Tag Archives: daily
Exploring the various types of Interest Charges
The interest charge for your personal credit cards is figured by the current amount of your balance on your credit card account and the APR or Annual Percentage Rate you are being charged for. Credit card issuers tend to use one of several methods to determine your interest and/or finance charges. The end game of theses various types is not the same; so it is best to know the differences literally. The finance charge is the dollar amount you pay to use credit. The amount depends in part on your outstanding balance and the APR.
Credit card companies use one of several methods to calculate the outstanding balance. The method can make a big difference in the finance charge you’ll pay. Your outstanding balance may be calculated using the adjusted balance, previous balance (sometimes referred to as two-cycle), or the average daily balance as the reference point. Check your card agreements terms if new purchases and/or cash advances are also included or excluded as this varies from provider to provider.
The average daily balance is the most common calculation method for interest and or finance charge rates. Every morning usually in the billing period, the balance is updated with credits or refunds. With some credit card issuers, any new purchases are also added. When the end of the billing cycle comes around, daily balances are added and divided by the number of days in the billing cycle to arrive at the “average daily balance.”
The adjusted balance method is the most beneficial method for cardholders. Credits received during the current billing cycle are deducted from the balance at the end of the previous billing cycle. Cash Advances you may of received made during the period for the billing usually are not reflected on the total. Basically, if you pay your bill before the end of the billing cycle you don’t get stuck with finance charges.
With the previous or two-cycle balance method, the average daily balance is figured from two billing cycles rather than a single one. This tends to increase the finance charges one must usually pay. There is no grace period involved with this method and if you don’t pay the amount due in full, the charges may be made retroactive back to the time of the original purchase.
It is also important to note that many credit cards also carry a minimum finance charge. Regardless if your calculated finance charge is lower, you will still be required to pay this charge. However, if no purchases or cash advances have been made during the duration of the billing cycle, generally you will not be assessed and charges. Nevertheless it is generally wiser to check the particular card in question’s terms of service and fee schedule.
Not Sure Where To Start Repairing Your Credit? These Tips Can Help!
Having terrible credit can affect your daily life in a number of ways. It’s harder to own a home and interest rates are higher on cars, insurance and a number of other purchases. If you’ve had a hard time keeping your credit rating up, here are a few tips to get your credit back in good shape.
One of the best ways that you can do in order to keep a good credit score is to pay for a monthly copy of your credit report. This will allow you to see all the activities done with regards to your credit. If something does not look right, you will be able to dispute it before it is too late.
Every time someone inquires on your credit report, your score will go down for a short time. This is to discourage people from applying for a ton of credit accounts at the same time. Try to apply for only a few accounts while repairing your credit score, and do so at long intervals.
Always keep your bank accounts, your tax payments and your utility payments in order and timely. The way in which you manage these necessities reflects strongly on your credit rating. Falling behind on your obligations and having overdrafts at the bank negatively impacts your daily life and makes it more difficult to get credit.
If you are in the midst of repairing your credit and find that you are having difficulty paying bills on time due to financial stress, call the financial institution and see what options there may be for you. You may qualify for an economic hardship deferment of a loan or for reduced payments. You never know unless you ask!
When you are working to improve your credit, do not rely on debts falling off of your credit report. While it is true that debts recorded on your report can expire, the process takes many years. Serious debts are likely to be referred to collection agencies, as well, making them impossible to ignore. It is better to face up to the fact that you will have to pay off the legitimate debts on your credit report.
Use your credit cards to pay for daily expenses. You can repair your credit by using your credit card to pay for the small things you buy everyday such as gas and food. Make sure to pay the bill in full every month of course; this kind of regular payment in full is very good for your credit score.
A great tip to improve your credit score is to avoid excess credit. Having multiple lines of credit and racking up huge debt on that credit is a recipe for disaster. It shows that you have more debt that you can deal with and will significantly lower your credit score.
An important tip to consider, when working to repair your credit, is how applying for a loan will affect you. This is known as a “hard” inquiry on your credit report. However, you will take “less of a hit” if you group these inquiries into a short amount of time, as opposed to, spread out over a couple of months.
As you learned throughout this article, repairing your credit score is a careful blend of knowledge and action, with knowledge obviously being the more important factor. Once you learn how to repair that score, it’s up to you to take the action necessary to leave that bad credit behind you for good.