It’s the end of January. Do you know the status of your 2019 financial resolutions?
If you never made any, or you’ve already let them slip, it’s not too late to start or start over. After all, you’ve probably only gotten one paycheck so far this year—or maybe none, if you’re a furloughed or working-without-pay federal worker.
Self-improvement or moral resolutions as a New Year’s tradition go back thousands of years to Babylonian times. During those times, people made pledges to clear their debts or give something back. We still make similar promises today.
The most popular New Year’s resolutions in 2018, according to YouGov Omnibus, are exercise more (59%), eat healthier (54%) and save money (51%). Save money beat out lose weight (48%), reduce stress (38%) and stick to a budget (35%). So if you’re making a financial resolution this year, you’ll have lots of company.
It’s easy to forget your resolution, but there are lots of techniques (okay gimmicks) around that will help you remember your promises to yourself and stay on track. Here are 10 savings challenges to participate in 2019.
1. The 52-Week Challenge
Out of all the savings challenges out there, this weekly savings challenge is the most popular and comes in various forms. Every week, you’re supposed to deposit a certain, pre-determined, amount into a savings account, jar or envelope.
If this is your first time saving anything or you’re looking for a small savings challenge for your child to start, then I’d suggest you start off small. Each week deposit $9.64 into a savings account. You can set up automatic deposits with your bank or use savings apps like Qapital. The amount is at your discretion too. You could save less or more depending on what you’re comfortable with. This challenge doesn’t have to last 52 weeks; you can sock away $500 in 30 days, 100 days or 6 months – it’s your decision. Once you’ve accomplished this goal, you can use it to fund a short getaway, a new outfit, give to a charity, designate it an emergency fund or use it as seed corn for your next savings challenge.
Out of all the 52-week savings challenges, this one is the most widely talked about. A simple variation of this challenge is to deposit a dollar amount equivalent to the week you are in. For example, if it’s week one then deposit $1 and at week 52, deposit $52. (If you’re starting in week 3 of 2019, play catch-up with a $6 deposit.) By the end of the year, you’ll have $1,378. You can also reverse the order for quicker gratification by saving $52 on week 1 and decrease your weekly savings by $1 until you are left saving $1 on the last week of the year. Qapital offers a 52-week rule saving feature that you could use to support this challenge.
Aiming for an exact $1,000 savings goal? Try saving $10 per week for the first four weeks and then save $20 per week until the last week of the year.
If you’re looking to make a major purchase or build up an ample emergency kitty, then this challenge is for you. You could simplify the process and save $100 a week for 52 weeks. But, you might like challenges where you snowball your savings. There’s one challenge where you save $20 in week one, week two is $35, week three is $45 and week four is $125. The next set of four weeks will go up by $5 to $15 dollars (your choice) and then repeat the process every four-week interval until you reach your $5,000 goal.
Take on challenges like this for major goals like a first home down payment or a wedding. Deposit $125 on the first week, $150 on the second week, $175 on the third week and $300 on the fourth week. On the fifth week, start the cycle all over again and continue the challenge until you reach $10,000. An amount such as $10,000 or greater doesn’t have to be tackled alone, especially if you’re paying down credit card debt. Partner up with your significant other or family members to pay for a mutual goal and have a built-in accountability partner.
2. Bi-Weekly or 26-Week Savings Challenge
Not everyone can handle saving every week. Some people get paid bi-weekly or twice a month and prefer to save according to that schedule. Thankfully, there’s some challenges that consider that. The $1,000 challenge requires you to save $26 from your first paycheck of the year (or the first week if you want to cut the year short) and then add on $1 to your savings deposit every week (i.e. on week 26, you would deposit $51 into your savings).
To save $10,000, you could alternate between saving $275 or $475 from every paycheck between week one and week 24. That will bring you to $9,000. Then, save $425 on week 25 and $575 on week 26 to reach your goal.
3. Save One-Month Of Salary
Your savings are a hedge against unforeseen and unfortunate circumstances such as job loss. Experts recommend saving enough to cover at least a few months to six months of necessary expenses. For this challenge, you can start off with a goal to set aside 8.33% of your annual salary, or one month of salary, by stowing away 10% of your monthly income into your savings account. Throughout the year you can increase it to a higher percentage to increase the number of months you would like to cover. Alternatively, you could increase it the following year when you participate in the challenge again.
4. Round-Up Savings or Save The Change
Your New Year’s Resolution may involve breaking bad habits like overspending or spending frivolously. I’ve found round-up apps to be helpful in helping people like myself see that I do have more money to save and I don’t need to attend Taco Tuesdays every week. Apps such as Qapital,Acorns, Digit, and Qoins save by automatically withdrawing spare change or extra dollars from your checking account. With Qapital, you can choose how much to round up on your checking account purchases and the loose change gets deposited into a Qapital goals account that is FDIC-insured and backed by one of their partner banks. Some apps like Chime and Qoins have the ability to use your spare change to pay down your debts while other apps like Acorns takes your extra cash and invests it.
Banks are getting in on the action, too. Bank of America has a Keep The Change Savings program for its customers that rounds up purchases to the nearest dollar and then deposits the difference into a designated BOA savings account. Be mindful of your bank’s rules for allowing third-party access to your accounts and make sure the savings app you choose offers FDIC insurance.
5. The Weather-Dependent Challenge
Budget blogger Melissa Berry at Sunburnt Saver created a savings challenge that follows the weather. She calls it Weather Wednesday. On Wednesday of every week, you look at the highest temperature for that day and then save an amount equivalent to the number of degrees. For Berry, who lives in Phoenix, Ariz., could be depositing over $100 a week into her savings bucket. If you live in Alaska, turn those negative degrees into positive dollar amounts.
6. $1 A Day or The 365-Day Money Challenge
With 365 days in a year and $1 for each day, you could have – drum roll, please – $365 in your savings account by the end of 2019. Use this simple strategy towards a gift for yourself, a charity donation or towards a trip. If this challenge is not enough of a challenge, try this idea with young family members. Another version of this is to match your daily savings to the number of the day in the year. If it’s day one then save $0.01; on day 150, save $1.50 and on the last day of the year, save $3.65. By the end of the year, you’ll have $667.95.
7. $5 Dollar Savings Challenge
The $5 Savings Challenge has many forms. There’s one that will help you achieve $7,000 by multiplying the number five by the number of the week you’re in. At week one you would sock away $5 and at week 52 you’d put away $260. Another type of $5 challenge involves physical cash. You may have seen photos of stacks of $5 bills floating around the internet; they are probably flaunting the results from this particular savings challenge. It requires you to take any $5 you come across and physically save it in a jar, shoebox or envelope. Then six months or one year later, deposit all of your $5 bills into your savings account.
8. Monthly Challenges
If you like No Shave November, then you might enjoy these savings oriented monthly challenges too. Budget blogger Kumiko Ehrmantraut of The Budget Mom crafted a list of ways you could save each month of the year. For example, her savings calendar includes Pack-A-Lunch January and Freezer & Pantry May (a challenge she said saved her $300), plus Generic July and No Spend November. Blogger and content manager Irina Vasilescu at Don’tPayFull.com, a coupon website, designed a similar challenge.
9. The Bad Habit Jar
We’ve all got a bad habit. When British media website Unilad posted a video on their social media of someone putting cash into an “I Am Late Again” jar, I chuckled. Then I realized that’s a pretty clever way of saving money and playfully penalizing a bad habit. Some of us grew up in households where there was a swear jar to curb children from using any language the adults disapproved of. And others can recall Schmidt’s Douchebag jar on the sitcom New Girl. I’m not sure what happened to the money once those jars were full, but I’m sure whatever you have by the end of the year can go towards a nice reward for yourself or someone else or towards your rainy day fund.
10. The Envelope Challenge
Envelopes aren’t going out-of-style anytime soon. Between the envelope budget method and the envelope savings challenge, there’s a rising demand for them. They are a bit easier to carry and move than a jar or shoe box. To start, mark each envelope with a series of numbers; pick a range you are comfortable with such as 1 to 25 or 1 to 150. Throughout the year, fill the envelopes up to the corresponding number. The envelope marked with the number 10 will hold bills and coins equaling $10, while the envelope marked 25 will have bills and coins totalling $25. The 1 through 25 range will total $325.
A New Year’s resolution to save more money is a worthy promise to make to yourself. To make sure you stay on task in 2019, try to get specific about how much you want to save, take one step at time, get a support system from friends, family members or like-minded communities and don’t sweat your mistakes. Also, make sure you enjoy your money every now and then so you don’t exhaust yourself with the process.
-Asia MartinForbes Staff
Mastercard: Diligent About Digital In Africa
Mastercard knows only too well that technology can drive inclusive financial growth with simpler and more efficient ways to do business and life. And Raghu Malhotra, the man spearheading this trajectory in Africa, is also focused on social progress.
In many ways, Raghu Malhotra is like the brand he works for, leaving his footprints in different parts of the world, and in some cases, the most unlikely corners.
On a scorching summer’s day in June 2016, Malhotra traveled 100km east of Jordan’s capital city Amman, to a camp with white tents named Azraq built for the refugees of the Syrian Civil War.
In the desert terrain and hot, windy conditions, people had to queue for hours on end for plates of food handed out of visiting trucks. But some of them, displaced and homeless overnight, expressed their gratitude to Malhotra, President for Mastercard in the Middle East and Africa (MEA).
Mastercard, a technology company that engages in the global payments industry, had distributed e-cards, as part of a global collaboration with the World Food Programme, to the refugees that they could now use to purchase food and other supplies from local shops.
“I spoke to the people myself and saw what their lives were… Even those who were doctors with their families and were displaced… They said to me ‘you have restored dignity to our lives; you have no idea how demeaning it is to queue up to be given food’… We actually digitized how that subsidy for food was given. Some of these things go beyond economics,” says Malhotra.
That very simply sums up Malhotra’s mandate for Africa as well.
The New York-headquartered Mastercard, ranked No. 43 on Forbes’ list of the World’s Most Valuable Brands, with a market cap of $247 billion, which connects consumers, financial institutions, merchants, governments and business, is fostering key partnerships across the African continent to help drive inclusive economic growth.
The idea, Malhotra says, “is to get our global skill-set to operate in its most efficient form in every local economy, at the same time, we must do good, and it must be sustainable.”
He calls Africa the next bastion of growth for various industries.
“As a company, we have stated we are going to get 500 million new consumers globally. And Africa plays a big part of that whole story… We want to be an integral part of various economies here,” says the man responsible for driving Mastercard’s global strategy across 69 markets.
“It probably took us over 20 years to get the first 50 million new consumers, in my part of the world, which is the Middle East and Africa (MEA). It took us probably five years to get the next 50 million, and last year alone, we put over 50 million consumers [in the formal economy] in MEA. That is part of our whole African story, so this is just not rhetoric; we are actually building our business on that basis.”
Home to four of the world’s top five fastest-growing economies, Africa has the fastest urbanization rate in the world, the youngest population, and a rapidly expanding middle class predicted to increase business and consumer spending.
It’s a continent of opportunity for global players like Mastercard with an eye on the potential of a booming consumer base and small and medium entrepreneurs, most of whom are still not a part of the formal economy. A large proportion of Africa is still unbanked. There is enough business opportunity in offering people digital tools so they can lead respectable financial lives.
But it is in knowing that financial inclusion is not just about technology, but more about solving bigger problems, as the World Bank says in its overview for Africa: “Achieving higher inclusive growth and reaping the benefits of a demographic dividend will require going beyond a business as usual approach to development for Africa. Going forward, it is imperative that the region undertakes the following four actions, concurrently: invest more and better in its people; leapfrog into the 21st century digital and high-tech economy; harness private finance and know-how to fill the infrastructure gap; and build resilience to fragility and conflict and climate change.”
And in order to enable financial access, Mastercard has a balanced strategy in place, with the right partnerships for inclusive growth on the continent, Malhotra tells FORBES AFRICA.
“Every emerging market has different segments of people and you need to get the right product for the right segment. What we do is a balanced growth strategy across the continent based on timing, opportunity etc… Of course, because the bottom of the pyramid is much bigger, I think what we need is to adapt things differently; that is where the inclusive growth story comes from. That is where the opportunity is, but there is a second part to it…” And that, he summarizes, is advancing sustainable growth, doing good and bringing more transparency and efficiency.
The new pragmatic dispensation of governments in Africa towards ideas, technology and innovation has surely helped open up the stage to newer segment-driven products, especially as Africa already has such global laurels as Safaricom’s mobile money transfer and micro-financing service M-Pesa that took financial access to a whole new level. Also, sub-Saharan Africa remains one of the fastest-growing mobile markets in the world.
Malhotra says he finds African governments consistent in how they are rolling out their digital vision, and in trying to collaborate towards creating better ecosystems for their economies, though each is unique with its own dossier of problems.
“When I speak to various governments around Africa, I see a commonality of what their needs are and I also see a commonality in how they are trying to respond. So I think a lot of them realize running cash economies is a very inefficient way of doing things… Also, the consumer base is much more open to new technology because there is no bedded infrastructure or legacy infrastructure. I think where governments need to start thinking a bit more is how much do they want to do completely on their own.”
Part of this transformation on the path to financial progress is alleviating the burden of cash. Cash still accounts for most consumer payments in Africa. Mastercard, which started out as synonymous with credit cards, continues its efforts to convert consumers from cash to electronic transactions, and move beyond plastic.
Business Intelligence For Dummies
Sorry, Ph.D.s! Dean Stoecker’s analytics software, Alteryx, can turn almost anyone into a data scientist. And it’s turned him into a billionaire
Sun Tzu meets software in mid-August at downtown Denver’s Crawford Hotel. The floors are terrazzo. The chandeliers are accented with gold. And Dean Stoecker, the CEO of data-science firm Alteryx, has summoned his executives for the annual strategy session he calls Bing Fa, after the Mandarin title of The Art of War. “Sun Tzu was all about how you conserve resources,” says Stoecker, 62. “How do you win a war without going into battle?”
Stoecker knows something about conserving resources. He cofounded Alteryx in 1997, when the data-science industry scarcely existed, and spent a decade growing the firm to a measly $10 million in annual revenue. “We had to wait for the market to catch up,” he says. As he waited, he kept the business lean, hiring slowly and forgoing outside investment until 2011. Then, as “big data” began eating the world, he raised $163 million before taking Alteryx public in 2017. The stock is up nearly 900% since, and Stoecker is worth an estimated $1.2 billion.
“People ask me, ‘Did you ever think it would get this big?’” he says. “And I say, ‘Yeah, I just never thought it would take this long.’ ”
Alteryx makes data science easy. Its simple, click-and-drop design lets anyone, from recent grads to emeritus chairmen, turn raw numbers into charts and graphics. It goes far beyond Excel. Plug in some numbers, select the desired operation—say data cleansing or linear regression—and presto.
There are applications in every industry. Coca-Cola uses Alteryx to help restaurants predict how much soda to order. Airlines use it to hedge the price of jet fuel. Banks use it to model derivatives. Data analysis “is the one skill that every human being has to have if they’re going to survive in this next generation,” says Stoecker. “More so than balancing a checkbook.”
Alteryx’s numbers support that forecast. The company, based in Irvine, California, generated $28 million in profit on $254 million in revenue in 2018, and Stoecker expects to hit $1 billion in annual sales by 2022.
Stoecker grew up the son of a tinkerer. His father built liquid nitrogen tanks for NASA before quitting his job to sell “pre-cut” vacation homes in Colorado. He made them himself. “It was literally just him nine months of the year, and he would cut wood for 50 buildings,” Stoecker recalls. As a teenager he joined his father, and by the time he arrived at the University of Colorado Boulder to study economics, he was able to pay his own way.
After graduating in 1979, Stoecker earned his M.B.A. from Pepperdine, then took a sales job in 1990 at Donnelley Marketing Information Services, a data company in Connecticut. There he met Libby Duane Adams, who worked in the firm’s Stamford office. Seven years later, the pair founded a data company of their own, which they cumbersomely named Spatial Re-Engineering Consultants. (A third cofounder, Ned Harding, joined around the same time; Stoecker, who came up with the idea, took the lion’s share of the equity.)
SRC’s first customer, a junk mail company in Orange County, paid $125,000 to better target its coupons. “We were building big-data analytic cloud solutions back in 1998,” says Stoecker, when many businesses were barely online and terms like “cloud computing” were years away.
SRC was profitable from the outset. “We didn’t spend ahead of revenue. We didn’t hire ahead of revenue,” says Adams, sitting in a remodeled 1962 Volkswagen bus at Alteryx headquarters, theoretically a symbol of the company’s journey. “We never calculated burn rates. That was a big topic in the whole dot-com era. We were not running the business like a dot-com.”
In 2006, as part of a pivot away from one-off consulting gigs, SRC released software to let customers do the number-crunching themselves. They named the software Alteryx, a nerdy joke for changing two variables simultaneously: “Alter Y, X.” Stoecker made Alteryx the company name, too, in 2010.
The market was still small. To grow revenue, “we just kept raising the price of our platform,” Stoecker says. In the beginning, Alteryx sold its subscription-based software for $7,500 per user; by 2013 it was charging $55,000. The next year, as Stoecker felt demand growing, he slashed prices to $4,000. Volume made up for the lower rate. Today Alteryx has 5,300 customers. “We immediately went from averaging eight, nine or ten [new clients] a quarter to north of 250,” he says.
Although data mining and data analytics is a long-established field, encompassing a slew of startups as well as giants like Oracle and IBM, “we see almost no direct competition,” Stoecker insists.
“It’s a pretty wide-open field,” says Marshall Senk, a senior research analyst at Compass Point Research & Trading. “The choice is you buy a suite from Alteryx or you go buy 15 different products and try to figure out how to get them to work together.”
Inside Alteryx’s offices, Stoecker pauses in front of a time line depicting his first 22 years in business. “The good stuff hasn’t even occurred yet,” he says. “I’m going to need a way bigger wall.”
Cover Photograph by Ethan Pines for Forbes.
-Noah Kirsch; Forbes
The Forbes Guide to Credit Cards
The credit card had a humble beginning. Diners’ Club introduced the first general-purpose credit card in 1950, followed eight years later by the first bank issued credit card. Americans have been using plastic credit cards since 1959 when American Express introduced plastic to replace its cardboard predecessor.
Today, credit cards have become ubiquitous in the United States. According to the Federal Reserve, Americans used their credit cards to pay a record 40.8 billion times in 2017, and those payments totaled $3.6 trillion. Statista reports more than a billion credit cards in the U.S. today and, according to the Federal Reserve, credit card debt now surpasses $1 trillion.
There are several reasons for the explosion of credit card use. One is the security and convenience of using a card instead of lugging around loads of cash. Another reason is the boom in online shopping. There’s also the number of banks offering compelling cash and travel rewards to their card users. Some credit card issuers offer a 0% introductory APR on purchases or balance transfers as a way to market their cards. And then there is a credit card’s ability to help consumers build a credit history and score that will help them later if they want to take out a mortgage, borrow for a car, or do anything else (like rent an apartment) that might require a credit check.
In this Forbes Guide to Credit Cards, we cover these and other topics you need to decide whether and how credit cards should be part of your financial life.
What Is a Credit Card?
Credit cards, which are a form of revolving credit, work differently than installment loans. With an installment loan, such as a car loan, a consumer borrows a fixed amount of money at a fixed or variable interest rate. A minimum monthly payment is set in advance, and it doesn’t change over the course of the loan.
With credit cards, it’s a different ball game. First, most credit cards come with a credit limit. A credit limit of $10,000, for example, enables a consumer to charge up to $10,000 on the card. Of course, there is nothing requiring the cardholder to use any or all of the available credit.
Second, the minimum payment on a credit card varies based on the outstanding balance. As the outstanding balance goes up, so does the minimum payment. Conversely, as the balance goes down, the minimum monthly payment also goes down.
Third, there’s no term on revolving debt. A car loan, for example, typically has a set term (e.g., 5 years). With a credit card, a consumer can continue to use the card so long as the balance doesn’t exceed the card’s credit limit.
The Types of Credit Cards
There are several different types of credit cards. These include cards for those with no credit or poor credit, business cards, and those looking for rewards. Here are the major types of credit cards available today.
Secured Credit Cards
In the world of credit cards, you’ll find there are two broad categories: secured and unsecured. Both report your payment history to credit reporting bureaus. Most credit cards you see advertised are unsecured, meaning they don’t require a refundable deposit to use them. Secured credit cards, on the other hand, require a security deposit to open the account.
Secured cards will likely have the word “secured” attached to its name—for example, there’s the Discover it® Secured card. To use this card, you’d deposit $200 to open a $200 line of credit with Discover. After eight months, your account, along with your other credit accounts, are reviewed monthly to evaluate your credit management. At that point, assuming you have paid off your balance every month and managed your other accounts well, Discover will likely refund your deposit and switch you to an unsecured card.
|Secured vs. Unsecured|
|Bases for credit limit||Refundable security deposit||Credit history and income|
|Interest on carry-over balances||X||X|
|Rewards (i.e. cash back)||X||X|
|Report to national credit bureaus||X||X|
|Offers security and protection services||X||X|
|Helps build credit||X||X|
|Fees (i.e. annual fee, late fees)||Depends on the bank’s offerings||Depends on the bank’s offerings|
Unsecured Credit Cards
Unsecured credit cards are what most people think of as traditional cards. What follows are various types of unsecured credit cards.
Student Credit Cards
A student credit card is designed for college students with limited or no credit. Student cards usually come with low to no annual fees and an educational component in the form of rewards. Some banks and credit unions will offer statement credits for maintaining a certain grade point average, for example. Other card features include cash back or rewards points. The credit limit on student cards is often low given the applicant’s limited income and credit history.
Business Credit Cards
There are two types of business credit cards: small business and corporate. Card issuers will have different qualifications for each card. For example, what one bank considers a small business, another might not.
A small business credit card operates like a personal credit card and it’s commonly used to establish credit for a young business. It’s similar to a personal credit card in that the small business may not have enough credit history to get a corporate card and so the business owner applies for credit through their own name.
Businesses that have more scale and a credit rating from one of the business credit rating agencies meet the requirements for a corporate credit card. Corporate credit cards give companies with millions in revenue the flexibility of authorizing multiple users and earning business related rewards like air mileage.
These cards aren’t hard to come by so you can shop around to find one that meets your business needs.
Reward Credit Cards
Credit cards offer a variety of valuable rewards. From cash back to free travel, rewards credit cards seek to build loyalty with card holders by rewarding them when they use the card.
Here are the major types of reward credit cards:
Cash Back Credit Cards
A cash back credit card offers discounts on purchases by giving cardholders cash in the form of a check, direct deposit or a statement credit. Cash back rewards typically range between 1% to 6% on purchases. For cards that pay the same rewards percentage on all purchases, the rewards range is from 1% to 2% in most cases. As the rewards rate rises above 2%, the rewards are limited to specific categories of purchases.
When choosing a cash back credit card, look for one that matches your spending habits. For example, if you spend a lot on groceries, you could choose a card that gives you a higher cash back rate at grocery stores. If you value simplicity, however, you could choose a card that offers 2% in unlimited cash back on all purchases.
Another feature to consider is monthly and annual fees. If your annual fee is equal to or bigger than your one-year cash back earning potential, it may not be a good fit for you unless you’re looking for the cash back to cover that fee. Likewise, if your interest rate is high and you will likely carry a balance, then you may not even get a chance to enjoy cash back rewards, since those rewards are likely to be more than offset by the interest you pay.
Look at when you can redeem the cash back, as well. Some cards give cash back after you’ve earned a number of points at certain merchants, others give cash back after a certain number of days or months, and some give you instant cash back. Read the redemption process for earning cash back to determine if its worth your time and energy.
Travel Reward Credit Cards
Credit cards are tools that can be aligned with your lifestyle. Travelers looking to earn mileage or discounts on hotels and travel packages have travel reward credit cards as an option. There are bank cards that are great for general travel and then there are branded cards that are great for flights on specific airlines or stays at specific hotel chains.
You could get a travel rewards card through a financial institution such as your bank. Bank of America’s Travel Rewards credit card gives you unlimited 1.5 reward points for every dollar you spend, plus 25,000 bonus points when you spend $1,000 or more within the first three months.
Some travel reward credit cards double as branded cards. Airlines offer credit cards that help you accumulate frequent flier points, which you can redeem for flights, free checked luggage, preferred boarding or discounts with their partners like other airlines. American Airlines partnered with Citibank to produce the AAdvantage Platinum Select World Elite Mastercard, which comes with all sorts of bells and whistles such as earning up to 50,000 bonus miles.
Hotel reward cards carry similar benefits. You would use a hotel card to earn points towards discounted rates, room upgrades, extended checkout or a free stay. The IHG Premier Rewards Club card gives free stays to cardholders on their card’s renewal anniversary.
Maybe hotel and flight discounts don’t excite you? Car rental companies like Avis offer credit cards, too.
Once again, pay attention to the fine print of how you can earn points, as well as how you will redeem those points. Some travel rewards programs may require you to cover your own taxes when redeeming your travel points—meaning, for example, that a free flight might not be really free.
Branded Credit Cards
Stores and other merchants partner with card issuers to create cards offering rewards or cash back. The Amazon Prime Rewards Visa Signature by Amazon.com, Chase and Visa Signature gives Amazon Prime members 5% cash back on purchases made on the site and at Whole Foods stores.
Unlike credit cards, which allow you to carry a balance into the following month for whatever interest charge you qualify for, charge card issuers require that you pay your balance off every month. If you choose not to pay the balance off, you will incur a fee.
Another difference is the credit limit. Charge cards do not have a pre-set spending limit; however, there are some retail charge cards that do. No pre-set spending limit doesn’t mean you access to endless credit. The bank can limit your credit to your regular usage of the card or your payment history.
Though charge cards are no longer as commonplace as credit cards, some financial institutions still offer them. They are helpful tools for people who prefer to not have long-term debt.
These cards may come with rewards programs, too. With American Express charge cards, for example, reward points could be one to five times your purchase amount. The only downside is these cards tend to come with high annual fees.
Subprime Credit Cards
Subprime credit cards are designed for borrowers who have poor credit scores. Subprime cards often come with exorbitant fees on top of high interest rates. There are some, however, such as the Credit One Bank Visa, that keep their fees and interest rates in line with standard rates. If you have poor credit, your goal should be to rebuild your score so you can qualify for lower interest rates and save money in the long run.
0% Introductory APR on Purchases and Balance Transfers
Some credit cards offer an introductory 0% APR. The 0% annual percentage rate is an introductory feature. Once you reach the end of the introductory period, the rate goes up to a standard credit card interest rate. Credit card companies may extend their 0% APR offers to purchases, balance transfers or both.
It’s important to understand the difference between 0% on purchases and 0% on balance transfers. With purchases, consumers pay no interest on their balance during the introductory period. Once the introductory period ends, the interest rates goes to the standard purchase rate based on the cardholder’s individual’ creditworthiness.
Balance transfers work differently. Knowing that consumers want to avoid interest charges on their revolving debt, some issuers offer balance transfer promotions to obtain new customers. Once the customer is approved, she can transfer her balance from an existing credit card to her new credit card with a 0% APR. While she’ll benefit from the 0% APR during the introductory period, most balance transfer cards charge a transfer fee of 3% to 5% of the amount transferred. A few cards, like the Chase Slate card, waive the balance transfer fee for those who initiate the transfer within a set period of time.
As previously suggested, shop around, compare features and go with a card that benefits you the most.
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