Good Morning Green Panda Friends.  It’s time for another post in the Green Panda Credit Card Management Series. We have already discussed whether credit cards are a good idea for young adults, as well as the best solutions to pay off credit card debt.  Today we are going to start to review different credit cards available on the financial market. These are not credit cards that we recommend; they are just good credit cards that have unique rewards programs. 

Good credit cards offer good rewards programs with low interest rates and little or no annual fee.  The first card that we are reviewing is the TD Payment Plus Visa Credit Card.

The TD Payment Plus Visa Card is a good credit card because the more we pay the more we save.  This credit card offers a good rewards program that offers savings every single time we make a payment to our VISA card bill.  TD Bank is “America’s Most Convenient Bank”.  It is the American affiliate of the major Canadian financial institution TD Canada Trust.

The TD Payment Plus Visa Card Has a Good Rewards Program

If we pay 5% to 9.99% of our current monthly balance we receive 25% of the month’s interest charges in the form of a statement credit.

If we pay 10% of our current monthly balance we will receive a statement credit equal to 50% of the month’s interest charges.

This is a good rewards program because it is unique.  It is similar to a cash back rewards program except that our statement credit is based on our payments, and not on our spending. 

With traditional cash back rewards programs the cash back statement credit is usually paid out once a year.  However with the TD Payment Plus Visa Card the statement credit is paid out monthly at the time we make our payment.

The TD Payment Plus Visa a Good Credit Card for Young Spenders

The TD Payment Plus Visa Card is a good credit card for young spenders and young savers because it helps us pay off our credit card bill every month.  The more we pay on our monthly bill, the more we save and earn in the form of a cash back statement credit.

There is no annual fee for the TD Payment Plus Visa Card.  This means added savings, and no annual fee.  The TD Payment Plus Visa Card is currently offering 0% APR interest rate on balance transfers for 6 months. 

To find a TD Bank near you please click here or call 1-888-561-0608

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Good Monday Morning Green Panda Friends.  It’s time for a new series on Green Panda.  Our new Credit Card Management series will be featured every Monday and Tuesday over the next several weeks.  We will discuss the pros and cons of paying with credit cards, paying off our credit card debt, and the cost of carrying a balance on our credit cards.  We will also review several different credit cards to help you find the best credit card to fit your needs.

There are several Pros and Cons for using credit cards as a form of payment.  Paying with a credit card is a convenient form of payment since we may not always have cash in our pockets to pay for our purchases.

The con to swiping our credit card everywhere and using it as a common form of payment is the security risk of fraud.  The more places that we swipe our card, the higher risk there is of our credit card being cloned and used for fraudulent purposes.

The delayed payment and interest free period are other pros of using our credit card as a form of payment.  All credit cards offer an interest free period which usually ranges from 17 to 25 days. This means that we can make a purchase and have 0% interest on our credit card as long as the balance is paid off in full before the end of the interest free period.  We should always take advantage of the delayed payment via the interest free period as often as possible.

However, the con to the interest free period on our credit cards is that we may not be able to pay off the balance in full by the end of the interest free period; therefore the 0% interest free period will start to cost us.  Contrary to popular belief, we do not start earning interest on our purchases as of the first day. We start earning interest on our credit card balance after the interest free period is over.  Cash advances and balance transfers do not usually offer an interest free period. Therefore we start accumulating interest as of the first day.

Using a credit card as a form of payment and making our monthly payments on time helps us build a good credit history.  Our credit card doesn’t have to be paid off in full each month in order to build a good credit history.  As long as (at least) our minimum payment is made each month our credit card will be in good standing, and we will continue to build a good credit history.

The con to using our credit card as a form of payment is that if we are unable to make our monthly payments on time it can create a negative credit history.  Most credit card companies report our payment history to the credit bureau once a month.  Our payment history starts to become negative after we are 30 days late on our monthly payment.  Therefore, if our payment is due on the 5^th of the month, we will start being 30 days late on the 5^th of the next month. The credit card company may call us to collect the money after the payment due date, but it doesn’t affect our credit bureau for at least 30 days.

Another pro of using our credit cards as a form of payment is that we can earn Rewards Points to redeem towards cash back, travel, and/or merchandise.  You can accumulate a lots of point and travel with a airmiles credit card for example. However, the con to this benefit of a credit card is that hoping to earn rewards points may cause unnecessary spending.

As long as we do not carry a balance and do not accumulate interest on our credit cards I personally believe that the pros of using our credit card as a form of payment outweigh the cons.

Photo by Robert Scoble

Too much credit is as bad as no credit at all. This is what we usually say in the banking industry. If you have too many credit cards in your wallet, it could hurt your credit score or worse, hurt your balance sheet when it comes time to pay them off! However, if you have only one card, it could hurt it as well… Are credit cards good for your credit score? Actually, they are!

A few reasons to avoid having too many credit cards

Most people tend to think that credit cards were created with an evil purpose in mind (even more evil than the one who created unsecured personal loans ); forcing you to spend more than you can afford and causing you to pay extorsionist interest rates to greedy financial companies in return (mwahahaha!).

Paying with a credit card is like buying goods with “virtual” money for some people. Since they don’t actually take the dollars from their pocket, they feel like they didn’t spend any money… until they get their bill!

Besides temptation, I can’t really say why it would be bad to have more than one credit card. I actually believe that you are better off taming the beast once and for all and learn how to use a credit card responsively.

What is the magic number then?

When people ask me how many credit cards they should have, I tend to answer 3 to 4. Why so many? The very first reason is to have a credit card per company: In my wallet, I have a Mastercard, a Visa and an Amex. While I always use my Mastercard (this is the one that gives me the most points and warranty extension), it sometimes happen that a merchant doesn’t accept it. This is why having credit cards from different companies can be an asset.

The second reason to have more than 1 credit card in your wallet is to protect myself from fraud. If my main card is cloned, it will be cancelled right away by the company and I will receive my new Mastercard in about 10 days. If I’m on vacation during that time, it could be quite a pain to wait 10 days without a credit card. This is when I would use my other cards in the meantime.

The third reason to have 3 to 4 credit cards in your wallet is less known by the public: This will help you build a stronger credit score. One of the key points while calculating your FICO score is the balance of your outstanding debts versus your authorized limits. Take a look at this example:

John has only 1 credit card with a maximum limit of $1,000. He has made a few purchases on the card and his balance is $800. Therefore, his debt utilisation ratio is 80%.

Mary has 4 credit cards of $1,000 limit each and only used the first one. With the same balance of $800, her debt utilisation ratio is down to 20%.

Mary will end-up having a stronger credit score than John because according to the FICO score calculation method, she is far from being maxed out. The theory is that she is better able to manage her credit in a more responsible manner. Interesting isn’t it?

So which credit cards do I need?

I think you should select one credit card that gives rewards points or cash back while the other 2 or 3 should be no fee cards without many incentives. You only have to use the first one and forget about the others. They won’t cost you a thing but they can be useful to build a strong credit history and protect you in case of fraud.

Watch your credit cards, you may be losing money.

Credit card (and other) debts can grow like weeds. Try to tame the it before debt gets out of control. Fixing one habit at a time works, trust me. If you use credit cards or have credit card debt, you have to be diligent with handling them.

I’ve learned quite a lot from personal experience. My first credit card ever was from Citibank when I turned 18. I thought it was so cool to have my own card, even it was only a $300 credit limit one. It had a “low APR” of 14.99%, which jumped to 25.99% in 6 months. Within a week I spent half of my limit. Looking at some old receipts, it seemed like I spent it on a mixture of eating out, gifts for family (I felt good at the time about that), and car repair.

I know while handling credit credit card is a simple process, it’s not easy to actually do and get started with. The key for me was being informed and automating my system.

Review your monthly statements.

Identity theft is becoming more common and a good habit is to look at your statements every month. Sometimes credit card companies make mistakes on charges. I log in to my credit card account every couple of days to see if anything suspicious happens. I need to work on checking my paper statements.

When you review your statements, see if there are any updates or changes to the interest rate or fees. The complete disclosure about credit card fees is long and verbose. Double check to make sure your interest rate hadn’t increased dramatically. A friend told me that her American Express credit card had an increase even though she has never been late with a payment.

If there is an annual fee for your card, I’d get another card or negotiate that off. Why should you be charged a fee to be a cardholder? Basic credit cards that don’t have rewards or low interest rates shouldn’t have an annual fee on the card.

Pay your credit card bills on time.

A good credit history can help you when looking for a mortgage for a home as a higher credit score leads to lower interest rates.  Credit cards are notorious for charging their customers $39 for later charges and $39 for going over the limit. That can be $78/month added to the balance not including the interest. Do yourself the favor and pay on time and keep it under the limit.

Another way credit card companies make their money is by charging you $15 to make a payment over the phone. I can’t think of another provider that charges you for paying them over the phone. Try to mail/send your payments a week early, but if you have to pay $15 to avoid $39 or higher, then suck it up and pay the fee. Automating my bill payments online has made my life much easier and has kept me from having late fees added to my bills.

Pay as much as you can. (Pay in full is best)

Credit card companies might call you a “deadbeat“, but at least you’re not tied to them each month. If you can’t, then pay as much as you can. Do not just settle for minimum payments. If you’re unable to pay the minimum for your credit cards, call them to set up an affordable plan.

With the recession, some companies are willing to work with you. At the very least, ask them to waive fees and lower your interest rate. Again, some credit card companies are more willingly to work with you as the economy has hit many families hard. They would rather get some money than no money. Get your payment plan in writing to protect yourself.

Build your income or reduce you expenses to increase your debt reduction payments and eliminate your debt. It doesn’t matter if you have the best credit card for college students or the worst piece of plastic. You need to kill your debt.

Try a debt snowball or even snowflaking some more into your monthly credit card payments. Pay more than the minimum on the highest interest rates first and continue down your credit cards in descending order. When you pay off the first card, put all the debt payments from it into the second card and continue until you have paid off all your debts.

NEVER lend your credit card to anyone!

This account is tied to YOU and you will be held responsible.

Your Take

How are you handling your credit cards? If you have credit card debt, how aggressively are you attacking it?

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