Credit Secrets & Tips

1. Have your tax refund direct deposited into your bank account.

The benefits include receiving your tax refund faster and knowing that your refund check will be safe and not lost or stolen.

Direct deposit also provides an easy way to save part of your tax refund, because ‘what you can’t see you can’t spend.’

The large numbers of consumers mistakenly believe that paper checks are safer than direct deposit when, in fact, the opposite is true.

Paper checks account for more than 90 percent of the reported problems with its federal benefit payments.

You also have the flexibility to directly deposit your tax refund in up to three different
accounts at three different U.S. financial institutions.

2. If you need cash and you can’t wait for your tax refund, carefully consider your options and costs.

In particular, “refund anticipation loans” arranged by tax preparers for people who file their returns electronically, will get you cash in just a day or two, and the loan will be paid back
with your tax refund, but the costs are comparable to very high interest rates.

Also remember that people who file their returns electronically using the IRS “e-file” service can receive refunds in two weeks or less.

3. Make good use of your refund.

Consider paying down or paying off your loans and other bills, starting with the ones that charge the highest interest rates on unpaid balances.

Start or add to an existing savings account. Or, fund a retirement account or college savings plan.

4. You can pay your tax bill using your credit or debit card but beware of the costs.

Your financial institution may offer small incentives - such as miles, points, cash back or
other rewards for using your card - but factor in the processing fee, which can be substantial, especially for credit cards.

Other costs also may apply, such as interest if you don’t pay your card balance in full by the due date, and overdraft fees if your debit card withdrawal exceeds your account balance.

5. You can have your payment withdrawn electronically from your bank account.

This service adds speed and convenience. You can also file your tax return early and set the payment withdrawal for a specific date, such as April 15.

Ask your financial institution about any fees it may impose. But make sure you have enough funds in your account when the payment is to be made.

6. If you need to borrow money to pay your taxes, you have several choices but all come with fees and costs.

The cheapest way to pay your tax bill is to tap your bank account. But if you must borrow
the money, options include bank loans, an monthly installment plan and your credit card.
Using a home equity line of credit may be an option, but remember that you could lose your home if you are unable to make the payments.

7. Take advantage of free tax preparation services.

One program helps to promote is the Volunteer Income Tax Assistance (VITA) program, which provides free tax-preparation help to low- and moderate-income taxpayers at various locations. Click here to read more detail.

Some VITA sites even have representatives from banks or other organizations who can assist in other ways, including opening a bank account or obtaining a credit report.

Personal saving as a percentage of disposable personal income has dipped as low as 1 percent in recent year.  If you are like most Americans, one minor tremor is all it would take to shake your whole financial foundation.

In addition to long-term savings, financial experts agree that consumers should aim to have at least three or six months’ living expenses saved for emergencies.  If you are having trouble establishing a nest-egg, don’t despair.  The following are some simple ways to boost your saving:

1.  Pay yourself first

Saving is the cornerstone of financial security, so make it a priority.  After all, a lack of savings can turn a minor financial setback into major financial crisis.

2.  Make it automatic

Having money automatically deducted from your checking account into a savings account helps to ensure that you meet your savings goal.  Even better, if your employer has the capability to automatically deposit your pay check have some funds directed into a savings account.

3.  Turn a hobby into income

Many people have untapped talents,  Whether you enjoy photography, painting, knitting, or metalwork, consider possible ways to earn money by doing what you love best.  Baby-sitting and lawn work are also good ways to earn additional money.

4.  Downsize

Most people have garages, basements, and attics full of items they no longer want or need.  Holding a garage sales or advertising some of your things online ,such as selling on e-Bay, could result in a boost to your saving account.

5.  Use gifts wisely

If you receive unexpected funds, do not be tempted to spend them thoughtlessly. Instead, put all money received from tax refunds, inheritances and gifts into an interest-bearing savings account.

Finally, make a commitment to pay down debt.  Reducing your debt allows you the freedom to make smart future financial choices.

Holiday sale ads: they blanket the airwaves, jam your mailbox, and add another pound to your Sunday paper.

Soon you’ll be bombarded with ads for pre-holiday sales, preferred customer specials, early bird sales, midnight madness events, coupon savings days, and, don’t forget, post-holiday sales.

Sure you want a good deal, but just how do you decide if the deal is real?

The following some tips can help you get the most for your money:

* Shop around

A “sale” price isn’t always the “best” price. Some merchants may offer the sale price on the item you want for a limited time.

Other merchants may discount the item you want everyday. Also, when you’re comparison shopping, make sure you have: the item’s manufacturer, model number, stock number or other identifying information.

* Read sale ads carefully

Some may say “quantities limited,” “no rain checks,” or “not available at all stores.”

Before you step out the door, call ahead to make sure the merchant has the item you want in stock. If you’re shopping for a popular or hard-to-find item, ask the merchant if he’d be willing to hold the item until you can get to the store.

* Take time and travel costs into consideration

If an item is on sale, but it’s all the way across town, how much are you really saving once you factor in your time and the costs of transportation and parking?

* Look for price-matching policies

Some merchants will match, or even beat, their competitors’ prices. Read the merchant’s pricing policy carefully. It may not apply to all items.

* Go online

Check out Internet sites that compare prices for items offered online. Some sites also may compare prices offered at stores in your area.

If you decide to buy online, keep shipping costs and delivery time in mind.

* Carefully consider bargain offers that are based on purchases of additional merchandise

For example, “buy one, get one free” or “free gift with purchase.” If you don’t really want or need the item, it’s not a deal.

* Ask about sale adjustments

If you buy an item at regular price and it goes on sale the next week, can you get a credit or refund for the discounted amount?  What documentation will you need?

* Ask about refund and return policies for sale items

Merchants may have different refund and return policies for sale items, especially clearance merchandise.

For most people, financial health doesn’t depend on how much they earn, but how much they spend.  To find out where your money is going, start carrying a pocket-size spiral notepad with you all the time, and write down every purchase you make, including the amount. 

Even if it’s a soft drink form the convenience store, or a trip to drive-thru at a fast-food restaurant, record it in your notepad. After two weeks, review your notes and ask yourself if you really need all the things you buy.

Upon close inspection, most people are surprised to find out where their hard-earned money is going.  If this is true for your case don’t dismay - almost everybody wastes moeny to some degree.  It’s important to understand that every purchase we make - excluding such absolute necessities as food, rent, and gas for the case - is a choice.

Consider the following examples of how changing some small habits can affect your wallet’s health:

(1).  If you smoke one pack of cigarettes each day, then consider quitting smoke. it would save you nearly $1,500 each year.

(2). If you make it a habit to take long, hot shower, then take a shoter shower.  Water heating is the third largest enrgy expense in your home.

(3). If you drink 64 oz. of bottle water each day, then why cann’t you purify your own water.  It could save $60 each month.

(4). If you have magazine subscriptions delivered to you home, the visit the library or read magazines online.  Do you know the average American family spends more than $100 every year on magazine.

(5). If you buy a snack from a vending machine each day from work, then consider bringing your own snack from home.  It could save you an average of $30 per month.

(6). If you leave the air conditioner or heater on all day, then turn it down when you away from home.  For each 1 degree, you’ll save up to 5% on your heating/cooling cost.

(7).  If you drive even short distances, then walking or biking instead.  According to AAA, mortorist pay an average 68.9 cents per mile.

The following tips are basic principles about obtaining and using credit cards that can save you some serious cash and keep you out of debt.

6. Always Shop Around

Don’t apply for the first “pre-approved” offer you receive in the mail or any for that matter. Do the research for yourself. There are plenty of sites such as bankrate.com that allow you to compare hundreds of credit card offers with a simple search. You’ll get the best deal by shopping around.

5. Read the Fine Print

The terms and conditions are the equivalent of the disclaimer you hear on car lot commercials. It cuts through the hype and reveals the true terms of the credit card such as what happens when you miss a payment and what you’re really getting from the rewards. Most terms are not that long, usually around one full page, it’s worth your time to read them.

4. Ask for a Better Rate 

Once you have been a credit card customer for a few months call them and ask for a better rate. They won’t laugh at you, they get hundreds of these calls every day and if you’ve been a good customer it usually will work. Credit card companies work hard to obtain you as a customer and they will work hard to retain you.

3. Pay Off Full Balance Every Month 

All credit cards have high interest rates compared to other types of loans. You should never plan to carry a balance on a credit card. If you must make a large purchase that you do not have the money for at the time, obtain a loan or a revolving line of credit from your bank. You will save a bundle on interest rates.

2. Do not get a Cash Advance 

This is the second worse thing you can do with a credit card, short of missing a payment is getting a cash advance. The cash advances usually come with a very high interest rate.

What makes it worse is the fact that with most companies this higher rate credit will not get paid off first, or even in the order that you took it out. They will apply your payments towards all the lower rate purchases and will only begin paying off your high interest cash advance will all other items on that credit card have been paid off.

1. Never, EVER Miss a Payment 

This is the absolute worse thing you can do with a credit card. Not only will you incur a late fee, but your interest rate will also skyrocket. In addition it will be a negative blemish on your credit report which can cause the rate on any other loans or credit cards you have to increase as well as insurance rates. It also makes you less likely to get approved for future credit.

If you are low and moderate-income taxpayers, then you should take advantage of IRS programs and bank services that can help you save more money for future goals, including buying a home or funding a child’s education, tax preparation, qualify for tax credits, etc.

IRS-coordinated Volunteer Income Tax Assistance (VITA) program that provides free tax-preparation services for qualifying individuals.

Also, IRS has the ability to direct deposit tax refunds in up to three different checking and savings accounts at up to three different U.S. financial institutions.  It encourages you put part of your refunds into both savings and checking accounts.

If you are interested in obtaining free tax return preparation, you should call the IRS at 1-800-829-1040 or go to www.irs.gov/individuals to locate a VITA site.