Credit Card Debt Can Be Avoided With Smart Credit Card tips

Credit cards have become omnipresent; they have now eclipsed cash as a common method of payment in America. Plastic money is the new American currency. The use of credit convenience has evolved into a nightmare of credit card debt inconvenience for many Americans. The lure of plastic cards has made it difficult to imagine life without them. It is the appeal of not seeing cash money leave your pocket that spellbinds consumers, hence for many of them begins an unending cycle of expensive consumer debt. Consumer credit issues involve debt consolidation, credit card consolidation, or credit counseling. Before debt becomes an issue and you have to seek out the guidance of a trusted consumer counseling service, learn to be an educated and savvy credit consumer and avoid the future pitfalls of debt. Even if you are already in debt, unless you plan on stop using cards in the future, this article can give you guidance on how to avoid any future debt pitfalls. These are the seven smart tips about credit cards:

1. Shop around for the best deal

You are probably inundated with credit card mailers and phone calls soliciting your business. With literally hundreds of credit card offers to choose from, it’s smart to shop for the best deal. At the basic level, which meets the criteria of most American consumers is a card with a low Annual Percentage Yield (APR) and no annual fee. It is a boring proposition, but read beyond the promotional rates and go where the asterisks lead you, the zone of fine print.

The fine print is where you get the real information, such as when does the promotion rate expire, what does the rate jump up to, what are the late payment penalties, and if you make a late payment how does that affect your APR, amongst other components of your credit card.

2. Build a good credit rating

Avoid late payments by paying your credit card bills on time. Also, pay your credit debt off completely, if you don’t it could negatively affect your credit rating. A diminished credit score can be very expensive in terms of getting approved for low interest loans and employment offers that require good credit history. So if you stay within your means and pay your bills on time, you can avoid getting into debt, having a bad credit report and needing credit repair. The axiom is pay on time and stay within your means.

3. Make online shopping safer

Before making purchases online, read the website privacy policy as well as the security features. Only, if you are satisfied with the website policy in these two areas should you endeavor to shop. Also, some credit card companies provide a one-time use account number for large online purchases so that you don’t have to use your real account number for the transaction.

4. Limit the number of your cards

Stop carrying a bulky wallet filled with credit cards. At most you need two to three cards. Having too many cards can work against you when it comes to apply for a loan or mortgage. Your loan lender may determine since you already have access to so much money through your cards, the added loan debt may strain your ability to repay the loan.

5. Understand your consumer credit rights

Know and understand your rights as a consumer under the Fair Credit Reporting Act, Equal Credit Opportunity Act, Fair Credit Billing Act, Electronic Fund Transfer Act, and the Fair Debt Collection Practices Act. You can get more information about these important federal laws and consumer rights on the Federal Trade Commission's (FTC) website, The FTC’s Bureau of Consumer Protection works for you, the American consumer.

6. Switch balances carefully

Don’t transfer your high interest rate balances or do a credit card debt consolidation to a lower interest rate credit card, until you read the fine print. The low rate for the balance transfer most likely is for a limited time, involves transaction fees, sometimes up to 4 percent of the amount transferred. The hefty fees charged, may outweigh any savings provided by a lower interest rate. Also, if you don’t pay off your complete transferred balance before the limited time offer expires, a new high interest rate sets in.

Educate yourself about the total costs of having credit cards; you owe it to yourself.

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Get Out of Credit Card Debt

Credit card debt has been growing at a steady pace for many Americans over the years. Millions of Americans are having difficulty even keeping up with minimum monthly payments, let alone have the ability to pay off the debt. For most, the debt cycle is an unending one, in many cases requiring credit counseling to end it.

But the debt, especially credit card debt can be a costly affair not just in terms of monies owed, but in the realm of your credit score and credit report. Unpaid debt can be lead to a lowered credit score, affecting negatively the credit report requiring time consuming credit repair.

The last thing you want to do after paying off your debt is to get back into debt again. However, statistically it has been shown over and over again, that once people get out of debt rehab, they go back to credit card addiction.

Henceforth, it is time to shift your mind away from the cycle of debt, debt consolidation, and credit counseling. It is time to start anew. It is time to shift your thoughts away from just debt reduction to how you can avoid debt.

But remember, not all debt is bad, home buying, student loans, and school loans are considered good debt. You will always have some form of debt in life, the Super Rich among us even have it, but they are more sophisticated in their use of debt, they call it leverage.

According to the Federal Reserve Board's Surveys of Consumer Finance, the country’s richest 1% piled on $342 billion in new debt between 1998 and 2004. The richest 1% of Americans are households with net worth, (including primary residence) of at least $6 million.

The richest 1% of Americans, own 34% of all privately held wealth, never has wealth been so highly concentrated in a relatively few hands. Such disproportionate control of wealth is accompanied by a holding a disproportionate amount of debt. The same 1% holds 7% of the nation's total consumer debt, roughly $650 billion.

Unlike the average middle class American who spends his paycheck on a new car or a big screen TV, the rich leverage debt or invest it to make more money.

The reason I am sharing this with you is not because I want you to start playing the credit card arbitrage game, but to avoid and stay off consumer debt. It is going to be a lifestyle change, a change of habits, and a change in thinking; this must be done to avoid consumer debt.

Here are Six Simple Rules for avoiding debt and controlling your finances:

• Start an emergency savings fund, preferably to meet three to six months of expenses.
• Mitigate risk. Get proper car insurance, home insurance, health insurance, disability insurance, and life insurance.
• Recognize you weakness with regards to credit card use and change the habits.
• Budget monthly. Track your income and expenses on a monthly and yearly basis.
• Think long-term. Don’t be myopic with your finances. Do long-term financial planning
• Stay vigilant of your finances and disciplined in your spending.

If you follow the above rules you will be okay in your finances for the long-term.

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Gaurav Bhola, Managing Editor

College endowments meet shaky markets

With tuition costs rising, can donations continue to pay part of the freight?

To no one's surprise, the College Board reported on Oct. 22 that tuition at public and private colleges for the 2007-08 academic year continued to outpace inflation. But this year adds a new wrinkle — how the recent market turmoil will affect college endowments.

For some of the priciest schools, the above-average investment returns in recent years — as the markets boomed and hedge fund investments soared — have helped take the edge off upward pressure on tuition. If those returns suffer, those relentless tuition bills could edge even higher.

For example, at Vanderbilt University in Nashville, the endowment — worth about $3 billion — contributed about $125 million to the school's operating budget in academic year 2006-07, paying for programs, financial aid, and endowed chairs for faculty, among other items, says Michael Schoenfeld, Vanderbilt's vice-chancellor for public affairs. "It lowers the cost of tuition, it's a fairly simple transaction," Schoenfeld says. "If we didn't have the payout from that endowment, the cost of educating students would not go down. It would have to be replaced somewhere else."

The majority of endowment funds are concentrated at a small number of elite institutions in the public and private sector, with the wealthiest 10% of colleges and universities holding the most assets, according to the College Board. Schools such as Harvard and Yale have multibillion-dollar endowments that are so high that some members of the Senate Finance Committee called last month for the schools to use more of that money to reduce soaring tuition costs.

Tuition hikes
Anyone with college-age kids knows why costs are a hot-button issue. This year's College Board report shows hikes of more than 6% in tuition and fees for both public and private colleges. The increases are consistent with last year's, though the rate of increase at four-year public colleges is the lowest in five years. While the figures for tuition fees are the "sticker price" of a school, the cost of room and board and financial-aid grants means that what students actually pay is often much different.

The rising costs are driven by a variety of factors, from a slowdown of growth in the student financial-aid sector to flat or insufficient state funding at public colleges, said Sandy Baum, senior policy analyst at the College Board, during a press conference held in Washington, D.C., to release the findings. "There is no startling piece of information, but the data we have this year does confirm that the average price of college is continuing to rise more rapidly than the consumer price index and more rapidly than the average prices in economy," Baum said.

Four-year public colleges have taken the hardest hit, with the rate of growth in tuition and fees this decade the highest it has been in 30 years. The average tuition and fees at four-year public colleges for the 2007-08 academic year are $6,185, up $381 (or 6.6%) from last year, the College Board said. Those numbers don't include room and board and other expenses, which add about $7,404 to the bill.

The consumer price index for all urban consumers rose 2.8% between September, 2006, and September, 2007.

Costs at private universities saw similar increases to those at four-year public schools. Tuition and fees for this school year averaged $23,712, a $1,404 (or 6.3%) increase over last year. University officials cited rising utility rates, health care, and workers' compensation costs among the reasons for the hikes.

This is the first year that the College Board included in its report a chart with the overall endowment assets of colleges and universities. The endowment is an important figure to keep in mind when looking at tuition because colleges tend to spend 4% to 6% of their endowment earnings as part of their annual budget, said Baum. Private four-year colleges and universities tend to have the lion's share of endowment funds, with overall endowment assets of $82,700 per full-time student, while public four-year colleges and universities have about $13,800 per student.

Thirty-one private colleges have endowments of at least $1 billion, while 1,486 others have endowments of about $13 million, according to the National Association of Independent Colleges & Universities (NAICU).

Many of these schools use their endowment earnings to cover the cost of grants to students, money that has become even more important as federal grant aid is waning, according to David Warren, president of the NAICU. For example, the inflation-adjusted number for Pell Grants — a federal grant program funded by the U.S. Education Dept. — in academic year 2006-07 was $12.8 billion, down from $13 billion five years ago, Warren notes.

Offsetting costs
With less federal grant aid, public colleges and universities turn, in part, to their endowments to offset the cost of tuition for students, a factor that plays less of a role at public universities, where a bulk of their operating funds come from state appropriations. Schools also are looking at cost cuts and other sources of revenue to keep tuition from rising even further.

"Certainly for some institutions that do have a significant endowment, that endowment does play a large role in subsidizing the price that students pay," says Donald Heller, an associate professor and senior research associate at Pennsylvania State University's Center for the Study of Higher Education. "Without that endowment, students would be paying a lot more than they actually are."

Still, the fluctuations of the stock market are unlikely to have an impact on tuition costs at private colleges unless there is a continued economic downturn, Heller notes. Most institutions try to minimize the fluctuation in their endowment value by insulating their assets as much as possible from the ups and downs of the stock market, investing them in hedge funds and other vehicles — though it's not clear yet whether the subprime crisis is affecting college endowment holdings in those areas.

"The reality is in the short-term, a downturn in the stock market or other markets will have relatively little impact on the operating budget of a university," Heller says. "It will take a number of years of downturns before we start to see an impact."