10 Common Reasons Merchants Reject Your Credit Card

Did a rejected credit card leave you stranded at the point of sale? Knowing why this happens can help you avoid such mishaps in the future.

You’ve spent months scouring the Internet for the perfect washer-and-dryer combo to complement your newly renovated laundry room. Finally, you’ve located what appears to be the right match at a great price.

Suddenly the deal is off. Your credit card won’t go through, and you have no other immediate form of payment to use.

It’s happened to many of us, and it’s not always the result of financial irresponsibility.

Here are factors that could trigger a credit card rejection, along with tips to remedy the problem.

1. Maxed-out card

Exceeding your credit card’s spending limits can have negative consequences, both in the form of fees and denials.

It also can damage your credit rating because of the utilization factor, which accounts for 30 percent of your FICO credit score.

If you’re close to the limit, you can try to request an increase. But don’t use that as an excuse to go on a shopping spree and increase the height of your debt mountain.

2. Fraudulent purchases

If your credit card issuer suspects a fraudulent purchase is being made with your card — or if you have actually reported such fraud — it will prompt a freeze.

Such activity — real or suspected — also could result in the closure of the current account, followed by the issuance of a new card.

If your account is frozen, promptly contact your credit card issuer to validate the purchases.

3. Authorized user dropped from the account

Perhaps you have been an authorized user on a credit card account, but the person whose name is on the card has decided to revoke your rights. In such instances, you will be cut off from using the account.

You can also lose temporary access if the cardholder has reported the card as lost or stolen.

To avoid being caught off-guard, simply keep the lines of communication open with the person whose name is on the card.

4. Transaction holds

Transactions such as securing a hotel room or renting a car could result in a hold being placed on your account. If you are close to your credit card’s limit, the card could be rejected at a subsequent point of sale until you’ve paid the final bill and the holds are lifted.

To avoid running this risk, keep your balances low to maintain a large amount of available credit.

5. Foreign/international transactions

Foreign transactions can raise credit card companies’ suspicions about fraudulent purchases being made with your card, resulting in a freeze on your account. That can be true even if you are in the U.S. but making a foreign purchase online.

The solution? Before you travel, let your credit card company know that you will be far from home, including where you will be and when you will be there. And always alert them in advance about foreign transactions conducted online from the comfort of your own home.

6. Unusual purchases

If you make a purchase that seems odd based on your prior spending behavior, it may be flagged by the credit card company.

Two years ago during Black Friday, I headed to Saks Fifth Avenue in search of some goods whose prices were steeply reduced. My purchases came to $458. The card was quickly denied.

When I called the bank, it released the hold but told me that because I usually don’t shop at “high-end” stores, the bank figured my credit card information had been stolen.

Let your credit card company know if you plan to shop at a different type of store or to make a usually large purchase. At the very least, always have a backup way to pay.

7. Delinquent accounts

Ignore the balance due long enough and the magic plastic may suddenly lose all of its powers. Whether you suffer this fate depends on the issuer and your history with the company.

Other negative consequences that may result from not paying your bill include:

• Damage to your FICO score once the activity is reported to the credit bureaus.
• Lower credit limits if the issuer views you as a greater risk than before.
• Fees for late payments.
• A higher interest rate.

To avoid the risk of delinquency, set up payment reminders. If money is tight, reach out to the creditor to see if payment arrangements can be made or whether any additional remedies are available to you.

8. Card has expired

If you didn’t get a new card in the mail before your card’s expiration date, call your card’s issuer. It is possible you have been a victim of mail fraud.

Of course, it’s also possible that the card was mailed to you, and you mistook the envelope for a piece of junk mail before tossing it in the trash.

9. Transposed numbers

Sometimes you are asked to provide a ZIP code or the security code on the back of the card to confirm your identity at the point of sale. Mix up any digits, and rejection will follow.

You can always retry. But if you make too many errors it may prompt your credit card issuer to lock you out of using the card until you call to explain what happened.

10. Closed account

A credit card company can close your account for all sorts of reasons, and it doesn’t have to give you advance notice. CreditCards.com says:

Even if you’re not in default, an issuer can boot you at any time. The most common reason is that you’re not using the account often enough.

To lower the odds that your account will be closed, simply be a good customer. It’s a good bet that your card company will keep you if you use the card regularly and responsibly and always pay your bills on time.

Has your credit card been rejected at the point of sale? Tell us about it in our Forums. It’s a place where you can swap questions and answers on money-related matters, life hacks, and ingenious ways to save.

Source: http://www.moneytalksnews.com/9-common-reasons-your-credit-card-was-rejected/?all=1

How to Pick an Emergency Credit Card

In times of financial emergencies, credit cards could be your knight in shining armour. We've magnified some of the properties you should look for in an emergency credit card.

Several terms have been coined to ideally describe a state of financial 'emergency' – some call it bad luck, poor timing, dead broke, while others just call it plain old not having tangible cash!

Whatever the moniker, its fundamentals don't change because when a money emergency occurs and you've exhausted all possible options of keeping your head off life's chopping block, the plastic that you keep tucked only for emergencies just might keep you buoyed for the time being.

In the spirit of yielding an umbrella in the wake of looming dark clouds (yes, directly translated from Bahasa Malaysia), we've identified key points that you would need to look for in an emergency credit card that could wipe your worries away in almost any comprehensible conundrum.

Low-Interest Rate

Scrubbing through the myriad of credit cards available in the market for this attribute comes second nature to every credit card hunter.

No doubt a low-interest rate might trigger your frivolous spending if treated as a regular credit card, but it serves emergency credit cards best with rates as low as 8.8% p.a as opposed to the standard 15% - 18% p.a.

Should you diligently be able to keep the low-interest rate credit card only for emergencies, you will find that the fat bill you just swiped will not incur a painful interest rate that could keep you from settling the outstanding amount. Conversely, it would definitely mean a steep climb toward clearing the debt post-emergency.

No Annual Fee

Most cards in the Malaysian market offer credit cards with annual fees at a flat zero, however many only offer the benefit if you swipe more than 12 times a year. This is a hassle if you don't plan to use your emergency card often (or are you expecting 12 emergencies per year?).

From a logical standpoint, should you be signing up for an emergency card, an annual fee of any sort would be a rent-my-pocket fee for no good reason. So do read the terms to find a credit card that truly is free for life without the conditions.

Having an annual fee on plastic that you hardly swipe other than during times of desperation would only add to your credit burden. By desperate situations, we don't mean Black Friday (you have cashback credit cards for that)!

Low ATM Withdrawal Fees

A little intertwined with the low-interest rate from the point above, low ATM fees also prove to be a strong necessity in emergency credit cards.

In the event that your plastic swiping abilities are ineffective due to a desperate need for tangible cash, an emergency credit card with low cash withdrawal fees would be your best bet as credit cards typically have quite a large fee on cash withdrawals.

Rock bottom ATM fees allow you to take the monthly installment in healthy strides and like the aforementioned, these cards are supposed to come to your rescue, not drown you in endless debt.

 High Credit Limit

Credit cards offer a different range of credit limits even though they follow Bank Negara guidelines on the issue, and one with a high spending limit is most welcome during times of financial emergencies.

This means that the credit limit you receive even though your salary is the same on all applications may differ from bank to bank unless your salary is between RM2,000-RM3,000 per month. Your credit record on CCRIS will also play a part in how much of a limit you are given.

Sometimes a little trial and error are in order. If a card you applied for is not giving you a good deal -cancel it and get a new one!

Emergencies such as hospitalisation and perhaps being completely stranded in a foreign country might end up being pretty exorbitant, and the last thing you need is an emergency credit card that is not able to serve its purpose.

Protection and Insurance

This doesn't mean you get to ignore your medical card insurance altogether because that in itself can be considered an emergency fund.

However, you can find other kinds of protection for travel and personal accident linked to credit cards. More commonly found in travel credit cards, this attribute is indeed a commodity for emergency credit cards.

In ill-fated incidents that occur overseas such as losing all of the local currency or simply running out of them, travel credit cards can prove very helpful in avoiding distasteful encounters with foreign authorities, immigration, or both!

Other perks of an emergency credit card that can serve you out of the country are one that can be accountable for lost baggage and hospitalisation, which are the most popular from a wide list of coverage depending on card exclusivity.

Alleviating the Unforeseen Circumstances

Its no doubt, there are some amongst us who can survive the strike of an unfortunate event that creates a financial state of emergency with no emergency credit card, but that does not completely grant anyone immunity from ridiculously expensive emergency scenarios.

You might even be a regular card owner and making sure your current credit card has checked as many as possible out of the above and will surely come to your aid in good times as well as troubles.

If the incredible amount of credit cards in the market confuse you, be sure to check out our credit card comparison for emergency credit cards and more to suit your lifestyle.

Source: https://ringgitplus.com/en/blog/Credit-Cards/How-to-Pick-an-Emergency-Credit-Card.html

7 Ways to Improve Your Investment Returns

To create a large investment portfolio, you need to save money regularly, invest consistently, and learn to stay the course for as many years as it takes. There are, however, several strategies that can help you improve your investment gains over time. This post highlights a few of those strategies.

Improve Your Investment Returns with These 7 Strategies

1. Find Lower Cost Ways to Invest

It’s easy to ignore investment expenses during bull markets – especially if you’re making money. However, the impact of those expenses can really add up over time, and not in a good way.

In fact, lowering your expenses by just 1% can make a huge difference in the performance of your investment portfolio over the long-term. Let’s say that you’re earning an average of 10% per year on your portfolio, but paying 2% in investment fees of all types. That will leave you with a net rate of return of 8%. If your portfolio is $100,000, it will grow to $466,097 after 20 years.

If you can cut your annual investment expense in half – to just 1%, your effective net return will rise to 9%. If your portfolio is $100,000, after 20 years it will grow to $560,440. That’s a difference of roughly $94,000, and it is earned simply by cutting your investment expenses by 1%. Investment expenses DO matter!

To find the lowest fees possible, look for an online broker that has either a low- or no annual fee, and lower transaction costs. Favor funds over individual securities (since you won’t trade them as frequently), and choose no-load funds wherever possible.

2. Get Serious About Diversifying Your Portfolio

Most of us know about the importance of diversification. But, just as is the case with investment expenses, the concept can easily get lost during a bull market. After all, if your stock allocation becomes disproportionately large in a rising market, it will actually help your portfolio performance – at least for as long as the bull market lasts.

But that’s the problem – bull markets never last. The August mini-crash should be a wake-up call to anyone who has been ignoring proper diversification over the past few years. Markets fall much more quickly than they rise, which means that advance preparation is completely necessary. And that is what diversification is all about – preparing for changing circumstances.

No matter how well your stock allocation is doing, be sure to maintain appropriate percentages of your portfolio in both fixed income investments and cash equivalents. They will help to reduce the losses you’ll experience on your stock allocation in a down market. Remember, minimizing losses during a bear market is just as important as maximizing your gains in a bull market.

3. Rebalance Regularly

Rebalancing is all about returning your portfolio to its original level of diversification. If you originally planned to have 60% of your portfolio invested in stocks, 30% in bonds, and 10% cash, it will be time to rebalance if your stock allocation has grown significantly higher than 60%.

The same is true in a bear market. If your stock allocation has fallen to 40% due to the declining market, you should rebalance to increase that position. It will enable you to take advantage of gains when the market recovers.

4. Take Advantage of Tax-Efficient Investing

Like investment expenses, income taxes on your investment earnings have a substantial impact on the performance of your portfolio. While it’s not usually possible to make them go away completely (unless of course, you are investing in a tax-sheltered plan, like an IRA), it’s very possible and absolutely necessary to minimize investment taxes whenever possible.

One of the best ways to do this is to avoid heavy trading. Trading generates capital gains, and capital gains result in capital gains taxes. Those taxes – along with all of the trading fees involved – can result in a portfolio that doesn’t perform materially better than a buy-and-hold model that’s invested primarily in funds.

And speaking of funds, you should favor index-based exchange-traded funds (ETFs). Since such funds are tied to the underlying index, they only trade stocks when the index changes. That means that they trade stocks far less than actively managed mutual funds. That minimizes your capital gains, which ultimately minimizes capital gains taxes.

5. Tune-Out the “Experts”

Have you ever heard an expert confidently predict that the Dow is going to 25,000 – or crashing down to 5,000? Ignore them. “Experts” who make claims like that are nothing but crystal ball gazers. They have no more insight as to where the market is heading than you or anyone else, but they sure think they do.

But, that doesn’t mean that they’re harmless. Since they deal primarily in hyperbole, they can get your attention easily. After all, no one ever wants to get caught napping while big things are happening. And if a self-styled expert can cast himself as credible, you may just decide that he’s someone who knows what’s really going on.

If you want to be a successful investor, particularly on a long-term basis, you’ll have to learn how to tune out this kind of chatter. All it does is distract you from your own investment goals and strategies, and that won’t help you in the long run.

6. Continue Investing in Your Portfolio No Matter What the Market is Doing

A portfolio that is growing through a combination of investment gains and regular contributions can grow dramatically. You should never allow the direction of the market to affect your contributions – but sometimes that’s exactly what happens.

Both bull markets and bear markets can cause you to be hesitant to continue contributing to your portfolio:

• During bull markets, strong investment returns can easily convince you that continued contributions are no longer necessary.
• During bear markets, you may become convinced that contributing to your investment portfolio is an exercise in throwing good money after bad.

Both assumptions are completely counter-productive. Contributing to your portfolio during a bull market will not only cause your portfolio to grow faster, but it will also provide you with fresh capital for more investments.

Continuing to contribute to your portfolio during a bear market is even more important. If your portfolio is falling in value due to negative returns, your contributions will be the only factor that minimizes the decline. Even more important, the new cash that you put into your portfolio will represent capital to buy stocks at deep discounts when the market is at the bottom, and finally begins to move in an upward direction.

7. Think Long-term

Probably the worst delusion that can affect any investor is the “get rich quick” mentality. It’s especially hard to resist during bull markets. Everywhere you look, there are experts promising that you can double or triple your money in just one or two years by following their plan. It’s utter nonsense!

Like paying off a mortgage, building a career, or raising a child, successful investing requires both time and patience. You should never measure your time horizon in months, or even years – but rather in decades. By investing $10,000 per year in an index fund with an average rate of return of 8% over 30 years you will accumulate nearly $1.25 million. That may not be get-rich-quick, but it is a way to get rich – and that’s what really counts.

Making Your Investment Strategy Work for You

You’ll have to adopt a long-term view, and maintain the discipline to contribute your savings plan each and every year, and not allow yourself to get sidetracked by various get rich quick schemes along the way.

If you are already doing that, then you are on the right path. But you might have to use some of the strategies above to tweak your investment returns to higher levels.

Source: http://www.doughroller.net/investing/7-ways-to-improve-your-investment-returns/

6 Reasons Why Avoiding Credit Is Costing You

Remember that Credit is Money

As a teenager, I was repeatedly told that establishing credit and using it responsibly to build a high score was paramount to my long-term financial success. Too bad I completely ignored the latter part of that advice and found myself in a mountain of debt by the age of 21. And it’s around that time that I decided to complete a self-study course on financial literacy by a well-known expert. A bulk of the information shared seemed practical, but there was one section that left me scratching my head.

It was the part about debt-management; the instructor insisted on avoiding debt at all costs or it could be detrimental to your long-term financial health. While there is some truth to this statement if a debt is not managed responsibly, I’ve found that ditching credit altogether in favor of cash can come back to haunt you.

Here’s why:

1. Potential Lenders Can’t Properly Evaluate Your Application

Turns out having no credit is just as bad as having poor credit. Reasoning: lenders use your credit profile to gauge your credit risk based on several factors, such as payment history. But if nothing’s there, chances are your application for credit will be denied, or even worse, you may only qualify for the inferior products.

2. Exorbitant Security Deposits

If you just moved into a new place and need to activate cable, internet, electricity, water, or any other utilities, the provider may require a hefty refundable deposit if you have a minimum payment history. The same rule applies to cell phone providers: they’ll want to collect a lump sum upfront to be used as collateral in case you default on your monthly payment for services later on down the line.

3. Limited Credit Card Options

That irresistible credit card offers you see on television or internet advertisements are usually reserved for consumers with excellent credit. While lenders evaluate an array of factors to determine if you qualify for the most competitive offers, having a score on the higher end of the spectrum will definitely boost your chances. Until then, you’ll have to settle for a secured card or one with an outrageous APR should you decide to apply.

4. Good Luck Securing Travel Reservations

It’s practically impossible to make travel arrangements without some form of plastic. And if you use debit for lodging or rental reservations, don’t be alarmed if a large hold is placed on your card and remains intact for a week or so following the trip.

5. Limited Options When Renting

Need to rent an apartment? The landlord will want to run a credit check, even if you’ve proved you can afford the monthly payments. If you have little to no credit history, don’t be alarmed if they require first and last months rent along with a security deposit, or reject your application altogether if there are more qualified applicants on the waiting list.

6. Increased Insurance Premiums

Lenders, creditors, and landlords aren’t the only entities that may want to take a peek at your credit. “Approximately 95% of auto insurers and 85% of homeowners insurers use credit-based insurance scores in states where it is a legally allowed underwriting or risk classification factor,” according to the National Association of Insurance Commissioners. And the lower the scores, the higher the premiums. The good news is if you reside in California, Hawaii, or Massachusetts, you aren’t subject to this screening.

Bottom line: I’m not suggesting you apply for every credit offer that comes your way or else you could end up buried in a sea of debt, struggling to stay afloat. However, you shouldn’t completely ban them or you will have to fork over more dough than you initially bargained for should you need to borrow cash later on down the line.

Can Your Credit Report Affect Your Loan?

The importance of maintaining a healthy credit score often eludes young professionals who have just joined the workforce – important they will come to realise the hard way when their application for a personal, car or home loan is rejected.

For those who have been rejected by financial institutions when applying for a loan, the reason is most likely a poor credit rating or score. 

Understanding credit report

In Malaysia, Bank Negara Malaysia (BNM) maintains a computerised database of credit reports which contains credit scores. This database system is known as the Central Credit Reference Information System (CCRIS).

According to BNM, at present, the database system contains credit information on about nine million borrowers in Malaysia. CCRIS receives credit dates from various financial institutions and generates individual credit reports, which are made available to financial institutions, individuals, and even companies upon request.

A credit report contains the following credit information of an individual:

1. Outstanding credit(s) – excluding any accounts which have been fully settled.
2. Special attention account(s) – Non-performing loans, loans that are in default or close to being in default.
3. Application(s) for credit – Applications approved in the previous 12 months, excluding application that has been rejected, deleted, or cancelled.

How does a credit report affect loan application?

Financial institutions refer to your credit report to determine your repayment capabilities before approving a loan application. However, in order for the lender or bank to access your credit report, it first has to inform you in writing that a credit check is to be conducted.

Once the application has been approved, the bank will send information to the Credit Bureau which details, in the form of a credit report, how well you handled your debt. Reference to the credit report will be made by the financial institutions periodically to obtain updates on an existing borrower.

If you are doubtful of the credibility of credit reports, the information contained in these reports is entirely factual and historical. The Credit Bureau will not in any way give recommendations or opinions based on the report to financial institutions.

Different banks have different policies when it comes to loans or credit card approvals. They may place varying importance on the different information detailed in this report. However, it is known that the approval of a loan application will largely depend on the risk evaluation conducted by the bank, based on the information in the borrower’s credit report.

The information stored in CCRIS also includes any new loan applications. Hence, it is safe to say that your banks are fully aware of how many banks you have already approached prior to applying for financial credit from them. This may not affect your credit rating but may send a negative signal to some banks.

Keeping a clean record

With full disclosure of your housing loans, car loans, credit cards, personal loans, as well as other commitments jointly made with friends or family members, it is important to keep a clean record to avoid any obstacles in applying for financial credit in the future.

While each bank assesses your credit score differently, your credit report will provide crucial information that determines whether your application is approved or rejected by the banks. Therefore, it is important to keep your credit rating in mind when you are managing your money and debts.

Here are some simple ways to ensure a clean credit record:

1. Get a job – Having a stable stream of income indicates your ability to service a loan or manage your credit card.

2. Avoid holding too many credit cards and maintain a good payment record – Apart from limiting the number of credit cards you hold, manage the repayment of all outstanding balances on your credit card. You can consider consolidating your credit card debts on one card.

3. Timely payment – Repayment history is a major factor in the lenders’ risk evaluation on a borrower. Do not drag or defer your repayments as it will affect your future loan or credit card applications.

4. Manage your debt – Always borrow according to your capacity. As your credit report encompasses all your active loans, banks are aware of your outstanding borrowings. If you have used up all your borrowing capacity, then your loan will most probably be rejected.

What if you have a bad credit report?

Raising your credit score is not complicated, but it does take time, discipline, and hard work. These steps can help get your credit score up to improve your chances of qualifying for a mortgage:

1. Check your credit report regularly. You are allowed to check your credit report every three months. Correct any errors on your report, especially late payments that are not recorded properly. Here’s how you can obtain your personal credit report.

2. Make all your payments on time. Late payments are the first thing that lowers your credit score.

3. Pay down revolving debt like credit cards. A high debt-to-credit ratio is another sure-fire way to lower your score.

4. Wait it out. As your credit report only records active loan accounts for the past 12 months, you just have to wait it out. As long as you’re paying down debt and making payments on time, your credit score will eventually rise on its own.

The above is generally good financial habits to inculcate from the beginning. However, if you have a bad record now, it is not the end of the world. While your credit rating can make or break your life (for the moment), it isn’t something to fear.

When you understand how to manage your credit responsibly, you will eventually build up a solid credit report and save yourself a lot of trouble, and sometimes even money from lower interest rates offered by banks.

Source:https://www.imoney.my/articles/can-credit-report-affect-loan

3 Reasons to Have More Credit Cards!

The first thing that comes to mind when more credit cards are mentioned is an irreversible financial crisis! But with scrupulous swiping, you could just make every ringgit spent count by having more credit cards.

Before you start heaving all sorts of lambasting thoughts at us, let us explain why the header above can make absolute sense if you approach it in the right way.

It's common to think that the excessive prostitution of your various credit cards with different ranges of benefits can cause you to lose track of spending ultimately leading you into a credit abyss. You won't be alone in thinking so but is that the only way?

In fact (not in theory!), having more credit cards can help you take complete advantage of every Ringgit you spend. Have we got your attention yet? Keep your eyes peeled as we flip your perception 180 degrees.

Improve Your Credit Worthiness

How creditworthy you are is decided based on a number of factors compiled and assessed based on an internal algorithm used by banks with the helping hand of Bank Negara to minimise risk to the bank.

The outcome of this process will influence your rate of approval for personal loans, home loans, hire purchase loans, and even other credit cards.

That said, having many credit cards isn't such a bad idea for your creditworthiness if you can show the bank how well you manage multiple debt opportunities. This, of course, can only be a boon if you diligently pay off your balances in full every month and avoid irresponsible spending.

Ride the Waves of Bountiful Perks

This is where channeling your inner leprechaun comes into play – converting every ringgit spent into alternative sources of bounty as provided by the credit card issuing banks.

The plethora of credit cards dwelling in the Malaysian market offers pretty gorgeous rewards and benefits, and honestly, it'll be quite sad if you didn't make use of them.

Travel benefits like priority check-in, access to airport lounges, airfare rebates, and reward points for overseas spending amongst others exist for the avid traveller with some of the best travel credit cards in the country.

Then there's the 'soccer mum' picking up the kids from school, taking them around from one place to another, and grocery shopping like a superwoman. She could get it all done and end up with a good amount of spare change by using a good cashback credit card where every Ringgit spent earns in return!

If that's not enough, think of the cards, which offer much better dining and shopping discounts than their competitors but this will only be helpful to you if you possess the card in question!

Unfortunately, these perks have been spread out across the myriad of credit cards available in the market – call out the inner frugal being and pick ones that will benefit you and not haunt your statement at the end of the month! If you're spoilt for choice, let us help you pick one with our credit card comparison.

The basic idea is to have an arsenal of credit cards with varying benefits to use when it will give you the best discount. But this doesn't mean racking up huge purchases on all of them!

For the Odd Emergency

And by this, we don't mean satisfying your insatiable desire to maximise all credit limits on your cards – but to be the shining piece of plastic during your times of financial darkness.

Some credit cards offer huge discounts on medical expenses, which can come to the rescue for those who don't have the added accolade of medical insurance under their belt.

How about a less panic engulfed scenario when you forgot to pay a visit to the ATM but have just eaten a full meal and need to pay up but your other card is piled up with the recent medical bill you ran up? Your emergency card could save you from an embarrassing situation.

Where emergencies are concerned, having more than one credit card can most definitely pull one out of financially sticky situations – frivolous and life-threatening alike.

Sign Me Up Already!

Hold your horses, troopers. Being the financial experts that we are, it is a cardinal task of ours to advise that credit mismanagement can occur under unscrupulous circumstances and does not have a preference in choosing its victim.

Therefore, we advocate proper use of your credit card and in the event that you do find yourself in financial dire straits, there is always the option of consolidating your credit cards through a balance transfer where interest rates are as low as 0%.

Or you could take up a personal loan to give you more breathing room to clear out the outstanding credit. At the end of the day, a credit card could be a friend or foe depending on how you use it. Sounds like a lot of things in life!

Source:https://ringgitplus.com/en/blog/Credit-Cards/3-Reasons-to-Have-More-Credit-Cards.html

Personal Finance 101: What Is a Cashier’s Check?

Cashier's Check

“Cashier’s check” is one of those financial terms that you may have heard thrown around, but what does it really mean? How is a cashier’s check different than a regular check, and why would you need to use one? Is it the same as a certified check? We’ll answer those questions and more below.

What Is a Cashier’s Check?

A cashier’s check is one drawn directly from a bank’s own funds in the bank’s name. It’s typically signed by a teller (also known as a cashier — hence the name). The bank is responsible for paying the amount on the check directly to the payee. This is in contrast to a personal check, which is drawn on your account and authorized by your signature.

You may be required to use a cashier’s check instead of a personal check for a particularly large or important purchase, such as making the down payment on a house or car. Since the cashier’s check is drawn from a bank’s funds instead of your personal account, the seller knows it won’t bounce. A personal check would offer no such assurance.

Another advantage of a cashier’s check over personal checks: Funds from cashier’s checks are made available almost immediately — the next day at the latest. A personal check is vulnerable to longer processing times, and large amounts are at particular risk of long holds.

How do I get a cashier’s check?

Getting a cashier’s check is something you can only accomplish offline. To get one, you’ll need to do some banking the old-fashioned way: Go into your local bank branch or credit union and request one from a teller.

You’ll want to bring your ID, and make sure you know all of the necessary information for the check: the payee’s name, the exact amount, and any notes that should be included.

If you have an account with that bank or credit union — it can be a savings or checking account — the teller will simply confirm that you have the funds and take that amount from your account before handing over the check. If you don’t have an account there, you’ll need to have enough cash to cover the check amount.

Note that some banks won’t issue cashier’s checks if you don’t have an account with them, so it’s worth calling ahead if you aren’t a current customer.

What does a cashier’s check cost?

You’ll typically have to pay a fee before a cashier’s check is issued, though some may issue them free for all or certain customers. Fees vary from bank to bank, but the largest banks in the U.S. charge anywhere from $7 to $10 for the service, according to MyBankTracker. Other banks may actually charge a percentage of the check total instead of a flat fee.

Are there cashier’s check scams I should watch for?

Unfortunately, yes, but these scams are more likely to entangle the recipient of the check rather than the sender. Like any other checks, cashier’s checks are vulnerable to forgery.

One particularly popular scam has the “payer” sending a check for an amount that is greater than he or she needs to pay, then asking the payee to return the difference in cash or via a wire transfer. The catch, of course, is that the check turns out to be bogus.

If you’re accepting a cashier’s check as payment, make sure you accept one for only the agreed-upon amount. You can also verify that the check is legit by calling the bank where it was supposedly issued — just be sure to track down the bank’s contact information from a trusted outside source.

Alternatives to Cashier’s Checks

If you need a more secure way to pay someone than cash or a personal check, a cashier’s check isn’t your only option. Here is a rundown of some of your other options, and how they differ from cashier’s checks:

Certified checks

You might find that a bank teller automatically assumes you want a cashier’s check even if you ask for a certified check. That’s because certified checks have become increasingly rare, and many people use the terms interchangeably. (My own mother, a bank teller for more than 20 years, has only issued two or three certified checks in that time.) But there is a difference.

A certified check is still a personal check — unlike a cashier’s check, the money is drawn from your account, not the bank’s. However, both you and the bank sign it. The bank’s signature essentially guarantees the payee that you have funds available in your account to pay the check amount, which the bank can freeze until payment. Because both you and the bank sign the check, both of you could be held liable if there is a problem with payment.

Practically, both a cashier’s check and a certified check are more secure ways to guarantee payment than a personal check. However, a cashier’s check may have an edge from a security standpoint. Since it comes solely from the bank’s account, there aren’t as many chances for issues such as fraud or payment disputes.

Money orders

A money order offers another secure way to pay someone. You fork over money to an institution, and they give you a money order that looks a lot like a check. You verify the amount, fill in the payee and sometimes your own personal information, and sign the front. The money order is then sent to the payee, who must sign the back to receive the funds. You can ensure it’s delivered by using a tracking number on your receipt.

Like a cashier’s check, there is a fee to get a money order. Fees vary widely, but banks and credit unions are usually the more expensive option, charging around $5 to $10. You can get a money order for just a dollar or two at the post office or Wal-Mart. Note, however, that money orders are usually capped at a certain amount, such as $1,000. If you need to send a payment for more than that, you’ll have to purchase multiple money orders.

To send smaller amounts, a money order probably has an edge over a cashier’s check when it comes to convenience. That’s because you can get a money order at the bank, but you can also go to the post office, grocery store, and even some gas stations — no bank account is required. And since a money order doesn’t have your banking information on it, you might prefer it over a personal or certified check if you don’t know or trust the payee. However, the person or business being paid may prefer a cashier’s check because money orders can be more vulnerable to fraud, and it can take longer to get their money.

Wire transfers

A wire transfer is another option to consider, especially if you need to send money fast. You’ll need to know the bank name, routing number, and accounting number for the payee to start the process. Many banks will require you to visit a bank branch, especially when you need to wire a large amount, though some may allow smaller wire transfers online.

Once the bank verifies that you have the money and sends the amount you requested, the payee can access it almost immediately — there is typically no hold on the funds. This is a big pro over cashier’s checks if speed is an issue. Wire transfers are also a good option if you need to send money abroad. However, note that wire transfers are very expensive. Expect to pay $25 to $30 to send a wire transfer domestically and around $15 to receive one, according to MyBankTracker. If you need to send money abroad, you could be looking at a fee of around $50.

Be sure you know and trust the recipient of a wire transfer, since the speed of the transaction means it can be hard to recover funds in the event of fraud.

Cashier’s Checks Can Mean Peace of Mind

Cashier’s checks represent a relatively low-cost, convenient way to add a level of security to an important payment. Though you will need to head to a bank to get one, the process is fairly painless and helps guarantee your payee will receive their money.

As I outlined above, there are other ways to make a secure payment, including certified checks, money orders, and wire transfers. All have pros and cons that you should evaluate in the context of the payment you need to make.

If you simply need to make a person-to-person payment without the added assurance of a cashier’s check, check out our post on The Best Apps to Send Money. Many of these services allow you to send money electronically for free, and you won’t even need to blow the dust off your own personal checkbook.

Source;http://www.thesimpledollar.com/what-is-a-cashiers-check/