It’s not so bad as this period of life is the right time for teaching teens budgeting tips and prepaid credit cards can become a great tool to fulfill this purpose.

Another tool for your financial toolbox

Most parents don’t like the idea of giving their children traditional credit cards as they are afraid of overspending. Thus, credit card companies designed particular prepaid cards for teens which are aimed to teach kids dealing with money and credit being responsible.

The way these prepaid cards work is rather simple. Parents can load a particular amount of money that they deem appropriate for a teenager during one month, for instance, and then monitor the child’s spending by calling to the credit card company or with the help of online statements.

Safer than cash?

Actually, some experts consider these prepaid cards safer than cash because most credit issuers guarantee that the parents can be refunded for unauthorized purchases. In addition, the child won’t be able to spend more money than the parents have loaded. Moreover, even relatives can put money on the card for a teen instead of sending a check or just giving cash that can be wasted at once.

As for the teens, they will have more opportunities as having a prepaid credit card will allow making purchases online that are impossible with cash.

The major credit card companies, including Visa and MasterCard, offer prepaid cards for teens. As a rule, there are no overdraft fees, no interest charges or late fees. Thus, this financial option can become a really great tool for teaching budgeting tips.

However, it can become harmful without strict measures set for your teenagers. As an example on how to manage the prepaid card, load the desired amount of money each month in order to teach your kids efficient budgeting. Also, monitor your child’s spending carefully and discuss every purchase explaining whether it’s essential or not. Some parents may find it to be useful to make their children work for the card by means of doing some chores, for instance.

Great tool when used wisely

In fact, prepaid credit cards can be not only a good teaching tool, but also a great gift for teens. If your children will get prepaid cards, they will feel more adult and it’s really important for them to obtain a kind of financial freedom.

Don’t get too concerned if your child won’t manage proper spending right at the beginning. Be patient and try to explain every mistake. No one is perfect, but it’s better to make mistakes now at a young age in order to avoid the same errors as an adult.

Valery Thomson is a financial copywriter being occupied for the website providing payday loans online and she is eager to share her knowledge and experience concerning various financial issues.

The falling dollar and rising prices has left many people tightening their financial belts to the limit, in some cases even facing the need to borrow money to pay existing debts (certainly not a recommended practice).

More and more people are finding it difficult to pay their bills and are faced with credit scores that are declining due to delinquent payments.

The downward slope of a declining credit score is a slippery one and many people feel helpless when they find themselves in this situation.

Credit Repair Service

When faced with a stack of mounting bills and a diminishing pile of money, some people throw up their hands and hope the situation will magically get better. Unfortunately, that is not the case. Instead they find their credit score has gone down the drain.

By monitoring your credit report on a consistent basis, you will be able to detect any problems early on and take steps to correct the problems. There will be occasions where the blemishes on your credit report are due to your financial mistakes, although there are also instances where the credit report contains inaccurate information.

This is where a credit repair service, such as Ovation Credit Report Repair, step in to help people clean up their credit reports.

As you might imagine, there are plenty of “fly by night” operations that don’t have your best interests in mind. Be careful when selecting a credit repair service and look for a company that offers things such as a free consultation, no upfront costs, and no long term contracts.

Educate Yourself

The credit repair services are great for people that don’t want to take the time to educate themselves about their options. Given that you are here reading this, I’m going to assume that you are not in that category as you are obviously making an effort to educate yourself.

That is where Ovation Credit Report Repair sets themselves apart from many of the companies in this industry, as they provide a wealth of free knowledge in their Learning Center. You’ll find things such as: e-books, videos, and podcasts. They also have something called Credipedia, which is their Credit 101 encyclopedia of all things credit.

By taking time to educate yourself regarding the options available to you, the process to dispute inaccurate items on your credit report, and your finances in general, you can most likely avoid having to pay for the services of a credit report repair company. If you’re still unsure, or intimidated, of the process then it might be worthwhile to have a free consultation with a service such as Ovation.

In most cases, you will be able to handle your credit repair on your own if you are willing to commit to the work that will be required. Whether you ultimately decide on using a credit report repair service or not, just be sure that you are making an educated decision and not jumping in blindly.

Disclaimer
This post has been a paid review and contains my thoughts on the positive and negative aspects of the site or service in question. With the intent of providing information that is valuable to my readers, if you object to this post please let me know.

While it is no doubt more convenient for consumers to rely on credit cards than use cash for all of their purchases, it may not be the same for those people who are in professions that rely heavily on cash tips.

In the days of old, it was possible for many waiters, cab drivers, attendants, porters, bell boys, doorman, performers, and other such “tipped” workers to live off of the cash tips they earned on the job. Many were able to keep the cash tips unreported as income as there was no paper trails to prove otherwise. Additionally, it was a nice benefit to having instant access to cash before payday rolled around.

However, there are more and more people carrying credit cards than cash for safety or convenience reasons and it is affecting the incomes of those who accept tips. There is now a very obvious paper trail when credit card tips are involved, which employees must report to the IRS as part of their income. As many patrons are now prone to paying their bills and adding the gratuity onto their total bill, waiters and other workers no longer get to keep tips outright on a daily basis.

There seems to be one advantage of customers using credit cards to pay for meals and such. It seems that consumers who add a tip to their total bill typically will give a higher tip than those laying cash directly on the table. Perhaps it is psychological: Simply writing down a number to many is different from having to count out and leave actual dollars.

Not only are waiters and other customer oriented staff effected by a so-called “cashless” society, but others who count on cash donations are also seeing a slowdown. For instance, musicians or charity groups, such as the street corner Santa’s, have in the past been able to make a decent day’s take from appearing or performing on a public street. However, since less people are carrying around actual cash in their pockets, less money is being tossed into the hats and collection baskets of those soliciting donations.

While a future life without cash is unlikely, at least in the approaching few years, it may actually become a necessity for business people such as cab drivers and yard sale entrepreneurs to be able to accept credit cards or face lost income. Many charities and groups who thrive on donations have reported to see an increase in online transactions despite the fact they are seeing less actual cash donations. Consider places you visit regularly and note that if money is changing hands there is probably a credit card sign on the door.

Overall, technology is making it easier to become a cashless society and having at least one credit card on hand can help protect you from fraud when making purchases, unlike regular bank debit cards. If you plan to use a credit card the next time you visit a hotel or dine out at a restaurant, throw a few extra bucks into your wallet for the wait staff. They’ll appreciate your effort.

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Tisha Kulak is a writer for Creditorweb.com, where she writes about credit card offers, finances, credit cards, and responsible credit card use.

You might have heard of stories about credit card debts gone real bad, maybe you have even lived that story.

Many people would tell you that credit cards are just like cashless shopping. Unfortunately this gives some people the notion that with a credit card they can spend as much money as they want, but at the end of the day remember that you still have to pay for all the things that you purchased.

When you realize that you do not have enough money to pay for your credit card bills, then this is when the real nightmare begins.

As always, discipline is the key in handling your finances, including your credit card usage. You should use your credit card wisely from the first day that you have it. Here are some tips to guide you on how you can take advantage of your credit card and not the other way around:

• Only use your credit card when necessary. If you have some cash with you, spend it rather than using your credit card. This way, you would use your credit card only in rare occasions or in case of emergencies. Some people like to use a credit card for everything to build rewards or rebates, which can work well as long as you maintain discipline and follow the remainder of these tips.

• You can save a big chunk of money if you pay your credit card bills on time all the time. By paying your bills promptly can help you avoid late fees. Not only will you avoid late fees but you will also benefit your FICO score, as timely payments is one of the 5 steps to improve your credit score.

• Do not go over your credit card spending limit. This way, you would not have to pay more for penalties. By avoiding fees and penalties, you will prevent yourself from digging a deeper hole each month.

• It is not a good idea to have a truckload of credit cards in your wallet. One or two credit cards should be sufficient. Make sure that you choose a credit card that suits your needs, your budget and most especially, your lifestyle. Having too many credit cards may just tempt you to spend more. Juggling payments and due dates between numerous credit cards may also cause confusion and increase the chance of missing a payment.

• Request a due date that is convenient to your normal payment schedule. So that you can be reminded of your credit card bill, request that your due date be set on the same time that you pay your monthly bills like your electricity, water bill and mortgage payments.

• When using your credit card, pretend like you are spending cash. This means you must spend only what you can pay for. If you have a regular monthly income of a certain amount, then do not go over your limit at all cost.

• Keep all receipts of your credit card purchases. Make sure that they coincide with your credit card’s monthly statement. Report any discrepancies and unauthorized use of your card if you see something amiss with your bill.

Using your credit card responsibly will help build a positive credit history as well. Maintaining a good credit history is very important, particularly if you foresee a need for a mortgage, car loan, or any other type of loan. If you’re currently carrying a large amount of credit card debt, it is not too late to make progress.

Start following these tips today and begin using your credit cards properly!

Good reasons to close a credit card account:

• You are the victim of identity theft
• You are worried a co-signer might rack up debts (for example, an ex spouse or family member)
• Your credit card company is charging you ridiculous fees it won’t waive, like a high annual fee
• Your financial institution is unstable or uses unethical practices

Wrong reasons to close a credit card account:

• You’ve finally paid down a credit card and you figure closing it down will make you appear more responsible on your credit report
• You’ve recently obtained a lower interest credit card and want to close an older, higher interest card
• You’re afraid you have too much available credit
• You can’t control your spending and want to shut down all available credit sources

Why are these poor reasons to close accounts? Credit score is based on a number of factors including the age of your accounts – credit lenders like to see that you have been loyal to your creditors. One of the benefits of owning a credit card earlier in life is to establish good credit history. Closing your older accounts immediately cuts down your credit history.

Another factor is your debt:credit ratio.

Also, older accounts are likely to have higher limits as credit card companies will bump up limits for customers in good standing every six months or so.

It’s much better to have $15,000 available credit and use only $5,000 of it than to make a balance transfer to a new card with a $5,000 limit and close your older, $10,000 limit account. You will jump from a decent 30% debt-to-credit ratio to a dismal 100%. So if you are going to close inactive accounts, choose more recent ones with low credit limits. But you probably don’t even need to close them. You can’t have too much available credit unless you’re too tempted to rack up higher bills. In that case, you can cut up your physical cards while leaving the accounts open.

When leaving old accounts open, it’s a good idea to use the card at least once every six months to make sure your credit lender does not close your account for you due to inactivity which would negatively impact your credit report. You could set up automatic payments for cellphone bills or monthly charitable donations for your older, higher interest cards to keep them active, and connect them to your online banking service, making sure to pay in full each month.

If you do need to close down accounts, it’s best to do so gradually, at a rate of one per month as closing down multiple accounts in a short period of time can trigger a temporary drop in credit score.

About Retail and Gas Credit Cards

Credit cards issued by retail stores or gas stations (unless they are Visa or Mastercard with retail or gas rewards) are not as beneficial credit references as regular cards because many use less reliable, smaller financial companies and they also approve almost anyone who applies. Some have even suggested that each retail store credit card you open lowers your credit score by 20 points.

These types of credit cards come with crushing interest rates in exchange for rewards points or discounts. Many department stores try to lure you into signing up with discounts off your initial purchase. Because these are lower value forms of credit, don’t just sign up to get a one-time perk. Only sign on for stores you will shop frequently in and that you will be able to pay off the balances each month.

About the Guest Blogger:

Linda Bustos is an editor for CreditorWeb, where you can learn about credit cards, identity theft, understanding credit reports and more. She is also an active member of the Destroy Debt Forum.

With growth in the consumer credit card business beginning to slow, many credit card companies are beginning to pay attention to small business owners.

According to an article in the Chicago Tribune, credit card companies are aggressively pushing small business credit cards.

Many small businesses make due with the use of personal credit cards, which isn’t always the ideal solution to the needs of a business. Having a dedicated small business credit card can simplify the record keeping and expense reporting without blurring the line between personal and business expenditures.

In addition, having a business credit card is nice if you have more than one employee as it is more convenient to provide a separate card for any employee that will need to have purchasing power.

While this may sound attractive if you own your own business, don’t rush out and start signing up for new business credit cards. The first step is honestly evaluating how you handle your personal levels of debt. If you are struggling to stay current on your personal credit cards, you may want to focus on cleaning that up before you extend the business with an additional line of credit.

According to the National Small Business Association, 71 percent of small business owners are carrying a monthly balance. Depending on the type of expense and the interest rates on the card, it may make more sense to obtain a traditional loan as opposed to using credit.

Many of the big names in the credit industry, such as American Express, Discover and Chase, are offering special cards tailored to the small business owner. In most cases, these credit cards carry rewards programs like many standard credit cards although some of the rewards programs are more specific to business owners.

For example, American Express has a program that provides an automatic discount at specific merchants such as Kinko’s. Discover introduced a card that permits cardholders to write a special check that is considered to be a credit card transaction, which allows a business owner to pay for goods or services that may not accept credit card payments.

If you are a small business owner, take some time to review the small business credit cards that are available and select one that best suits your needs as a business.

With gas prices continuing to rise across the country and speculation that we may soon see upwards of $4.00 per gallon, one needs to look for any opportunity to try and offset the cost of gas.

One of the easiest ways to offset the rising cost of gasoline is to use a rewards card for all of your gasoline purchases.

There are a few different varieties of gas reward cards available but one that I have really taken a liking to is the BP Visa Rewards card. This card offers a 5% reward on all gasoline purchases made at any BP station, which happens to be convenient for me with a BP station right near my house and one right near my office.

With the BP Visa card, you accumulate the reward until you reach a minimum of $25.00 and then have the option of receiving a check or BP gift card. The approach that I have taken is to wait until I accumulate $100 and then request a check in the full amount. The reason that I do not request the BP gift card is because I would then miss out on earning the reward on any gasoline purchased with the gift card as opposed to my rewards card.

As an added bonus the BP Visa card is currently paying up to a 10% reward for an introductory period, which we actually took advantage of when my wife transferred one of her existing cards over to the BP Visa card.

If you don’t already have a BP Visa card or any other gas reward card, check out a comparison of gas reward cards and sign up today to begin offsetting the cost of gasoline.

ProBlogger is currently organizing another group writing project and the theme this time around is a *Top 5* list.

With regard to personal finance and debt management, there are numerous topics that lend themselves well to a *Top 5* list. As an example, FreeMoneyFinance has written a post on the The Top Five Steps to Grow Your Net Worth that is well worth a read.

When I sat down to think about a topic for my own *Top 5* list, I immediately thought of how to improve your credit score. On the financial message boards that I frequent, this is often one of the most common questions asked and is of particular concern to people that have struggled with debt in the past and are trying to improve their situation.

Without further ado, I present to you my Top 5 Steps to Improve Your Credit Score:

1. Pay at least the minimum due on time every month. The main reason that my wife and I maintained good credit scores while battling our way out of debt was because we always made at least the minimum payment on time every month. It wasn’t always easy and there were some very lean months right out of college but neither of us ever had a late payment. Even though you aren’t paying the debt off entirely, the lenders are really only concerned with whether or not you are going to pay them on time. Timely payments accounts for 35% of your FICO score so this is where you can get the most bang for your buck.
   
   
2. Reduce your debt to available credit ratio. The next largest impact on your FICO score is the amount of money you owe on your credit cards relative to your total credit limit, also known as your debt to available credit ratio. The general rule of thumb is to shoot for a ratio no higher than 25% but obviously the lower the ratio the better. While the best scenario is to improve the ratio by reducing the outstanding debt, another option to boost the ratio is to try and increase your total credit limit. Be careful though as the additional credit could lead you to more debt if you are still struggling with the issues that resulted in the original debt.
   
   
3. Do not cancel or close your cards as you pay them off. Often times people that have struggled with debt will want to close the credit card as soon as they eliminate the outstanding balance. However, this action can negatively impact your credit score in a number of ways. First, one aspect of your credit score is the length of your credit history and older cards are weighted more heavily. If you happen to close one of your older cards, you will be removing that lengthy credit history from your account. Another reason your score may decrease relates back to the debt to available credit ratio. When you close that account, you remove the entire available credit from your total but the outstanding debt does not decrease at all because the balance was zero. After working so hard to eliminate the debt, you don’t want to skew your ratio by closing your card. The last reason to keep paid off cards open is that they will often present attractive balance transfer offers that can help you expedite your debt repayment.
   
   
4. Correct mistakes on your credit report. As I am sure most of you know, everyone is now entitled to one free credit report per 12 month period from each of the three main credit reporting agencies. When you order your credit report, review the information closely and dispute anything that is a blatant mistake. Be prepared as correcting mistakes can sometimes be a lengthy process but if your report contains errors it is imperative that you get them corrected.
   
   
5. Be responsible with the number and type of credit accounts. As you work on improving your credit score, do not rush out and sign up for 10 new credit cards in an attempt to improve your debt to available credit score. The number of open accounts can work against you as lenders might view too much available credit as a potential risk. As a general rule of thumb, try to keep your accounts down to 3-4 credit cards including traditional cards and department store cards and an installment loan such as a student loan, car loan or mortgage. If you don’t meet this guideline, it is not a good idea to close accounts or add new accounts to fit the mold but that is a general example of a healthy mix of credit.
   
   

There you have my top 5 steps to improve your credit score. If you find that you can only follow one of these steps at the beginning, make it the step of paying your bills on time. This one step can help prevent you from falling deeper into debt with late payments and over the limit fees, which then result in increased rates and make the problem even worse.

This list is not an exhaustive list and I challenge you to find additional ways that you can improve your credit score. If you have a step that you think can benefit others, please take a moment to share it with everyone!

Last night I was lucky to avoid a costly mistake of not paying close enough attention while conducting a financial transaction. With a night of crummy weather ahead, we decided to have last night as our “eat-out” night and we ordered some Chinese food. After placing the order, I decided that I would head out a few minutes early and get some cash at the ATM for our spending money next week and to cover the cost of dinner.

Charging a Fee?
As I pulled up to the ATM and swiped my card, I entered my pin number and the amount of cash to withdraw. At this point, I received a message that the bank was going to charge me a $2 fee for the transaction. This was odd because while this bank is not one of our banks, it is in the fee-free network for us.

After contemplating whether I really wanted to pay the fee, I opted to continue the transaction and accepted the fee. Then I received a notice that my pin number was entered incorrectly. I re-entered the pin number and received the same message. Immediately I became concerned that something had gone wrong with our account or check card.

Doh! Moment.
After receiving the message about the pin number, I decided to cancel the transaction and would head home to verify everything was okay with my account. As I opened my wallet to ensure that my check card was in my wallet, I realized why I was having trouble at the ATM.

Instead of using my check card, I had swiped my BP Visa card. Doh! It is a good thing that I don’t have the same pin number on the BP Visa card as I do on my check card, otherwise I would have completed a cash advance and been charged an outrageous interest rate. To be honest, I don’t even know if I do have a pin number on the BP Visa card or what it is if I do have one, but I was lucky to avoid a costly mistake due to my inattention.

Once I realized my mistake, I used my check card and the transaction completed without any incident. I think part of my confusion is that we just received new check cards, which are now blue in color. Our old card was green, just like my BP Visa card, and I must have just grabbed that card thinking it was my old check card.

Have you ever made a costly financial error due to lack of attention on your part? I was lucky this time but will be making sure I pay more attention in the future.

While it is possible to use your credit card to obtain cash, this practice can dig you deeper into debt and often will result in making a bad situation worse. Unfortunately, I have to admit that I have fallen victim to the cash advance perils while in college as I had taken money to cover expenses. Thankfully, I have learned that lesson and will never repeat that mistake. Here are the main reasons why you should not use a cash advance:

Higher Rates.
The interest rate on a cash advance is almost always higher than the rate for purchases. It is not uncommon to see a cash advance rate in the neighborhood of 20% interest. You have to ask yourself why you would need cash that bad to pay 20% interest. Often times, you can find an answer to the need for money without resorting to a cash advance and it will cost you far less in the long run.

No Grace Period.
Typically, when you use a credit card for a cash advance there will not be any grace period. This means that you will begin accruing interest the moment that the cash hits your hands. Unlike purchases that typically have a grace period where you will not be charged any interest if you pay the balance in full, the cash advance hits you immediately. In addition, as mentioned above, the interest is often accruing at a substantial interest rate.

Transaction Fees.
If the above two reasons are not scary enough, cash advance offers usually will include a one-time fee as well. The fee will vary from credit card to credit card, but is usually either a flat fee or a percentage of the transaction amount. While there used to be a maximum limit on the fee, many credit cards have since removed that maximum limit and charge a percentage of the total transaction. Obviously, this fee can be quite costly depending on the amount being requested.

Alternatives.
Rather than use a cash advance, I think there are usually a few alternatives that can be pursued that will not be quite as costly. While convenience checks often come with the same transaction fee as the cash advance, the interest rate is usually much more reasonable and may even be classified as a purchase, meaning there could be a grace period.

Obviously the best alternative is to build up an emergency savings account that can be accessed when needed. Depending on where you open your savings account, there may be a delay of a few days before you receive the funds. If you are uncomfortable with that delay, it may be beneficial to keep a small amount at a local bank or credit union for immediate access.

There is no doubt that people make foolish mistakes, which I have done myself as mentioned above. But one financial mistake that should be avoided at all costs is the use of a cash advance.