Selling A House Archives

January 17, 2021

Why Was My Credit Card Application Denied? – Lexington Law

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Your credit card can give you more flexibility in your day-to-day expenses. However, a credit card is a privilege, and it’s not guaranteed for everyone. Learn the top reasons why a credit card application is denied and what to do when that happens to you.

8 Reasons Why Your Credit Card Application Might Be Denied

1. Your Credit Profile Is Thin

Building credit is essential to a stable financial future. Creditors have a higher degree of trust in well-established borrowers who have a long history of being responsible with their money.

This can feel like a cruel joke because you need credit to build a credit history—but you’ll be denied for credit because you don’t have history!

If your credit profile is thin, you can look for lenders that accept new borrowers with short credit histories. These lenders often charge higher interest rates to offset the risk they’re taking with you, but everyone needs to start somewhere.

2. You Have a Lot of Credit Card Debt

Your credit utilization ratio is the comparison of the amount of credit available to you monthly versus the amount you spend. Ideally, you want your credit utilization ratio to be at 30 percent or lower. So, if you have one credit card with a $5,000 limit and a credit line with a $1,000 limit, your total available monthly credit is $6,000. Ideally, you don’t want to actively use more than 30 percent, or $1,800, of this credit per month.

If your credit cards are maxed out, then your credit utilization ratio is probably out of balance! Lenders might assume that if you can’t pay off your current credit card debt, you won’t be able to pay off new debt.

You couldtart by paying down your current credit card debt, or call your current creditors and ask for higher limits. An increase in your credit card limit could lower your overall credit utilization ratio. This might increase the chance of another creditor approving you for a new card.

3. Your Application Is Incomplete

Ensure you filled out your application properly with the right information. If you forget even the smallest item, it can result in your credit card application being denied. For example, perhaps you stated that your income was $4,000, not $40,000. Or maybe you forgot to include the income earned at your weekend job.

Before you submit your credit card application, thoroughly review all the fields.

4. You’ve Missed One or More Payments

If your recent payment history is less than stellar, there’s a high risk that you’ll be denied. Creditors are scared of individuals who have a poor history of regular payments. If you’re in this situation, consider using credit repair services before you apply for your new credit card. Credit repair can uncover unfair or inaccurate information on your credit report.

5. Your Credit Score Is Too Low

Often, the cards with the best benefits are only offered to people with high credit scores. Banks will typically specify the preferred credit score range for each of their credit cards. Find out your credit score and only apply for cards for which you are in the recommended score range.

6. Your Debt-to-Income Ratio Is Too High

Your debt-to-income ratio is the amount of debt you have versus the income you bring in. It’s a simple calculation that divides total recurring monthly debt by monthly gross income. If your debt-to-income ratio is too high, it essentially means you can’t afford or are at the brink of not being able to afford more debt.

A general rule is to keep your debt-to-income ratio under 36 percent, with no more than 28 percent of your debt going toward your housing.

7. Your Income Is Too Low

One of the most significant factors for a lender is your income. Before a creditor simply hands over funds, they’ll want to be certain you have the ability to pay them back. If your income is too low or you have an unstable source of income, you’re deemed a higher liability to the lender.

Start by applying for the right card. Ifyou’re a new grad, be realistic and go for the basic credit card instead of the platinum card. You might be approved for a card with a low limit, and over time, you can earn the creditor’s trust.

8. There Is an Error on Your Credit Report

It might surprise you to know that credit reports often have mistakes on them. Your credit report may have someone else’s bad debt. Or, your report might list eight credit cards that aren’t actually yours.

Whatever the case, errors on your credit report will usually bring down your credit score. It’s essential you get a copy of your credit report and review it for any errors. If you find any, you will need to dispute them with the relevant credit bureau (TransUnion, Equifax or Experian).

To avoid this happening in the future, practice the good habit of reviewing each of your three credit reports at least once a year. This way, when errors show up, you’ll catch them right away before they spiral into more significant issues.

Does a Credit Card Application Denial Affect Your Credit?

The credit card application denial itself won’t really impact your credit. However, when you apply for credit, a hard inquiry usually occurs on your account. A hard inquiry is when a lender makes a request to review your credit report in the process of reviewing a loan or credit application. This hard inquiry will occur whether you’re approved or denied for the credit card.

A single hard inquiry may not impact your credit score at all. Sometimes, a hard inquiry could lower your score by a few points for a short while. But several hard inquiries in a brief period of time can have a more significant negative impact on your credit score. So, if your credit card application is denied once, it’s not the smartest move to apply for a couple more back-to-back.

What to Do After Your Credit Card Application Is Rejected

The first step you could take after a credit card application is denied is to find out why. Banks are required to give you a reason. This is called an “adverse action” notice. Not only does the letter describe why you were denied, but it also offers suggestions for how you can improve.

Once you understand why you were denied, you can proceed with a plan.

Ask for a Reconsideration

Credit card issuers are mandated to reconsider applications upon request if you have new or additional information to provide. If you believe your application was unfairly denied or there were external factors you can explain, you can request a reconsideration. You can make this request by phone or in writing (depending on the lender). Be prepared to provide proof of your additional information.

Wait to Apply Again

It’s important to wait a little bit, no matter what card you want to apply for. As we’ve previously mentioned, you want to avoid having too many hard inquiries on your credit report too close together. Several back-to-back hard inquiries will only serve to lower your score and likely result in a credit card application denial.

Consider Credit Cards for Bad Credit

You could also consider applying for a credit card that is more lenient to people with bad credit. For example, a secure credit card asks for a security deposit. These types of credit cards are essentially guaranteed for automatic approval as your deposit acts as a guarantee that you can’t overspend.

Review and Improve Your Credit

Take a good look at your credit report and credit score and ask yourself if there’s room for improvement. If you were denied for a legitimate reason, such as too many missed payments or a poor credit utilization ratio, these are factors you can work to improve.

Your credit unlocks many opportunities in life. If your credit card application was denied, it should be a wake-up call that you need to fix your credit. A low credit score could stop you from getting jobs, mortgages or rental agreements, fair interest rates and more. At Lexington Law, we specialize in helping people take back control of their credit. Find out more today.

Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Kenton Arbon is an Associate Attorney in the Arizona office. Mr. Arbon was born in Bakersfield, California, and grew up in the Northwest. He earned his B.A. in Business Administration, Human Resources Management, while working as an Oregon State Trooper. His interest in the law lead him to relocate to Arizona, attend law school, and graduate from Arizona State College of Law in 2017. Since graduating from law school, Mr. Arbon has worked in multiple compliance domains including anti-money laundering, Medicare Part D, contracts, and debt negotiation. Mr. Arbon is licensed to practice law in Arizona. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

January 17, 2021

How to Audit Your Medical Bills

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Medical issues are challenging to deal with on their own, but then come the medical bills. Unfortunately, medical bills are the leading cause of bankruptcy in the United States. Medical bills can often be astronomically high, causing many people to fall into debt when trying to pay them off.

However, many Americans don’t realize that they should always be reviewing their medical bills to verify the charges are valid. This is especially true for people who are worried about paying their bills. An audit from Equifax found that hospital bills exceeding $10,000 had, on average, $1,300 in incorrect charges.

You may not need to check your bill thoroughly if you had just a simple consultation, but there are more likely to be errors if you had a more complicated visit, such as a surgery. Keep reading for a comprehensive guide and tips on how to audit your medical bills.

What to Do When Reviewing Your Medical Bills

Take these steps when auditing your medical bills:

Ask for an Itemized Copy

Your medical provider will likely send you a summarized version of your medical bill. This is a condensed version of your statement that groups charges into categories, so it doesn’t provide you the level of detail and insight you need to review your bill thoroughly.

If you receive a summary bill, reach out to the relevant parties and get the itemized version instead. You have the right to ask for an itemized bill, either from the billing department at the medical facility or online. Please note that even a small procedure can result in a multipage statement, so you’ll have a lot of reviewing to do.

Once you have the copy, review it for any suspicious items. This can include:

Double billings: Does a line item show up twice when you don’t think it should? For example, two doses of morphine when you’re sure you were only given one. You can compare charges to your medical records to verify or disprove items on your bill.
Non-procedural or non-medical-related items: Some hospitals have been caught trying to charge for things like hospital bed rentals, surgical equipment and other reusable supplies. Hospitals aren’t legally allowed to bill these items to patients, and you can dispute these charges immediately.
Unused items: Items such as slippers, toiletries and over-the-counter medication can cost hundreds of dollars if the hospital supplies them. For example, a simple over-the-counter painkiller, such as Tylenol, can cost as much as $15 for one pill. Dispute any false claims and, if you can remember to do so, bring your own slippers.
Mistaken identity: Mistakes happen on medical bills from time to time. A fellow patient with a similar name or insurance number could have all their medical treatments added to your invoice. Don’t fall victim to mistaken identity, and make sure your charges match your treatment.
Refused treatments: At some point during your medical care, you may have refused certain medications or treatments. If you did, make sure they don’t appear on your final bill.
Other: Watch out for any other charges that seem incorrect in any way, such as incorrect medication names or dosages, incorrect dates, the wrong name or address, wrong insurance information, wrong surgery minutes, incorrect room classification, and so on.

If there are any codes or words on your bill that you don’t understand, take the time to look them up. You should be able to find explanations online. Some useful resources include this Medical Dictionary, the Medicare code lookup tool and this ICD code reference tool. An ICD code ensures you were billed for the correct diagnosis.

Check Your EOB and Medical Records

Next, check your Explanation of Benefits (EOB) and your medical records. Compare these to a copy of your medical bill. You can get your EOB from your insurance provider. Your EOB will automatically come via mail or email and show what portion of the charges are being paid by the insurance provider. The statement will say “Not a bill” at the top.

You can get your medical records from your health provider. You will likely have to fill out a form requesting a copy of your medical records, and you may be charged a processing fee for the request. The cost can vary for each provider, but states usually limit how much a provider can charge. Ask up front what that fee will be.

Talk to Your Physician

Hospital stays are often traumatic, and it’s unlikely you remember every procedure or medication ordered by the doctor. It’s entirely within your rights to call your doctor and ask them to verify each item. Another sound strategy is to ask for a written copy of the original order. Hospitals can’t bill you for procedures not ordered by your doctor in writing. Compare the written copy of the original order to your medical bill and dispute anything that doesn’t match.

Keep Records of Everything

Keep records of everything, including receipts, dates of services and payments, healthcare visits and provider names. This will help you avoid confusion as you sort through all the details. It will also make any disputes easier as you have all your proof organized. Additionally, if you end up in small claims courts, records will be necessary for your lawsuit.

Hire an Auditor

If you have tried to dispute your bill to no avail, it’s time to take action. You can request an internal audit from the hospital and consider hiring your own auditing service to secure a second opinion. Escalating things to this stage usually uncovers errors in the billing and results in reduced costs.

What Should You Do Next?

Challenge the Charges in Question

The first step in challenging your medical charges is to contact the medical facility’s billing department and try to speak to someone who may reduce your expenses.

Many Americans don’t realize that medical charges are negotiable. Even if you can’t have items removed, you can ask for them to be reduced. Hospitals can ultimately charge whatever they want for medical costs, but you can compare your fees to what is considered standard. Use the FairHealth tool for comparison. If your charges are double or triple the standard, bring this up in negotiations.

You can also file an appeal with your insurance company.

Work With a Patient Advocate

If challenging the charges on your own doesn’t result in anything, you may consider hiring a patient advocate. An advocate will negotiate on your behalf, and they have the experience to garner results. Usually, advocates only charge you if they’re successful in getting a reduction in your bill, and their charges are typically a percentage of what you saved on the bill.

File a Formal Complaint

Some cases of medical price gouging are downright illegal. If you believe yours to be an unlawful situation, you have every right to file a formal complaint with your state’s attorney general’s office. Creating a record of abuse can also help protect your credit from further unfair damage.

Protect Your Credit

When your medical debt is sent to collections, you have a period of 180 days before it appears on your credit report. This means you have some time to work things out before your credit is impacted.

Ultimately, you need to make sure you take care of your bills in one way or another. Negotiate what you can, pay what you can and communicate with billing staff so they know what you’re doing. This can delay them from sending the billing to collections. Even if the medical debt isn’t fair, it can end up being sent to collections and ruining your credit.

Be proactive in auditing your medical bills quickly and acting as soon as you suspect anything is wrong. If you’ve already had medical bills show up on your credit report, you can still work to improve your credit score. Consider using credit repair services from Lexington Law. We’ll help you address any unfair and unverified negative items on your credit report. Get your credit score back on track today.

Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Born and raised in Salt Lake City, John Heath earned his BA from the University of Utah and his Juris Doctor from Ohio Northern University. John has been the Directing Attorney of Lexington Law Firm since 2004. The firm focuses primarily on consumer credit report repair, but also practices family law, criminal law, general consumer litigation and collection defense on behalf of consumer debtors. John is admitted to practice law in Utah, Colorado, Washington D. C., Georgia, Texas and New York.

Source: lexingtonlaw.com

January 17, 2021

Common Mistakes That Lead to a Lower Credit Score

Getting a loan or a new line of credit is usually subject to a 3 digit-number known as the credit score. And although it is not the only indicator used by banks and other lenders, your score weighs heavily on your financial health. So, what are the common mistakes that lead to lower credit score and how can you avoid them?

1. Missing or Delaying Payments

Since your credit score is an overview of your financial undertakings up to the point of applying for a loan, how you handle existing debt matters. Delays or late payments on other loans or credit card installments will affect your score negatively.

Up to 35% of your credit score is determined by your credit history. This calls for timely payments, and where that is not possible, negotiate with your lender for fairer terms to ensure continued payments. Luckily, the moment you restart regular payments, your score starts to improve.

2. Over Utilizing Your Credit

As earlier noted, you need to pay your debts on time for your credit score to stay high, but the amount of credit you use matters. Known as credit utilization rate, this is the ratio of your credit card debts divided by the amount of credit that is available to you.

The ratio is expressed as a percentage and the higher it is, the worse your credit score gets. Of your total credit score, 20% is determined by this ratio.

Tip: Whenever possible, only use up to 30% of your credit to ensure that your credit utilization ratio remains low.

3. Having no Credit Lines

As a follow-up on the second mistake, you may think that having zero lines of credit will make your score high. Unfortunately, that would be unwise. Remember that your credit score is derived from your credit history. Without any history to look at, there will be less information for accurate analysis and your score will be low.

4. Having Errors in Your Credit Report

Reading your credit report Errors, whether clerical or fraudulent, are some of the common mistakes that lead to a lower credit score. Avoid such mistakes by checking your credit report regularly and disputing any errors. On the upside, credit reporting bureaus are obligated to furnish you with a free report annually.

Also, unlike when a lender requests your credit report which can affect your score adversely, checking your own report has zero effect on your score. Besides, monitoring the report helps you to keep track of any payment that you might have missed. So, check your report periodically and ensure that you can account for all entries.

5. Closing Your Credit Facilities

After you have paid off a credit card or loan, what comes next? Choosing to close the credit line is a huge mistake. Essentially, you will be erasing a good history that speaks to your ability to repay debts. Particularly, if you were repaying your monthly debt installments on time, then that history needs to be on your report.

Also, closing credit cards lowers the average age of your accounts, which in turn lowers your credit score. Known as credit age, this is the average time that your accounts have been active, and the higher it is, the better your credit score will be.

15% of your FICO credit score is based on the length of your credit history.

Conclusion

A low credit score can deny you anything from a mortgage to a new credit card. A bad score also means high rates and other stringent terms on a new loan. You can keep your credit score from dropping by avoiding all of the above common financial mistakes.

For credit repair and financial advice, contact Credit Absolute for a free consultation.

Source: creditabsolute.com

January 11, 2021

How Many Credit Cards Is Too Many? – Lexington Law

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

There’s no right or wrong answer to the question of how many credit cards to have. More importantly, you should aim to understand what affects your credit score, and how the number of cards you have plays into your ability to responsibly manage your credit.

How Many Credit Cards Should I Have?

Is three cards too many? Should I apply for another card? What should I do if I have too many credit cards? How many cards do people with good credit have? If you’re asking these questions, you’re not alone.

According to FICO as reported by CNBC, cardholders with “exceptional” credit scores—above 800—have an average of three open credit cards. Ultimately, the perfect amount of credit cards for you comes down to what you’re comfortable with and what you can realistically manage.

Cardholders with exceptional credit scores (above 800) have an average of three open cards.

Here, we’ll discuss some instances when you may want to consider adding another card—and when to hold off. Remember to consult your financial advisor if you’re ever unsure of the best move.

When to Consider Adding a Card

If you have zero cards or one card: Having a variety of credit accounts is important. This means incorporating a mix of things like credit cards, auto loans, mortgages, and student loans. If you don’t yet have a credit card, consider applying for one to diversify your mix.

If you only have one, it may be beneficial to add another to show lenders that you’re capable of managing multiple accounts and paying them on time.

If you have no trouble managing accounts: Some people have a hard time keeping track of multiple credit cards. If you’re able to stay organized and keep track of relevant account information, having multiple credit cards will be a less risky move. As long as you’re paying all your accounts on time, you shouldn’t have a problem with three or more credit cards.

If you’re not earning rewards or benefits: Maybe you’re still using the first credit card you ever applied for years ago. If it doesn’t have a cash back or other rewards program, you may be missing out on free money. Additionally, if your credit score has improved in recent years, you may be able to apply for a card with a lower interest rate.

When to Hold Off on Adding a Card

If you have debt: According to a 2019 survey from CNBC, approximately 55 percent of cardholders have debt. Instead of adding another card—increasing the temptation to rack up a hefty balance—consider shifting your priorities to paying off debt. A smaller debt load has psychological benefits and increases your chances of getting approved for a line of credit in the future.

If you’re struggling to keep track of your cards: If you’re finding it hard to remember payment due dates or keep track of balances, it’s probably a sign you’ve reached your credit card capacity. Staying organized is the key to success with multiple credit cards.

If you’re about to apply for a loan or mortgage: If you’re planning on applying for a large or important line of credit, hold off on taking any action that could affect your credit score. Lenders like to see that you have a steady credit history, and applying for a new card may cause a temporary dip in your score.

Does Having Too Many Credit Cards Hurt Your Credit?

No, the number of credit cards you have doesn’t directly impact your credit score. Whether you have seven cards or one, two basic principles of good credit management remain important: monitoring credit utilization rate and limiting hard inquiries. These factors do have the potential to substantially impact your credit score.

Pay Attention to Credit Utilization Rate

One of the main benefits of having multiple credit cards is that your combined total credit limit will increase. This is very useful when you’re aiming to stay below the recommended 30 percent credit utilization rate, or the percentage of your total credit limit currently in use.

For example, having only one card with a $3,000 limit doesn’t give you much leeway in terms of how much you can charge. If you were to charge the full $3,000, you would max out your card and likely lower your credit score. However, if you were to add two more cards with the same limit, your total credit availability would now be $9,000.

This would allow you to charge up to a total of $3,000 while still staying at or below the recommended 30 percent credit utilization rate.

No matter how many credit cards you have, aim to use less than 30% of your total available credit.

Like all things, it’s best to find a balance. Adding multiple cards too quickly in order to boost your total credit limit may trigger hard inquiries.

Limit Your Number of Hard Inquiries

A “hard inquiry” is a notation on your credit report caused by an official request by a lender to view your credit report. Hard inquiries typically occur when you apply for a credit card, loan or mortgage. They have the potential to lower your credit score, especially if you incur too many in a short amount of time.

A single inquiry may only lower your score by a few points. However, if you have very few credit accounts or a short credit history, the effects may be more substantial.

If you’re looking to apply for multiple credit cards, space them out over a period of six months or longer. Only apply for cards you know you’ll be approved for—or better yet, get preapproved. This means that a credit card issuer may approve you for a card based on income requirements and won’t have to pull a hard inquiry.

In addition to monitoring credit utilization and limiting hard inquiries, remember to keep other credit management best practices in mind:

Pay at least the minimum balance—on time and every time—for all of your credit cards.
Keep a good mix of credit accounts—cards, auto loans, a mortgage, and student loans, are a few examples.
Build a long history of good credit management by keeping accounts open.

Is It Better to Cancel Unused Credit Cards or Keep Them?

If you have a pile of credit cards that have gone unused, it may be tempting to cancel the accounts. However, this is typically more detrimental than it is beneficial. To build a long history of good credit management, aim to keep your credit accounts open.

Use your cards every once in a while—even if it’s just for small purchases—to avoid them being canceled. Since credit card issuers aren’t all required to notify consumers of a card cancelation, an unexpected cancelation may result in a credit score dip.

When to Consider Canceling a Credit Card

If the card is newer: If you absolutely need to cancel a credit card, it’s better to close a newer one than an older one. Since length of credit history accounts for 15 percent of your credit score, you’ll want to keep old cards with a long payment history. With newer cards, you haven’t built up that history, so canceling may not be as detrimental to your score.

If the card has a lower limit: Whenever you cancel a credit card, your total available credit will decrease, which in turn will also decrease your utilization rate. This is the main factor that lowers people’s credit scores after canceling a card.

Canceling a card with a low total credit limit will put you at the least amount of risk for going over the 30 percent utilization rate. And if you do cancel, make sure your utilization rate on your other cards is low.

If the card has high fees: Cards with annual fees or extremely high interest rates may be making it more difficult for you to make regular on-time payments on all of your cards or pay off other debts. Even though canceling a card may result in a temporary dip in your credit score, it’s best to consider your overall financial health and debt load.

Always consider what’s best for your unique situation—and if you’re ever unsure, consult your financial advisor. Improving your credit score, especially when you have multiple cards, can seem like a daunting task. If you don’t know where to start, Lexington Law can help. Explore our credit repair services to see if they’re right for you.

Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Cynthia Thaxton has been with Lexington Law Firm since 2014. She attended The College of William and Mary in Williamsburg, Virginia where she graduated summa cum laude with a degree in International Relations and a minor in Arabic. Cynthia then attended law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. Cynthia is licensed to practice law in Utah and North Carolina.

Source: lexingtonlaw.com

January 11, 2021

Why Was My Credit Card Application Denied?

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

8 Reasons Why Your Credit Card Application Might Be Denied

1. Your Credit Profile Is Thin

Building credit is essential to a stable financial future. Creditors have a higher degree of trust in well-established borrowers who have a long history of being responsible with their money.

This can feel like a cruel joke because you need credit to build a credit history—but you’ll be denied for credit because you don’t have history!

2. You Have a Lot of Credit Card Debt

3. Your Application Is Incomplete

Before you submit your credit card application, thoroughly review all the fields.

4. You’ve Missed One or More Payments

5. Your Credit Score Is Too Low

6. Your Debt-to-Income Ratio Is Too High

A general rule is to keep your debt-to-income ratio under 36 percent, with no more than 28 percent of your debt going toward your housing.

7. Your Income Is Too Low

8. There Is an Error on Your Credit Report

Does a Credit Card Application Denial Affect Your Credit?

What to Do After Your Credit Card Application Is Rejected

Once you understand why you were denied, you can proceed with a plan.

Ask for a Reconsideration

Wait to Apply Again

Consider Credit Cards for Bad Credit

Review and Improve Your Credit

Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Source: lexingtonlaw.com

January 11, 2021

6 Credit Card Tips to Help Prepare for the Holidays

Is it too soon to start planning your end-of-year holiday events? That may be debatable but we all know how quick retailers are to taking advantage of increased sales brought on by holiday shoppers. With Thanksgiving just around the corner most retailers are already advertising for their big shopping events and Black Friday deals. If you, like many others, choose to take advantage of these great deals then you’ll also want to plan ahead.

The biggest temptation during the holiday sales events is to break out the credit cards in order to take advantage of the great deals while they’re available. You might be saving a lot of money on the special deals but if you’re not careful, your credit card costs could end up making those purchases cost much more than they’re worth. That’s why you need to take precautions when using credit cards for holiday purchases. Here are six ways to make the most of your credit cards during the holiday season:

1. Sign Up for a Cash Back Card

For those of you who are not already heavily invested in a specific travel rewards program, you may be better off using a cash back rewards card. For new cardholders you may be able to get a bonus cash back offer when you sign up. If you do plan on signing up for a new card with a cash back deal, look for an offer that gives you a higher cash back percentage (as much as 5 percent) on popular retailers such as Walmart, Target, or even Amazon.

Just keep in mind that you should only choose a cash back or rewards card over a zero or low-interest card if you are able to pay your monthly statements in full. Otherwise it would be better to find a card with a zero-interest introductory rate or low-interest card as it would save you the most in the long run.

Holiday Shopping

2. Activate Your Bonus Purchase Opportunities

Many rewards cards will feature rotating bonus categories which you may need to activate or choose each quarter. If your card does have rotating bonus opportunities, make sure that you log in each quarter to activate. Also bear in mind that many of these rewards may have a limit on how much you can earn so keep track of your purchases and switch cards once you’ve reached the limit.

3. Learn About Shopping Portals

Unknown to many rewards cardholder is the opportunities available from shopping portals. Many loyalty programs and credit cards now offer online shopping portals which will allow you to earn extra points, miles, or cash back from your purchases.

These online shopping portals often feature some of the top national retailers and can usually pad your purchase rewards with extra points per dollar spent. With most airline and hotel loyalty programs, they will likely have their own portals as well. Using these websites can help you stack your rewards earning potential.

4. Examine Your Cardholder Benefits

Holiday shopping often features large purchases on items you wouldn’t normally buy unless they are heavily discounted – which is often the case during Black Friday sales events. For those bigger purchases, you may want to consider your cardholder benefits. May credit cards include benefits such as accidental damage and theft protection, extended warranties, price and return protections. These benefits can come in handy when making a large purchase, such as a new TV or computer.

5. Decide if it’s Worth Getting a Store Credit Card

If you don’t already have a great rewards or low-interest card, you may want to consider getting a store credit card. It is likely that any of the major stores that you plan to shop at during the holiday season will offer their own branded credit card. These cards should never be an impulse sign up though. You should always find out in advance if it’s worth considering.

Most of the retail credit cards will feature a very high interest rate so it is important that you consider their terms and conditions and quality of rewards programs before deciding.

6. Consider an Interest-Free Promotional Financing Offer

It is not uncommon for American shoppers to spend “too much” during the holiday season in order to take advantage of special savings and offers. That is all well and good if you are able to pay off your credit cards in a timely manner but if not, you could end up pay more in interest than the savings you earned from the discounts.

If you are unsure whether you’ll be able to pay off your credit card balances within a few months, you may want to consider opening a card with a 0 percent APR offer for new purchases. These offers allow you to avoid interest charges for six to 18 months. Just make sure you don’t keep a high balance on your card for too long as it can negatively affect your credit score.

For more financial advice and credit repair assistance, contact Credit Absolute.

Source: creditabsolute.com