Most of us have credit cards, yet very few people understand the different types of credit cards available. Before you sign up for another credit card offer, make sure you know what you’re getting yourself into. Here are three common types of credit cards and their important details. Arm yourself with information so you know exactly how your credit cards work.

A revolving credit card is the type you’ll get most often when you apply for a credit card. It can also be called open credit card or an unsecured credit card. Simply put, revolving credit means that you’re allotted a credit limit and are allowed to make charges within that credit limit. Each month, you’ll have a minimum amount due on the credit card but you can pay more if you like.

A revolving credit card will charge interest on your existing balance. The interest charges are added to your balance and need to be paid off as well. This is where a lot of people can get into trouble. High interest rates mean that you’ll be paying more than you actually spend in the long run. The higher the interest rate, the more you’ll end up paying.

Prepaid credit cards are another popular type of credit cards, although they also go by the name secured credit cards. They differ from revolving credit cards in that you need to put up some money to back your purchases. Instead of the credit card company lending you money, you’ll be borrowing against money you’ve already paid. Prepaid cards are common in bad credit situations. It’s low risk for the credit card company. They are a helpful way for you to build your credit rating, since your activity on the card is reported to credit bureaus.

You’ll still need to make monthly payments on your credit card, as you would with a revolving credit card. With timely payments to your prepaid credit card, your credit card company may change the status of your card to a revolving credit card. In this case, they will increase your credit limit beyond the amount that you paid as collateral.

With prepaid cards, you’ll still be subject to the late fees, credit card interest and other features of regular credit cards. Make sure to pay on time and keep your spending low or you’ll end up making your credit score worse. (more…)

Credit card companies want you! If you hold many different credit cards, or have an online merchant account you probably receive new credit card offers each week that promise that you can transfer your balance. Balance transfer offers are just one of the many results of heavy competition between credit card companies. Fortunately, it’s one that helps you out as well as the credit card companies, but only if you (pardon the pun) play your cards right.

It’s important to know that most small businesses can benefit greatly from these types of offers if you know how to use them. This is especially true to those who have an adjustable small business merchant account. However, don’t take this as a license to open as many credit cards as possible. On the contrary, you should make your balance transfer decisions after a careful weighing out of what will be best for you.

There are three reasons that balance transfer offers make good financial sense. If you get an offer in the mail, and if offers you one of the following opportunities, then you should take it if all other signs point to it being a strong financial decision.

Lower Interest Rate - This is the most common reason that people transfer their balances. Most credit card companies offer 0% interest on all balance transfers. However, this rate is normally only for the first six months and then it climbs to a higher rate. If you’re seduced by the 0% and don’t take a look at the regular rate, you’ll be in for some sticker shock when the six months are done with and struggling to make that regular online payment from that point forward.

Having a zero percent interest rate can save you hundreds of dollars over the course of your credit card usage, but only if the higher rate is reasonable. If you’re moving $1,500 from a 17% interest credit card, to a card with six months of 0% and a regular rate of 20%, you’ll end up paying a lot more. The only time this would be a smart move is if you are planning on paying off that balance within those six months.

Rewards programs - If you currently have a large balance on a credit card that has none of the popular “perks,” it may be worth it to move your balance. Although you generally won’t get a whole lot unless you spend on the new card, you may be eligible for discounts and other rewards that your old credit card company wasn’t offering. Make sure to read the fine print on the new credit card so you know exactly what you can earn.

Debt to credit ratio - An important part of your credit score is your debt to credit ratio. This rate compares the amount of credit you have, versus the amount of debt you have racked up. If all of your cards are maxed out, your debt to credit ratio won’t look that great to potential lenders. When you get a balance transfer offer, take a look at the credit limit they are offering you. If you will be getting more credit and keeping your debt the same, you’ll have a better ratio. Just make sure to not spend on the extra credit available.

Balance transfer offers should be viewed carefully if you can get one of the previously mentioned benefits. It’s important to know exactly what you’re getting out of the transfer and if it, in any way, helps your credit rating and financial picture.

 When you start to study to topic of debt management, you’ll notice that some financial experts refer to “good” debt and “bad” debt, and others simple throw all debt into one category. Is there such a thing as good debt, and if so, how can you make sure that your debts are of the right kind? When you see debt as either good or bad, you’ll begin to realize that you can make smart choices when it comes to debt. Smart choices lead to a better financial position, which can help you free yourself from bad debt.

A simple definition of good debt is this: good debt is any form of debt that gives you money back. Don’t confuse this with credit cards with a cash back reward. Good debt is something completely different. This type of debt allows you to purchase assets which will put money in your account long after you make the purchase.

For example, purchasing a piece of equipment for your small business is a good debt investment. The rise of franchise opportunities nationally makes this probably the most common example when discussing what is involved in good debt investment. The equipment will help you do your business more quickly, which can lead to faster profits. Even though you are going into debt to purchase it, it will pay off in the long run.

Another example of good debt is investment in property. Buying a house is probably the most amount of debt that the average person will carry in their lifetime. But a mortgage loan can allow you to earn money in the future. If you purchase a house for $180,000 and it is worth $250,000 in five years, your debt has actually allowed you to make money. Good debt investments can also include stocks, shares, coffee franchises, restaurant franchises, art and even rare comic collectible items. (more…)

It’s no secret that gas prices are rising across the land. If your wallet is taking a hit at the gas pump, you may be wondering how you’re going to stick to a budget this summer. Gas prices have risen dramatically in the months leading up to summer and it doesn’t look like it will end anytime soon.  As of June 4, 2008 the average price for a gallon of gas nationally was $3.98. This marks an increase of $0.82 from a year ago or an astounding 21%! Estimates show that the prices are only going to rise, so anything you can do increase your car’s fuel efficiency will help you save.

The following tips will help you reduce your gas usage and make the most out of the gas that you do buy so that you can save money for the more important Summer pursuits.

1. Reduce your fuel grade. If your car has been feasting on mid-grade to premium grade gas, it’s time to go back to regular if you can. There are some cars that do need premium grade gas because of their high-compression engines, but most can get by fine without it. Check your user’s manual and do some research on your make and model of car. You may be surprised to find out that you can downgrade to a cheaper gas.

2. Drive conservatively - This has nothing to do with your political views and everything to do with the way that you use your car. If you’re used to making long trips several times per week, or even a series of short trips during the day, it’s time to go on a driving diet. Compile all of your errands into one driving trip. If you frequently visit a metropolitan area a few times per week, make just one trip. Try to look for opportunities to car pool or even walk. Reduce your reliance on your car and you’ll save money on gas.

3. Obey the speed limit - If you’re the resident speed demon among your circle of friends, you’re probably the one that spends the most on gas. After 60 mph, your fuel efficiency takes a nose dive. Although it can be impractical to drive that speed on some major freeways, try to keep it as close to 60 as possible. You won’t arrive as fast as you used to, but you’ll also be saving yourself at least 20 cents per gallon of gas. (more…)