Personal Finance Blog by Debit versus Credit

Using Your Credit Card (Wisely) Can Save You Money

September 11, 2008 | Filed in: Frugality | 4 comments

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I’m no fan of credit card debt.  It’s just about the easiest way to ruin your life, financially speaking.  However I am an advocate of using credit cards when they can benefit you financially.  Believe it or not there are several ways that using a credit card for purchases can actually save you money.  It only works however if you don’t carry balances over from month to month – otherwise all that money you saved by using your card will have just gone right back to your credit card company in the form of interest payments.

As I mentioned when you use your card for certain purchases it can actually save you money by providing coverage such as warranty extensions and insurance free of charge.  Let’s cover just a few of these savings.  As a disclaimer you may want to verify that your credit card offers these benefits.  With that being said I have noticed that they are pretty standard benefits.

Skip The Car Rental Insurance

When was the last time that you rented a car?  Did you pay for the extra car rental insurance?  This “protection” usually adds a decent amount of money to your bill.  Did you know that your credit card offers the same protection just by using your card to reserve and pay for the car rental?  This insurance usually covers around $50,000 worth of damages caused by collision and theft.  So next time you rent a car say no to the rental company and just use your credit card.

Watch Out For Falling Prices

Let’s say that after careful consideration you’ve decided to buy yourself a brand new HDTV.  You’ve shopped around and found the lowest price and decide to spring for said TV.  You’ve heard, however, that there is a chance that prices could be dropping on these types of TV’s in the next several months.  Should you wait?  You could.  Why not just charge it on your credit card though?  By doing so they guarantee that if the price drops they’ll refund you the difference (as long as it’s within 60 days).  Of course there are limitations such as a maximum refund amount (probably $250) and it does not apply to Internet purchases, etc.

Don’t Buy The Extended Warranty

Let’s say that you go ahead and buy that HDTV that we talked about just a second ago.  As you’re checking out the cashier asks you if you’d like to buy an extended warranty on the TV.  The damage?  It’s going to cost you $90 to do it.  While I feel that these warranties can be useful for certain purchases they are most often just too expensive to justify the extra warranty.  But did you know that if you use your credit card to pay for it that they will often double the manufacturers warranty up to a maximum of 1 year?  So you can still feel peace of mind and save money by turning down that extended warranty offer from the store.

Travel (Or Don’t) With Peace Of Mind

Have you ever tried to get a refund from an airline company because you are unable to take the trip that you’ve planned due to an illness, death, layoff or some other issue?  If you have then you know how frustrating it can be trying to get your money back.  The airlines will do anything they can to avoid giving you a refund.  Next time you book your tickets make sure you do it with your credit card because if you do your credit card company will refund your money up to $1,500 dollars if you are unable to take the trip.  They provide trip cancellation/trip interruption coverage at no extra charge.

How many of these perks were you aware of?  There are still several more perks that credit card companies offer, which are usually pretty standard.  However you may want to check with yours before you try to take advantage of any of the perks I’ve listed.

Related Links: Find a great card with great credit card rates at Credit Card Specialist!

Tags: Credit Card Deals, Credit Card Perks, Frugality, Saving Money With Your Credit Card

How to Choose Insurance Deductibles

August 19, 2008 | Filed in: Frugality | 2 comments

How much should my insurance deductibles be?

You’ve all heard the question asked before, and maybe you’ve even asked it yourselves.  It’s a rather straightforward question, but there is no one right answer.  Everyone has a different financial situation and as such should look at their individual situations to decide how much to set deductibles at.  However there are several steps that can be followed, based on the idea of maximizing savings and minimizing risk.

Step One: Minimize Risk

How much risk are you able to handle?  By increasing your insurance deductibles you are effectively creating more risk for yourself.  If you were to be involved in some form of accident or insurance claim you would be responsible for covering the first $xxx dollars of the claim - this is your deductible.  For example, if I were to be in an accident and file a claim with the insurance company for $850 dollars to repair my bumper they would fix it, but only after I pay the deductible.  So if my deductible was $1,000 dollars then I would have to pay the entire amount to fix my vehicle as it’s more than the cost of the actual repairs.  If my deductible were only $300 dollars then the insurance company would have spent $550 on the repairs while I would only be responsible for the $300 deductible.  Pretty simple right?  The matter of risk is directly related to the amount of cash that you are willing to put on the line.  To minimize risk you should decide exactly what that magic number is for you.

Step Two: Maximize Savings

There are a lot of ways to decrease your insurance premium.  Usually one of the better ways is to increase your deductible.  That’s why we’ve looked at the amount of risk we’re willing to take on.  If you can handle paying $1,000 down on repairs for your vehicle then you might want to change your deductibles to this level.  By doing so you might be able to save yourself hundreds of dollars per year on your insurance premium.

I’ve used some quotes from my insurance company to provide an example.  With $300 dollar deductibles on both comprehensive and collision coverage my six-month premium would be $800.78 but with a $1,000 dollar deductible on both comprehensive and collision coverage my six-month premium would be $674.36 - a difference of $126.42 every six months, or just over $250 dollars a year! That’s a decent savings, just by being willing to assume more risk myself.  If I could go claim free for four years (not impossible by any means) then I would save enough money to pay for one of the deductibles if anything were to happen.  Over the course of 50 years I could save over $12,000 dollars (possibly less, depending on how many claims I make over this period of time) just by increasing the amount of my deductible.

Saving Money On Insurance Is Not So Hard

If you haven’t reviewed your insurance plan for a while now’s the time.  It’s not that difficult to make some minor adjustments to your policy and save yourself hundreds of dollars a year.  So call up your agent or log onto your policy website and review your coverages.  Make sure that you’re not skimping on coverage, but also make sure that you’re getting the savings that you deserve.  Now that you know more about deductibles and the associated risk you might just be comfortable increasing that deductible to $1,000.  Think about it, choose your risk and let the savings begin!

Tags: Deductibles, Frugality, Insurance

Weekend Reading: Aug 9th

August 9, 2008 | Filed in: Weekend Reading | No comment

It’s been an interesting week for me. I finally finished with the summer semester at ASU so now I’m on break for about two weeks before classes start up again. I pulled off a couple of A’s so I’m extremely happy about that. Anyway enough about me. Here are a few posts which I ran across over the last week:

For those of you who are health-conscious and into the organic movement there’s a great post over at organiccoupons.org covering 25 ways to make an organic lifestyle more affordable.

While we’re on the topic of frugality I thought I’d bring up a great post I ran into over at Iwillteachyoutoberich.com about how you can save money by purchasing expensive items abroad.  Check out I saved $2,500 by purchasing two items abroad.  Is that un-American?

For those Extreme Makeover fans out there here’s a sad tidbit of information.  A family who received a home via the Extreme show in 2005 is facing foreclosure after a failed business attempt with funds taken out of the equity in their home.  Check it out at AccessAtlanta.com

That’s it for this week.  Stay tuned for more next weekend!

Tags: Frugality, Organic Lifestyle

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