Two Cycle Average Daily Balance: Avoid it      
During the course of our research into the best credit cards available, we have come across some stinkers, as you might imagine. The new holder of the crown for lousy deals is any credit card which bears the appellation "two cycle average daily balance". Why is this term now on our D-list? Here's why: As we explained in our not so secret secret to debt reduction, the average daily balance computation works in your favor if you make multiple payments each month. This is a good thing, as it helps you reduce your debt faster. Two-cycle average daily balance is the credit card's solution to this problem. How it works is simple: instead of computing your average daily balance for the current billing cycle, it computes the average daily balance for the current and previous billing cycle.
 
How to Establish Credit as a Student      
Credit is a big catch-22 - you can't get credit without establishing credit, and you can't establish credit without getting credit. So how can a student establish credit? First, review what makes up a credit rating - the FICO score. More information on FICO scoring can be found in our Credit 101 Tutorial. The basic breakdown is: 35% Payment history 30% Outstanding debt 15% Length of your credit history 10% Recent inquiries on your credit report 10% Types of credit in use Logically, then, you will want to begin working on the first and third items, while minimizing the second and fourth items. In order to establish credit, you will need to obtain a loan and establish a solid payment history while not shopping around extensively for credit.
 
FICO Reason Codes      
Your FICO score is not the only piece of information transmitted about you when your credit is checked. In addition to the FICO numerical score, up to four FICO "reason codes" - reasons to approve or deny credit - are included with the report. Here is a table of FICO Reason Codes. Use these codes with credit reports you've already obtained in order to know why you've been turned down for a loan request, and to chart your course towards improving your FICO score.
 
Why Pay an Annual Fee on a Student Card      
It's important to understand that credit card companies are in the business of making money. As such, they can make money in one of three ways: Annual fees which bring in a steady revenue stream. Interest rates which bring in revenue based on balances carried. Penalty fees which bring in revenue when customers miss payments.
 
Co-signing and Credit References - What You Need to Know      
On many credit applications, there are places for other individuals to input information and roles they play with regard to the account. The most common roles include co-signer, credit reference, and joint account holder. Here's a quick explanation of the differences, in order of liability: A credit reference is an individual who agrees that they will provide reliable information about the borrower to the lender. A credit reference can also refer to a primary contact person in the event the borrower cannot be reached. Credit references do not leverage their credit rating or reputation; they merely provide information to creditors. Common credit references include family, friends, and even businesses that the borrower has worked with in the past.
 
The Student Credit Card Debt Reduction Plan      
Credit cards come in handy for emergencies as well as for things that we know we'll probably regret later. If you're like us you're not exactly using cash to pay your way through school. With around $85 billion in new student loan debt projected this year we're definitely not alone. With the average graduate already owing $20,000 in student loans, credit card debt is the last thing you need.
 
Face the Facts      
The fastest way to get into credit card debt is to ignore your own financial details. If you don't have a budget, you need to create one to track your income and expenses and you need to look at it often. Ignoring your finances and using credit cards is a sure-fire recipe for disaster. You can download a free interactive student budget template we made for you and customize it to meet your needs.
 
Do Your Homework      
What are the APRs for each of your credit cards and how much credit do you have available? If you can't readily answer these questions you need to do your homework and find out. The next step in getting on top of your credit card debt is to determine and record your essential credit card details. You can call the phone number of the back of your credit card and you'll need to ask about regular APR, credit limit, minimum payment and current balance. You should organize your credit card information into some format where you can track it. If you downloaded the budget template we've provided for you, we've already set up a table for you.
 
Improve the Odds      
Now that you've got your credit card details straight you should try to get them a little more in your favor. You have the right to call your credit card's customer service number and request a lower interest rate. Explain that you're trying to pay down your debt and that a lower interest rate will help you do this. If you have a good payment history with the company, many will lower your rate and if they do thank them and call back in a month and ask for even a better rate. If they won't help you out, you might consider a balance transfer to a lower interest card. For more on balance transfers see Appendix I.
 
Revisit Your Available Resources      
If you want to get your credit cards off your back you need to make more than your minimum payments. Review your budget to see your total minimum payments on credit cards and also how much money is left over in your budget each month. Re-evaluate your expenses to determine how much money you can free up. Then add your total credit card payments up and add the extra money to that number.
 
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