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Is it safe to start spending again?

Is it safe to start spending again?

Published 7/5/13

Is it safe to start spending again? By Peter Andrew

I've been writing about business and money for a depressingly high number of decades. But I only started to cover credit cards in 2008. Remember that year? It was when the impact of the credit crunch really began to hit. People were hurting, and suddenly debt that had previously seemed easily manageable took on scary proportions.

Often, my job was to howl at the injustices some credit card companies inflicted on their customers, to provide advice about strategies for paying down card debt quickly, and to warn readers about the horrors of unmanageable debt. I'm a cheerful sort of person, and all that doom and gloom didn't come naturally.

Everything's coming up roses

Then, on June 27, everything changed for me. An e-newsletter arrived in my Inbox from Comerica's chief economist Dr. Robert A. Dye.

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3 ways to maximize your travel rewards this summer

Published 6/5/13  (Modified 9/22/14)

3 ways to maximize your travel rewards this summer By Justin Boyle

Last weekend I got a text message from my mother. It included a photo of her smiling in front of a picture window overlooking the sea and text that read, "Brunch in San Diego, dinner at home in Phoenix. Not a bad life!"

My parents are making a pretty good go of the empty-nest lifestyle, taking an island vacation once every few years and occasionally traveling between their old stomping grounds in New York City and their new turf in the Valley of the Sun. But they're not usually the type to jet to the seaside for brunch on an ordinary Saturday, so I had to ask about this trip.

It turned out that it involved the pending expiration of points they'd earned through their credit cards with miles promotions. By keeping an eye on the fine print of their card agreements, they were simply making the most of what their travel rewards cards offer them.

Want to do the same this summer (and beyond)? Here are three tips for maximizing your travel rewards.

1. Target the right carrier

Not all airline rewards programs offer the same flight availability. Some carriers offer few seats to frequent flyers on their flights, but others are much more liberal.

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Should you start a business on zero percent credit?

Published 5/22/13

Should you start a business on zero percent credit? By Peter Andrew

I'm not what you'd call a natural entrepreneur. In fact, every venture I've ever tried to set up has turned to dust. But a few years ago, I inherited a small sum of money, and couldn't find anywhere to put it where it would earn a reasonable, relatively risk-free return. So I once again considered setting up my very own micro-enterprise: I planned to buy a cheap, run-down home, do it up, and then flip it before starting the process all over again.

A number of questions arose: Would my meager windfall be enough to fund such an operation? If not, where should I obtain working capital, especially as my bank and I are barely on speaking terms? Should I be ready to let credit cards take some of the strain?

Zero percent credit cards as seed capital

Given my track record, it's probably just as well I left the money in something my bank, without any trace of irony, calls a high-interest savings account. But should I have gathered some nerve and taken the plunge, having first applied for a clutch of zero percent credit cards? Maybe.

The idea of using the interest-free introductory period that many cards offer to fund a start-up business sounds attractive, and there are plenty of stories online about entrepreneurs who used plastic to get their companies off the ground.

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What is a chip-and-PIN credit card?

Published 5/7/13

What is a chip-and-PIN credit card? By Justin Boyle

At first glance, your U.S. credit card may seem ideal for traveling abroad. You can just bring your foreign-fee-free card on your next overseas trip and cross borders without having to worry about losing spending power to unfavorable exchange rates, right?

As many world travelers have found, it isn't always that easy.

The rise of chip-and-PIN cards

In 2004, card issuers in many parts of the world started changing their credit card format. The old signature-verified model began falling by the wayside in these places in favor of EMV smart chip cards, commonly referred to as chip-and-PIN cards.

Increased security is cited as the primary advantage of a switch to chip-and-PIN cards, which feature two authentication methods: the traditional magnetic stripe, as well as an encrypted microprocessor that broadcasts payment information to the card reader. Experts in India, where the national reserve bank has mandated a switch to EMV cards for international transactions, say that the chips are practically impossible for fraudsters to decode.

But after much of Europe switched to EMV technology, travelers from the U.S. began to fall victim to the incompatibility of their U.S. credit cards in some places.

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Should optimists avoid credit cards?

Published 4/26/13

Should optimists avoid credit cards? By Peter Andrew

I like optimists. Who doesn't? Optimism is one of America's defining national characteristics, and was an essential part of this country's rise to greatness. But some academic studies suggest that people with too rosy an outlook can get themselves into trouble, especially financially, and can-do can quickly turn into couldn't-do.

The trouble with optimism

Of course, it's not just Americans who can find their optimism tipping over into overconfidence or even self-delusion. Last year, Australian researchers uncovered similar traits in their compatriots. Unusually optimistic subjects in their trials tended to work fewer hours, have shorter planning horizons and fail to clear their credit card balances in full each month.

But there's plenty of that here too. A 2005 Duke University study, Optimism and Economic Choice, found a similar correlation in the U.S. And another, published in the Journal of Economic Psychology in 2007, indicated that the overoptimistic often make poor choices when choosing a new credit card.

For example, those who usually roll forward significant balances might seek out the best credit card reward programs when their rational, optimal choice would have been finding the lowest APRs. Presumably, they kidded themselves that their lives would change: Their income would grow, they'd win the lottery, or they'd magically alter their patterns of behavior and start zeroing their balances each month.

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3 tips for negotiating better credit card terms

Published 4/8/13

3 tips for negotiating better credit card terms By Justin Boyle

A friend of mine recently sat me down and told me that she was in a dismal, one-sided relationship with her credit provider. She had been a responsible customer, never missing a payment and never maxing out her limit, but the terms of her contract hadn't changed since college and she didn't feel like she could talk to them about it.

Luckily for her (and for all of us), not only is it possible to reason with credit companies, but there are proven pathways to the raised limit or lowered rate that you know you've earned. By arming yourself with a few key pieces of information, you can gently but firmly encourage your issuer to hear what you have to say.

1. Know who to talk to

First of all, most companies put customers through an automated phone tree for routine services. You're not going to get anywhere presenting your reasoned negotiations to the robot that answers your call, so get out of the tree as soon as you can (this is often achieved by mashing the 0 key until you're asked to hold for an operator).

Even when you get a human voice on the phone, you're still not all the way to your destination.

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