Zero Percent Balance Credit Cards

Credit has been used to make purchases for centuries, however it wasn’t until the  the 1970’s that the charge cards we know today became available and popular among the public sector.  At that time, consumers were charged an annual fee for the privilege of having credit.  In addition to paying an annual fee, most lenders offered a standard interest rate in the high teens for everyone regardless of credit worthiness.  Over the years we have seen many changes within the industry with more on the way in upcoming months.  One of those changes involves the introduction of zero percent interest credit cards.  Here we will learn more about the zero percent credit card.

What Are Zero Percent Balance Credit Cards?

Credit cards are a multi-billion dollar per year industry for the banks that issue credit to consumers.  Banks make their money on the interest they charge to consumer who use credit.  As the credit card industry became more competitive, many banks began introducing zero percent credit cards to lure consumers from credit cards that charge a higher interest rate.  The strategy works well and many consumers can benefit from using zero percent interest credit cards properly.  Most zero percent balance credit cards are issued for a temporary period that expires within a few months.  Once the introductory period has expired, the terms and conditions of the credit card will change based on the original contract.

How Can Zero Percent Balance Credit Cards Be Used?

Most consumers find zero percent credit cards tempting in that they have an opportunity to either transfer higher interest balances to a new card with no interest or make new purchases without having to pay interest during the introductory period.  When used correctly, zero percent credit cards can be a great tool to reduce your debt or purchase a big ticket item without paying high interest fees in the first few months after the purchase.

The Dangers Of Zero Percent Balance Credit Cards.

As many consumers already know, the credit card industry is undergoing many changes as a result of new rules and regulations.  The number of credit cards offering zero percent interest has dropped considerably in the past two years, however there are still offers available for those with excellent credit.  It is important for consumers considering zero percent credit cards to carefully read the terms of the credit card contract before applying.  While there are many benefits to using a zero percent interest credit card, there are not without negative consequences.  The biggest danger of zero percent credit cards is dealing with the higher interest rate once the introductory period has expired.  Consumers who make purchases and fail to pay off the balance during the introductory period often face a much higher interest rate for the remainder of their contract.  The same theory applies to those who transfer a large balance from a higher interest credit card.  Unless you are certain you can pay off the balance of your card, either purchases or transferred balances, you may end up paying more after balance transfer fees and future interest is applied.

Zero percent credit cards can offer consumers a great way to save money if used properly.  As with all credit card contracts, it is important to read and understand the terms and conditions before using any new credit card.

Personal Finance

First Margin Call

This post was originally published on Mr. Cheap’s original blog.  When he brought over all his posts – some of them didn’t make it so I’m planning to publish a few of them over time.

I recently got my first margin call from E*Trade for about $3K. It scared the hell out of me, not because I could pay (I had the money sitting in a cash account and just transferred it over), but the call was unexpected and I was worried that I misunderstood the system to the degree that I had triggered it.

The day after the call, I got on the phone to E*Trade and admitted that I’d had a margin call, told them that it was no problem paying it (and I’d already transferred the funds), but that I didn’t understand what had put me into a margin call situation. The man on the phone didn’t apologise, but it turns out that the problem was on E*Trades end and they considered a bunch of “safe” stocks (which they’ll loan 70% of the stock value on) as “riskier” stocks (which they’ll loan 50% on). He told me the call wouldn’t be enforced, and after checking my account assured me I was fine (even if I hadn’t transferred the cash in).

I used the situation to get more details about margin calls and what would have happened if it had been a real call. Apparently the speed on which they’ll sell your stocks depends how far over the line you are (he said they’ll give you 3 or 4 days if you’re just a little over, bit will sell immediately if you’re significantly past your limit). I asked him for good customers with a conservative portfolio if they ever will waive a margin call or increase their loaned %, and it turns out that its actually a law how much they can allow people to buy on credit (so short answer, no).

In the end I was happy to have my understanding of the margin account challenged (and happy that it was a problem on their end and not in my understanding). I learned some new things about my account, which is always a good thing.

Personal Finance

Best Free Canadian Rewards Credit Card Award Goes to…MNBA

A while ago I wrote how I used to have a Visa Aerogold credit card which might just be the worst Canadian rewards credit card ever.  I finally made the switch to a no-fee rewards card called the CIBC Dividend Visa which is ok – but it’s not as good as the MNBA Premier Rewards Platinum Plus Mastercard.

1% cash back reward

The main thing I like about this card is the fact that it pays 1% cash back on all purchases from the first dollar.  The Dividend card that I currently own has a sliding scale so I only earn 1% cash back after spending $3,000 annually.

No annual fee

After paying $170/year for the Aerogold – I will never pay annual fees again.  This card has no fees of any sort.

Car insurance and extended warranty

Another great benefit of this card is that it provides extra insurance for car rentals so you don’t have to pay extra for collision when renting.  It also provides extra warranty for most purchases.

I’m signing up

This card looks good to me so I’m going for it.  If you want to sign up for the card then feel free to sign up through one of the affiliate links on this post.


Free Educational Stock Trading Videos

I recently found out about a company (INO) that offers free stock trading videos online.  While I’m not into active trading anymore (at one time I had a big interest in it), there are plenty of investors out there who love to trade stocks.

INO offers free online videos which are basically educational trading strategy lessons for someone who wants to trade stocks.  This particular link leads to four different videos by trading experts who give up some of their secrets.

First you go to an intro page where you must register to watch the videos – this involves a basic registration – no banking info or credit info is required.

The four videos available:

Market Wizard InsightsJack Schwager explains the traits and behaviour patterns that supertraders have in common.

Applying Technical – 90 minute video – verteran market analyst John Murphy explains how he looks at the markets.

Five New Tools for WinnersJake Bernstein is probably the most prolific writer and researcher of material for today’s individual trader.

The Art of Morphing – Every position is the right position when things go exactly as planned.  If not??

Personal Finance

How Canadians Can Establish Credit In America

I actually lived in the US for a couple of years, but foolishly didn’t establish myself financially beyond opening a bank account. I used my Canadian credit cards, never owned property and just lived my life there.

Over a year ago when started up and I wanted to try it out, I wasn’t able to open an account since I didn’t have a US address or any US credit history. I tried a number of ways to get established with US credit and they were all quite difficult. The “official” way to do it is you go to a bank, offer to set up a GIC (they call them CDs south of the border) and an account with them. You then get a credit card with a limit significantly less than the CD’s value (so if you don’t pay your bill they have the CD). I tried to set this up, but the bureaucracy wore me out before I could have it set up.

Department stores, credit card issuers or anyone will just turn up their nose at you when you apply and don’t have any credit (this happened to me everywhere).

There is an easy “back door” which I used (and would suggest to others, this may also work in Canada or other western countries). Basically you use a friend who lives in the country that you want to establish credit in. Together you get a joint credit card, which they’ll be able to easily get if they have any sort of credit at all. The limit doesn’t matter. If your friend doesn’t trust you fully, that’s not a problem, just get the joint card and tell them to keep both cards when they’re issued.

Then you (or your friend) charge things on the card. The amount doesn’t matter, but its good to keep something on the card (buy a latte every month and just pay it off when the bill is due). Almost IMMEDIATELY you’ll be in the credit system and will get a FLOOD of credit card offers. Sign up for one of them, and when you get the card, get your friend to cancel the joint card. I’d recommend holding out for a credit card that has no annual fee, the interest rate doesn’t matter (since you’re going to pay it off every month, right?). Rapidly they’ll increase the limit if you just use it and pay it off consistently.

You now have started a credit history in that country, your friend isn’t liable for you any more, and you’ll keep getting more offers as you use and establish your credit in your own name. I always pay my credit cards in full (along with all other bills) and got a Visa, Mastercard and AMEX early in life and have never gotten more cards (except for a gold AMEX I only use for renting cars, because it covers the insurance). When it came time to get my first mortgage, the rep I was dealing with expressed amazement at how high my credit rating was. I expect if I ever apply for a mortgage in the US, my credit should also be fairly decent.