely to be larger and more frequent.

Cash Flow Management

A business credit card is essential for managing your company’s cash flow. When you are using a credit card, you are taking a loan from the bank that doesn’t need to be repaid until the statement due date. You are basically getting an interest free loan for about a 25 day period. You won’t pay interest as long as you pay your balance in full by the due date.

Establishes Credit and Creditability

We all know just how important our credit history is and building a solid one can be done by using a credit card. It requires you to manage your account responsible, but nevertheless it is a great way to build credit. In addition, having a business credit card lends credibility to your business even if you’re just a one-man operation. Seeing the business name on the credit card instead of your personal name will evoke a sense of confidence in your clients.

The first time I heard the term “debt snowball” I thought it meant the horrible problem of debt growing bigger and bigger and careening out of control. But, in fact, I found out that it’s quite the opposite. As you may already know, the debt snowball is the process of reducing that out-of-control debt in a methodical way that continues to gain momentum – yes, like a snowball rolling down a hill.

Why Use The Debt Snowball Method

The debt snowball is a method for paying down any debt, not just credit cards, and it’s extremely easy to implement. By tapping into this method, the debt snowball can save you thousands of dollars in interest payments and significantly (by years) reduce the time it takes to get you out of debt.

How To Get Started

• Make a list of all of your credit card debts (you can include other debts as well, such as school loans, auto loans, and home equity loans).
• For each loan, list the creditor, the outstanding balance, the monthly minimum payment, and the interest rate.
• Add up all the minimum monthly payments due, and continue to pay at least this amount until all of your debts are paid in full.
• As your balance goes down, so will the minimum payment, but continue to apply the higher amount to the accounts each and every month. When you pay off the card with the highest interest, take the amount you were paying on that card and put it toward the card with the next highest interest rate and so forth.
• Pump it up! When you have extra money (tax return, rebate from your new phone, etc.), apply it to your highest interest rate card. These extra payments result in great savings for you.

Why Pay Down the Highest Interest First (and not the lowest balance)

There are two schools of thought on how to approach paying off your credit card debt using the Debt Snowball.

1. Pay off the smaller ones first and work up to the bigger ones.
2. Pay off the higher interest rate cards first and work down to the lower ones

Think Bigger and Bigger vs. Faster and Faster

Attacking the cards with the highest interest first makes the most sense. Your savings will be greater and the time to pay off the total debt will be significantly less– effectively reducing the total amount of debt in a shorter amount of time.

If you approach the smallest debts first, without concern for the interest rates, you can still get to your goal, but it will take you longer and cost you money. The psychological benefit of the quick payoffs might be the key for many people but consider this; the need for “instant gratification” is what got you in this fix in the first place. Once the small accounts are paid off and the big ones are still looming ahead, it may become disheartening for you and the positive (and small) initial boost will be a dim memory.

Better Credit = Less Interest = More Savings

But wait, there’s still another way to save — an added bonus to the effectiveness of the debt snowball plan is your improved credit standing. As you start paying down your balances, your payment history will improve and your credit score will begin to go up. Take this opportunity to contact your credit card companies and ask to have your interest rate reduced. Often it can be as simple as a phone call. With auto loans and home equity loans, it will likely require a refinance, but the savings can be substantial. Again, keep paying the amount you were paying before the interest was reduced for some serious momentum.

How to Avoid the Pitfalls

As straight forward as this debt repayment method is, you need to be prepared for some temptations and some pitfalls. These are a few of the biggies.

1. Watch out for more debt. When you start to get some breathing room, don’t take this as the go ahead for more spending. While expenses (and impulses) are sometimes unexpected, do everything in your power to avoid new debt.
2. Have an emergency fund. Start by setting money aside for the unexpected. Even a small cushion of money will help you avoid more debt in a crisis.
3. Don’t get discouraged. Whether you are motivated mathematically or psychologically, consider the end result (most money saved) and pick the approach that will sustain your efforts and get the (snow)ball rolling.

The whole idea is to get you out of debt and save you money. We’re talking your personal finances here! Review your accounts, use the debt reduction calculator provided at CNN.com and see how long it will take you to roll yourself out of debt, and how much you will save by paying off your high interest cards first.

Photo Credit: lemonjenny via Flickr

Contrary to popular belief, credit cards aren’t inherently evil. As a matter of fact, they can be very rewarding and save you money. However, if they aren’t managed properly they can cause a great deal of financial heartache because have the power to hurt your credit score. If our troubled economy has taught us anything its that a good credit score is more important now than ever before. If you have any hopes of getting approved for a car loan, mortgage, or even credit card than your credit score has to be up to par.

Credit cards are kinda like a double edged sword, with one side offering you great benefits and rewards, while the other side having the power to seriously damage your financial stability. That piece of plastic can be a powerful tool, but it can either be used to help your credit score or it can severely damage your credit score.

Now, for the good news – you are in complete control! To help you down the right path we’ve got a list of ways a credit card can help or hurt your credit score.

How A Credit Card Can Help Your Credit Score

Good Payment History: One of the best things you can do is have a good payment history. Most credit card companies report your payment history each month which means you will be rewarded for your good habits right away.

Types of Credit: Ideally you want a variety of types of credit. One factor in your credit score is the types of credit you have. For example, how many credit cards you have in relation to other types of credit such as auto loans or mortgage loans. Adding credit cards into the mix will help your score because it shows you have the ability to manage several types of accounts.

Increasing Your Credit Limit: Increasing your credit limit can raise your credit score. That might sound strange at first, but here’s how it works. Your credit limit (or the amount you have available) versus your balance (or the amount you have used) is also known as credit card utilization. The lower your utilization the better. You can give a boost to your score just by having your credit limit increased. This is because the increase will automatically change your card utilization and that can quickly increase your score.

Paying Off Your Card: Paying off your credit cards works just the same. It improves your credit score quickly and possibly faster than paying off any other loans. Plus, paying your cards offs means you are avoiding interest which also saves you money.

How A Credit Card Can Hurt Your Credit Score

Late Payments: A quick way to hurt your credit score is by making a late payment. It’s always better to atleast make the minimum payment rather than making a late payment. The damage a late payment does to your score can be harsh, not to mention you will probably be hit with a hefty late fee too. In most cases being a few days late will not be reflected on your credit report because most creditors report late payments that are more than 30 days overdue, but I wouldn’t chance it!

Closing An Account: Believe it or not closing a credit card account can hurt your credit score. Your payment history makes up 35 percent of your score and the length of your credit history makes up 15 percent of your score. The big negative impact on your score when canceling an account results from the percentage of available credit you lose. If the card represented a significant percentage of your available credit, closing the account will hurt this facet of your credit score.

Credit Inquiries: When you apply for new credit then chances are the bank will review your credit history or make a credit inquiry. This type of inquiry actually can put a ding on credit history and actually lower your. Now, it doesn’t hurt your score much, but if you don’t have a strong enough credit score then that ding could be enough to keep you from getting approved. It is for this reason you really need to consider when to apply for new credit and when to hold off. For example, if you are going to be applying for an auto or mortgage loan in the near future then you want you score to be as high as possible so hold off on applying for other forms of credit like a credit card.

Maxing Out Your Card: A portion of your credit score has to do with your debt ratio. The rule of thumb is you shouldn’t have more than 30% of your available balance in use. For example, if you have a credit limit of $1,000 then you should only carry a balance of $300 or less. Keep the ratio of credit available to credit used as low as possible is ideal.

Photo Credit: via Flickr precious09032012

Credit cards often get a bad rap when it comes to frugality. It’s no wonder when we hear stories of people maxing out their credit cards and then paying more in total interest than they borrowed in the first place. And the credit card industry doesn’t help itself much, particularly when it jacks the interest rate up on cardholders when they miss a payment. But the truth is that credit cards can promote frugality and improve finances if they are used responsibly. To show you this, here are ten ways credit cards promote frugality.

1. Tracking Expenses: Credit cards are a great way to keep an eye on expenses. I put almost everything we buy on either a credit card or a debt card. Typically it’s better to choose credit cards because of the rewards, but a debit card works just as well when it comes to tracking. At the end of the week or month, it’s easy to see where all the money has gone.
2. Reducing Interest: Balance transfer credit cards are a great way to to eliminate interest expenses. Consider transfer a high rate balance to a card that gives 0% so you can avoid the interest. It doesn’t just have to be a credit card to credit card transfer, you could also transfer the balance you have on something like a home equity line of credit. This is a great way to reduce the interest you have to pay.
3. Earning Interest: You can also use 0% cards to transfer balances into a savings account to earn interest. Consider this scenario – Maybe you have access to $50,000 in 0% balance transfer funds for 12 months. At 4% interest, you could earn an extra $2,000 for yourself. Iif you have no debt, these 0% introductory rates can be used to simply put some extra cash in your pocket. The key here is to get a no fee balance transfer.
4. Saving on Gas: With the price of gas all over the place, it helps to do everything possible to save on the cost of fuel. There are several gas credit cards that offer cash rebates on gas purchases as high as 5% or more. This is an excellent way to cut down your gasoline costs.
5. Saving on Vacation: There are many credit cards that offer valuable hotel, airline and car rental rewards. My personal favorite and one of the best offers is the Starwood Preferred Guest card by American Express. The card offers Starpoints toward stays at Starwood hotels, and the points can be converted to miles as well. With your first purchase, you earn 25,000 Starpoints, enough for a weekend at a Category 4 hotel.
6. Building Credit: Responsible use of credit cards can help build a credit history that can save you a bundle when you go to buy a house or a car. The interest rate a bank will charge an individual depends in large part on the person’s credit score. The higher the score, the lower the rate. Using a credit card that you pay in full each month (or at least on time) will improve your credit score over time. Having available, unused credit will improve your credit score, too.
7. Saving on Taxes: This tip is particularly important if you run a small or home based business, but it applies to everybody. Making purchases that are tax deductible using a credit card gives you an audit trail of the purchase and reduces the risk that you’ll forget about the deduction at tax time. Every year when you sit down to do your taxes, you can take out your yearly credit card statement to confirm you’ve included all eligible deductions you’re entitled to.
8. Saving for College: If you have a 529 plan with Fidelity, they offer an American Express card that contributes up to 1.5% of your purchases into the 529 plan.
9. Saving for college II: With Upromise, a percentage of purchases you make can be contributed to a 529 plan. It works similar to the Fidelity American Express, except that the 529 plan does not have to be with Fidelity, and you can use just about any credit card or debit card. And signing up is free.
10. Shopping at Costco: Costco is one of my favorite places to shop. Now with the TrueEarnings® Card from Costco and American Express, you can earn 1% on general purchases, 2% for travel-related purchases, and 3% for restaurant and gasoline purchasee.

Photo Credit: o5com via Flickr

There are a handful of great apps that make earning and redeeming your credit card rewards even easier. We all know there’s an app for everything and credit card rewards are no different. As a matter of fact, such apps can really enhance your earning experience by helping you manage and maximize your rewards. Whether you need to enroll in the quarterly 5% cash back program or simply just check to see how many miles you’ve earn, you can do it with one of these apps.

Amex App(s)

American Express is known for their luxurious array of credit cards so it’s only fitting that they offer an array top notch apps too – four to be exact. That’s right Amex has four different apps you can download for Apple or Android devices. There’s an app for everything like managing your card(s), booking your travel plans, finding offers and entertainment, and managing your business.

When it comes to managing your American Express account you can view your bill, make payments, see recent transactions and access benefits on the go, including locating airport lounges around the world.

You have the ability to view and claim exclusive deals and offers available at nearby retailers and restaurants. It functions like loyalty rewards programs in which you will get you bonus cash back after making 5 or 10 purchases at a specific merchant.

You can also access and use rewards points you earn on more than 70 brands of gift cards and over one million products. If you receive a gift card you can also check the balance through the app in seconds.

Discover Mobile

The Discover app let’s you manage your card account(s), but, that’s not the cool feature. With this app you can enroll in the 5% rotating categories each quarter and you can also redeem your Cashback Bonuses for hundreds of eCertificates.

If you don’t know, you must register each quarter to be eligible for the 5% rotating categories offered with the Discover® More® Card. If you don’t register then you only get the normal 1% on your purchases. Being able to register right from your app makes registering very convenient.

As expected you can check account summaries, view balance and payment information, your available credit, Cashback Bonus balance and more.

Mile Blaster

Mile Blaster is an app that frequently fliers can put to go use. When earning mile after mile it’s gotta be hard to keep track of all your earnings. Mile Blaster can help you manage all your miles from all your different frequent flyer cards. The cool thing with this app is that you can track your hotel points too.

You can set up alerts so you will be notified when you’ve hit a goal. This way you don’t have to constantly check in to see where you are. The most annoying thing is when you miss out on cashing in, but Mile Blaster has a solution for this. You’ll also receive alerts that prevent your miles from expiring at six months, three months, one month and one week ahead of expiration.

You can also calculate the amount of miles you will earn on a flight using any loyalty program, helping you earn bonus miles on your next trip.

Award Wallet

AwardWallet provides a free service that helps you manage your reward balances and travel itineraries and Award Wallet tracks it all! Your miles, hotel points, and your rewards all in one place. Like, Mile Blaster, you can customize alerts so you are never out of touch with your earnings.

You can access balances and reward numbers, see a detailed view of your reward programs and check your balance without an internet connection. It’s important to not that American Airlines is not yet listed on AwardWallet. The best part about award wallet is it’s completely free to use.

Applying for a credit card is not a decision to take lightly. While credit cards offer convenience, security, and rewards, they can also lead to a life of debt if not used responsibly. Choosing the right credit card for your financial needs is the first step in using credit in a financially responsible way. So when applying for a new credit card, consider these 7 tips.

1. Credit History
2. Card Use
3. Credit Card Type
4. Rewards
5. Introductory Offers
6. Credit Card Issuer
7. Rates & Fees

Credit History

Your credit history and credit score will determine which credit cards you qualify for. Each time you apply for a card, the card issuer pulls and reviews your credit history. Called inquiries, these reviews of your credit history can negatively impact your credit score. So rather than wasting your time and hurting your credit score applying for cards you won’t qualify for, have an understanding of your credit worthiness and apply for an appropriate card.

Credit cards are categorized by credit quality: excellent, good, fair, and bad or poor. While each credit card issuer determines for itself how to categorize credit worthiness, here is how Discover describes various credit ranges:

• Excellent: Pay your bills on time and never miss a payment.
• Good/Fair: Pay most of your bills on time, and have made one or two late payments (more than 30 days past due) in the last year.
• Fair/Bad: Pay your bills, but have made three or more late payments (more than 30 days past due) within the past two years.

You can also check your credit report and FICO credit score to determine where you stand. MyFICO.com, the creator of the official FICO score, offers your report and score for free as part of a free 30-day trial of its Credit Watch program. With your score in hand, you can get a rough idea of how a credit card issuer will view your credit. While each credit card company evaluates credit scores in their own way, according to Equifax, here is a rough idea of what your score means:

• Excellent/Very Good: 725+
• Good: 660 – 724
• Fair/Poor: 560 – 659
• Bad: Below 560

Card Use

It’s really important to understand how you will use the card. For example, if you plan to carry a balance from month to month, a low interest credit card may be the best option. On the other hand, if you plan to pay off the card each month, the interest rate won’t be that important. Instead, you may decided based on the rewards offered by the card.

Credit Card Type

Not all credit cards are the same. In fact, there are four types of cards: credit cards, charge cards, prepaid cards, and secured cards. Each type of card offers different features, which you should understand before applying. Here’s a quick rundown of each type of card.

• Credit Cards: Traditional credit cards are what most people think of when it comes to plastic. These cards come with a credit limit, an APR for purchases, and in many cases cash back or other rewards. The minimum payment each month is usually 2 to 4% of the outstanding balance plus interest. If paid in full each month, however, no interest is charged.
• Charge Cards: With charge cards, no interest is charged because the balance must be paid in full each month. There is usually no preset spending limit, although that does not mean an unlimited credit limit. Instead, the card issuer sets limits based on your credit history and spending patterns. American Express cards are perhaps the best known charge cards available.
• Prepaid Cards: Similar to debit cards, prepaid credit cards allow you to add funds to the card and then use the card just like a credit card. Because you add money to the card before you can use it, there are no interest charges. Spending limits are set based on how much cash you’ve loaded onto the card. Prepaid cards generally do not improve your credit because you aren’t borrowing money.
• Secured Cards: These cards are a hybrid between traditional and prepaid credit cards. Like a prepaid card, you must deposit money with the card issuer. The money, however, is not loaded onto the card. Instead, it is deposited into a bank account and used to secure future payment of the card. The deposit generally pays interest. The credit limit is set based on how much money is on deposit. Like a traditional card, secured cards generally report to the credit bureaus.

Rewards

Credit cards today offer a variety of rewards ranging from cash to discounts to free travel. Rewards generally fall into one of three categories: cash, points, or miles. In many cases, cards that pay rewards in points can be converted to either miles or cash. The key is to understand how you will use the card and what rewards you want.

Some cards offer better rewards for certain categories of purchases. Other cards offer better rewards depending on how much you charge to the card each year. For these reasons, understanding how you will use the card is critical to getting the most out of the credit card rewards. If you fly the same airline frequently, using the airline’s credit card likely will result in accumulating the most miles. The same is often true if you frequently shop at the same retail store.

Introductory Offers

Many cards today offer some very attractive introductory offers. These offers typically fall into one of four categories:

• 0% APR on Balance Transfers: With a balance transfer, you can move high interest credit card debt over to a new card that charges no interest. The 0% APR typically lasts from 6 to 12 months. It’s important to understand the terms of these offers, particularly the transfer fee (typically 3 to 5% of the amount transferred) and the interest rate that will apply when the introductory rate expires.
• 0% APR on Purchases: Unlike a balance transfer, there are no fees associated with using a 0% APR card on purchases. The introductory rate typically lasts 6 to 12 months.
• Cash Bonus: Some cards offer a cash bonus after the first purchase. These bonuses typically range from $25 to $50.
• Miles/Points Bonus: Many cards offer bonuses in the form of miles or points after either the first purchase or after spending a set amount of money. In some cases, the bonuses are based on timely payment over the first 12 or 24 months.

Credit Card Issuer

When you think of credit cards, what probably comes to mine are Visa, MasterCard, American Express and Discover. The question is does it matter what type of card you get? In answering that question for yourself, here are a few things to keep in mind:

• Visa and MasterCard don’t actually issue credit cards. Instead, they serve as an intermediary between the merchant that accepts credit cards and the bank that issued them.
• Discover and American Express act as both the bank and intermediary all in one.
• Visa and MasterCard are the most widely accepted credit cards available. American Express is more widely accepted than Discover.

Fees & Rates

Finally, it’s important to evaluate the rates and fees charged by a credit card. While many credit cards today do not charge an annual fee, some still do. Those cards that do charge annual fees often offer greater rewards or are designed for those with bad credit.

As for interest rates, keep in mind that most cards charge different interest rates for purchases and cash advances. Cards also have a separate interest rate that will apply in the event of default.

Photo Credit: Andres Rueda via Flickr

Choosing a student credit card can be fun, but it can also be a little scary too. It’s fun because a new credit card in hand gives you sense of financial freedom, but it’s a bit scary because that little piece of plastic can also lead to debt. With the shape our country is in financially, that alone should be a huge reminder of just how important it is to be smart with your credit. Credit cards are a great way to build a solid credit history, but you have to be smart. Check out our list of top student credit cards on the market today. This article will give you a few tips on some of the things you should consider when you are applying for a student credit card. There are many great offers out there that can help you get on a path to financial success, but remember – YOU HAVE TO PAY IT BACK!

Don’t Just Go With The First Offer

It might be tempting to just sign up for the first credit card offer that comes your way, especially if the offer has a nice bonus. Don’t fall for the free t-shirt or concert tickets! Student card offer are readily available so there is no need to settle. If it’s a bonus you are looking for then you can get a bonus without compromising all the other features you should have like a good rate.

Compare Fees

That’s right, credit cards have fees! Keep an eye out for things like application fees and annual fees. The truth is, there is no reason to pay an application fee. There are many great card offers out there that don’t charge an application fee, so this is one fee you should and can avoid. When it comes to annual fees they aren’t always a bad thing. In most cases, when you are paying an annual fee it’s a trade off for something else. For example, many times cards that offer rewards programs or nice bonus offers have an annual fee. You have to determine if paying the annual fee in exchange for a sweet bonus offer is worth it.

Find Out What The APR Is

Always check to see what the interest rate is of the card before you apply. There are some cards out there that charge 50 plus percent in interest. That is ridiculous! One of the main things to consider is the rate. Typically, a good rate is 12% – 20%, with 20% being on the high end. If you don’t have good credit or you haven’t established a credit history yet, chances are you are going to get a higher rate, close to 20%. There is no reason to go with a card that has a rate higher than 20%.

Don’t Apply For Too Many Offers

Every time you apply for credit your credit score takes a hit. Now, if you have good credit then this might not be such a big deal. However, if your credit is a little shaky, it might hurt. Generally, a credit inquiry knocks your score down about 2 to 3 points. If you apply for 10 different cards then you can see how this might really affect you. Having all those inquiries doesn’t look good and could be enough to keep you from getting approved for a student card. Be selective and don’t apply for every offer that comes your way!