This Credit Card Payment Trick Saves You Money

Credit Card Interest Tip

First Published Date: February 28, 2016
all know it’s in our best interest to pay off credit card balances each month so you don’t get hit by the high interest credit card companies charge you. However, it may not possible for some of us to pay off balances in full. Today, I will like to show you a simple trick that that will save you money if you carry balances.

Credit card companies mainly use two methods to calculate interest. These are average daily balance method and daily balance method. As it sounds, average daily balance is the average of your daily balance for the full billing period. This average is multiplied by the daily interest rate and then multiplied again by the number of days in the billing period.

The daily balance method is much simpler than the average daily balance method, although both methods generate same the interest charge. The daily balance method looks at your interest charge daily for the billing period and adds each day’s interest to get your interest for the month.

So if you look at these methods carefully, you will realize that by paying several times (instead of paying once) on your bill every month when you carry balances, you will save money on interest charges, as paying several times will bring down your daily balances and averages several times for the billing period. Any partial payment will have the effect of lowering the interest you pay.

For example, if you are paying $200 towards your balances once a month, paying $50 in 4 weeks or several times throughout the month will generate less interest. On small balances, this trick may not trigger significant savings, but the savings will be noticeable on higher balances.

Keep in mind that if you are paying balances in full, you don’t need this trick, as you are not paying interest anyways. If you would like to find out more on how your credit card charges interest, read here.

Don't Book That Trip With Your Travel Rewards Credit Card Yet

Trip Cancellation Insurance Is Important

First Published Date: March 6, 2016

Before booking your next trip, make sure your travel rewards credit cards offer a very important insurance called Trip Cancellation Insurance. Many rewards travel credit cards do not offer this important insurance, although you will find mega sites like MoneySense or Rewards Canada are recommending these cards as the best travel credit cards and misleading consumers.

Trip Cancellation Insurance reimburses you in case a trip has to be cancelled due to covered causes like illness, death, and much more. You should not go on a trip without this insurance, as it will be a lifesaver in case you have to cancel your trip.

However, if you follow MoneySense or Rewards Canada blindly and book your trip with their number one recommended travel cards WestJet RBC World Elite MasterCard (MoneySense 2015) and American Express Gold (Rewards Canada 2016) and you need to cancel your trip due to illness, you will get burned heavily before your sun-filled trip to the Caribbean even begins because these “number one” cards do not come with trip cancellation insurance.

The methods these sites are using to rank the best travel credit cards are questionable and they do not have the consumer’s best interest at heart, as they are withholding vital pieces of information that you need to know before picking the best travel credit cards for you. For example, you will not find mentioned anywhere that those best travel credit cards are missing trip cancellation insurance. I wrote more about this in these articles:

Before picking any rewards credit cards, always do your research and look for independent web sites such as A Dawn Journal that are not affiliated with or compensated by credit card companies.

Credit Card Travel Emergency Hacks You Were Not Aware Of

How Your Credit Cards Can Help in a Travel Emergency

First Published Date : June 25, 2016

When you are travelling, if you run into unexpected troubles or in the event of emergency, travel credit cards can help you in foreign lands 24/7 and help is only a phone call away. You can even make free collect calls from foreign countries. Today, I will go over some of these free services that travel credit cards come with that can be lifesavers if you run into troubles.

You Lost Your Luggage – You can go through the traditional system in place and file a complaint that usually ends up with you making endless calls or spending a lot of time talking to the airline counter OR you can just call the concierge service provided by your credit cards and they will take care of the rest. Better yet, you may be eligible to receive coverage for expenses that incur due to lost luggage if your card provides lost luggage insurance.

You Are Stranded at Airport – A call to your concierge can sort things out for you and you may be eligible to receive coverage for costs such as hotel, transportation, food, and others if your card provides Flight Delay insurance.

You Need Medical Help – If you need medical assistance in foreign lands, travel credit cards can offer referrals to doctors, hospitals, consultation, medical transportation to the nearest facility or to your home country, transport your family from home to you, air-transport you from a foreign country to your home country if required, provide payments for all these costs and much more. Just make sure your travel credit cards come with a solid medical travel insurance from a reputable insurance provider.

You Need Legal Assistance – If you run into legal problems in foreign countries such as involved in car accidents, detained by local authorities, and so on, your travel credit cards can arrange to seek help from lawyers, embassies or consulates, assist with bail bond and so on.

You Lost Everything – You lost your passport, travel documents, cash and are stranded in the middle of nowhere? Relax and take a deep breath. Your travel credit cards can arrange and provide emergency cash, card replacement, assist with replacement travel documents, tickets, visa, immigration, customs, and much more.

What I mentioned above and possibly more can be covered by your travel credit cards. The art is to pick the best travel credit cards that meet your needs and make sure the concierge and insurance benefits are provided by reputable providers with adequate coverage. A Dawn Journal has lots of credit card articles that are unbiased and without any affiliations to any credit cards, unlike most other sites (meaning I do not collect any commissions for referring or providing links to credit card companies). And also keep an open for my next book Credit Card Hacks: What Credit Card Companies Don’t Want You to Know.

Car Loans Getting Easier

Loan Approvals Have Risen To Their Highest

First Published Date: June 28, 2009

Canadians looking to purchase a new car in the second half of 2009 should find it easier than they did a few months ago, according to a new report which gives broadly positive news on the likely availability of car loans for new customers. The report, released this Thursday, 25 June 2009 says that loan approvals have risen to their highest level in more than a year, and since the recession was declared. At the time of the recession’s onset, getting credit for any purpose became a great deal more difficult, with affordable loans comparable to the Golden Fleece for anyone not in possession of a world-beating credit score. With financiers more willing to lend now than they were a year ago, the motorist is getting a green light to secure funding for the vehicle they want.

The main reason for this ease would seem to be the federal government’s move to secure the finance of $12billion worth of car loans which will allow the financing companies to lend to deserving customers who have a decent credit rating. In any recession there will be a reluctance to lend to anyone but the absolute “can’t miss” customers, who often have little need for a loan in order to buy a car and borrow more for convenience than out of necessity. This latest move will open up the chance to buy a new car to a wider range of individuals and allow a greater fluidity of cash through the industry, which will in turn help stimulate an economy in need of some good news as it battles its way through the recession.

The withdrawal of some major lenders from the auto-loan business over the past year is also believed to have played a major part in the absence of credit – with the Bank of Canada being a notable exception. The car companies themselves, though, had in no small part either removed their lending branches or increased the credit score necessary for them to forward credit to new customers. Although there is good reason for being circumspect in giving out new car loans, it did have the effect of creating a vicious cycle which saw fewer customers able to buy cars, and consequently fewer cars being bought.

The overall impression emerging from the latest news is that the credit-worthiness and the intent to buy new is experiencing a rise in Canada and that there will be increased growth in the Canadian auto market as the year progresses. Household credit ratings are improving as the lessons of the recession are learned, and in combination with an increase in the amount of retail and durable goods purchases over recent months, the least that can be said is that the worst of the recession is over. How quickly this translates into growth of a reasonable amount remains to be seen, but it is a relief for any financial commentator to be able to say that better days are very nearly here. How much better depends on how ready people are to believe it.

To streamline and minimize blog maintenance, I will be discontinuing maintaining the Canadapersonalfinancewebsite.com website (however, I will still hold the domain). I will gradually move all articles from this site to A Dawn Journal. This article originally published on the above website on June 28, 2009.

New Credit Card Rules

What New Credit Card Rules Mean

First Published Date: May 23, 2009

Finance Minister Jim Flaherty is unveiling new regulations which will force credit card companies to behave in a more transparent manner – including a strict disclosure policy on penalty fees and interest rates. The move, announced Thursday (May 21), is intended to bring an end to or at least limit the incidence of Canadian consumers becoming saddled with excessive interest payments on their cards. In the midst of a global recession, more consumers than ever are struggling with debt repayments, and in Canada as elsewhere, the banks are being blamed for this situation.

Short-term special offers regarding rates and fees have long been used as a way to persuade shoppers to take out credit cards – leading to even reluctant customers finally agreeing to go plastic, then finding out some way down the line that the special offers are not worth the paper they are printed on in many situations. The new transparency regulations are intended to give customers a better chance of spotting the worthless offers and only accepting a credit card that they will be able to benefit from in a substantive manner. The way of things up to now has been that customer obligations regarding the special offers are couched in the cardholder agreements using the old obfuscatory methods of small print and impenetrable jargon.

Among a comprehensive raft of legislation, Flaherty is also set to introduce an industry-wide 21-day grace period for interest on new purchases, so that if customers pay their balance in full by the due date they will not incur interest. Up to now this period has been practised by some banks but not by all, but the new legislation will make it a blanket rule. The limiting of certain business practices that are not beneficial to customers will form a major plank of the new legislation. This will also hit the banks who have recently shortened their purchase-to-payment interest-free period, a move already condemned by the Consumers’ Association of Canada.

The ideas are intended to give Canadian customers a bit more breathing room on monthly bills – meaning that customers who do not pay off their bill in full will no longer find themselves penalized by interest. A large majority of Canadian households do pay their bills off in full every month – estimates put this in the region of 70% of homes – but with belt-tightening becoming a competitive sport in most of the Western world there are a number who simply cannot.

Opinions on the moves seem to differ widely, with opposition critics having derided the minister’s measures as nothing more than an “information campaign” which will do little or nothing to protect customers who are already struggling. Others have dubbed the moves “weak” and suggested that the minister is actively seeking to favour  his “bank buddies on Bay Street”. Opposition proposals which have not been adopted included a cap on credit card interest at 5% above the prime rates enjoyed by commercial banks. The NDP, who suggested this move, say that the government’s latest move will “send working families into more debt”.

To streamline and minimize blog maintenance, I will be discontinuing maintaining the Canadapersonalfinancewebsite.com website (however, I will still hold the domain). I will gradually move all articles from this site to A Dawn Journal. This article originally published on the above website on May 23, 2009.