Using Credit Cards To Leverage Buying Power
Credit cards have been and are considered to be the norm for purchasing convenience. Almost everyone today has at least one.
If you do not, I suggest you should obtain at least one to leverage your buying power; which is also an important way to develop or re-establish new credit. If your present credit is so bad that you have been unable to obtain one, there is help available. Most cities have a privately operated agency that specializes in obtaining credit cards in these cases. These agencies do not charge for their services if they are not successful. Look for them in the Yellow Pages. Frequently, they will advertise in the classified ad section of your local newspaper and in major national newspapers like USA Today and The Wall Street Journal. But of course we all want instant gratification and the internet can provide these means at lighting speed. I've done the research for you and would highly recommend applying for one or two of these online credit cards depending on your credit situation.
Side Note: Do not over apply, Each online credit card application will leave its footprint on your credit file.
Even if you have been denied a credit card by one of the large credit card companies, you should still be able to get a national credit card on your own. Sears and J.C. Penny credit cards are considered among the easiest of the national credit cards to obtain. If you are not successful, go to a local company, like a furniture store or appliance outlet, and try to open up a credit account there. Because you live in the area, a local store may be more willing to extend credit.
If all else fails, approach a bank which offers Visa or MasterCard about opening up a charge account for you with a credit balance. Here is how that would work. Fill out an application for the credit card you would like to receive and send the application along with a check for $300 to $500. Request that they extend that much credit to you. In other words, you are paying in advance for charges you will make in the future. No credit card company should reject that kind of an application.
When your account balance has been used, the bank may extend a credit limit to you without another deposit of money. Be sure to pay on schedule so that you take advantage of this opportunity for establishing a good credit history.
If you already have a credit card or two, then request several additional cards from other credit companies. You may decide to use one card for purchasing one type of goods and services and another card for others. Use the cards for items that used to pay in cash or by check. This system could be helpful to you later on when you will be purchasing maintenance services, building supplies, etc. The more you use these cards and make payments on time, the better your credit will be. When you attempt to obtain a mortgage loan, your credit history is established.
Be Careful! If you know that you might have trouble controlling your purchases, you should only have one or two cards at a time. In addition, a potential lender will look at the total amount of credit that is available to you by adding up all your credit limits. even if you never used these cards, the lender may decide that because you have a high total amount of credit available to you, it is possible for you to get in over your head with payments that may be impossible for you to make. Be sure to evaluate your credit situation and maintain as many cards as are practical for you.
Because of the intense competition between credit cards companies today, many have lowered their annual fee and , in some cases, have completely eliminated it. To determine which bankcard companies have the lowest annual fee, contact:
BANKCARD HOLDERS OF AMERICA
524 Branch Drive
Salem, VA 24153
The Bankcard Holders of America is a non-profit corporation that helps consumers with credit issues and debt problems. They also provide a lists of low interest rate and secured credit cards of banks around the country. Send a check or money order for $4.00 to above address, specify list.
Try to increase the limits on your present cards even if by only $250 or $500. You may be able to obtain higher credit limits just by asking. There is also reason to believe that many credit card companies will increase your credit limits faster if you do not completely pay off the bill every month. Suppose you charge $100 one month, and your custom is to pay the entire $100 the following month. When you get your bill, a minimum amount of $10 will be due. If you make a payment that is 20% higher than the minimum monthly payment, in six months they should grant you higher limits automatically.
For a particularly attractive real estate investment that requires a down payment or fix-up work, you could borrow that much against your credit cards. This is considered as a cash advance. Most credit card companies, however, often charge a higher interest rate on a cash advance balance. Some cards even charge a small percentage of the cash advance as a service charge. One of the best ways to obtain cash through credit is an overdraft protection program which I'll get into a little bit later.
On the other hand, making purchases for fix-up work with your credit cards may be very beneficial to you. There is usually a 30-day grace period on your balance before interest is charged. If you are only holding a property for three to six months to fix it up and resell it, you could charge the material on your credit cards and merely pay the minimum balance which includes interest. Here, you are able to write yourself a small loan until you sell the property and generate the money to pay off your credit cards. This frees your cash for other investments that come along.
The cost of using your credit would be the annual interest rate that is charged by the CC companies. Even if that charge is in the 12% to 18% or even 21% range, which is high in today's offers, when you are using that money as a down payment on real estate that will bring in over 80% to 100% per year return on your investment, it does not take a great deal of math to figure out that it makes good sense.
Credit Cards to Credit Fact Sheet