Wait! Read this before cancelling that credit card

Note: This is a guest post by Carrie Davis, personal finance blogger at SpendOnLife.com

You may think cancelling a credit card is a good idea because it will keep you from racking up more debt (it’s either that, or putting your card in a block of ice in the freezer, right?). But you should know that cancelling a line of credit can hurt your credit rating, which in turn can mean you won’t qualify for future loans at good interest rates.

Here are a few questions to ask yourself before calling up your credit card company to close an account:

How long have you had the card?
If this is your oldest credit card, you probably shouldn’t close it. The length of your credit history counts for 15% of your credit score, and closing a card you’ve had for twenty years will likely shorten your “credit lifespan,” so to speak. It’s a different story, though, if you opened this card at a retail store a few months ago on impulse. Closing a card you’ve only had for a short time isn’t likely to damage your length of credit.

Have you paid the card off in full?
Never cancel a card that is carrying a balance. The proper way to cancel is to pay the balance off completely, and then contact your creditor. Make sure that they report to the credit bureaus that the card was “closed at customer’s request.” And make sure your creditor gives you a written confirmation of the account closure for your records.

What is the credit limit on the card?
If you have a large credit limit on the card, it is probably helping your utilization rate. Your utilization rate (also known as your debt-to-credit ratio) is a big factor in determining your credit score. Ideally, you want a low utilization rate; some experts say your debt should never exceed 10% of your limits. So how do you calculate your overall utilization? First, add up the balances on all of your credit cards. Then, add up all of your credit limits. Divide the first number by the second number, then multiply by 100. That’s your utilization rate. Now, do the calculation over again, this time excluding the card you want to cancel. How you’d do? If your utilization rate goes up substantially, cancelling that card will most likely lower your credit score.

How tempted are you by the card?
If the credit card is tempting you to incur more debt than you can afford to pay back, you should probably close it. It may ding your score a bit, but that’s better than acquiring debt you're unable to pay down (which could end up hurting your credit score in other ways).

Cancelling a credit card doesn’t mean it will fall off your credit report
Know that if you do cancel a credit card, it will still appear on your credit file. If the account was in good standing, it could remain on your report indefinitely (good history never really falls off your credit record). Delinquencies on the account, however, won’t fall off of your credit file for seven years. So cancelling a credit card with a negative history is hardly an “instant fix” for your credit rating. Patience is the key to recovering from negative credit history—in time, your score will bounce back.

This post was written by Carrie Davis, personal finance blogger at SpendOnLife.com, a site dedicated to giving readers true and accurate information about credit, debt, and identity theft. Carrie is FCRA-certified and has a passion for educating others on how to achieve financial independence. Follow Carrie through the SpendOnLife RSS feed or on Twitter @SpendOnLife.

Edit your budget goals on the go with moneyStrands' iPhone app

This week we released a new update to our iPhone app with more convenient features to help you manage your money on the go. Have you downloaded the new version yet? Here’s a run down of what’s new in this version:

Edit budget amounts: Need to make a change to your budget goals? Now you can do so right from the app. Just enter the app and visit the budget view. To the left of your budget categories you will see a new icon. Click on it to view the amount you have allocated. Then click the amount and key in the new limit. Easy as 1-2-3.

Push Alerts: Now you can receive alerts when you're on the go with our new push notifications. Customize your alert notifications from within the web application for things like large purchases, exceeding budget goals, low credit or low account balances. Once set, the iPhone app will automatically notify you with a pop up message when any of these things occur.

Edit all fields within a transaction: If you have a manual account, you know that you can add and edit transactions right from the mobile app. In our latest update, we added the ability to edit all the fields within a transaction. Keep in mind whereas all manual transactions fields are editable, the amount field for transactions from automatic accounts cannot be altered.

New design: We gave the app a fresh new, sparkling look to avoid the traditional bland look most of us are used to when it comes to money management apps. What do you think?

Add transactions from the overview page: Our previous update also included the ability to add transactions to manual accounts. Taking it a step further now you can add transactions from your overview page, rather than having to go to your manual account page.

If you haven’t downloaded the new app yet, visit the iTunes App Store here. If you're new to moneyStrands, don't forget to register online first at moneyStrands.com

Got a suggestion on how we can make our app better? Drop us a note and let us know at feedback@moneyStrands.com

Black Friday: 10 tips to help you survive

A couple weeks ago we posted a roundup of some good articles to help prepare you for the holiday shopping season. With a little help from our shop-a-holic friends and some wisdom from our own personal experiences, we’ve put together more awesome tips to help you prepare for one of the busiest shopping days of the year, Black Friday. Whether you are shopping online or braving the early morning lines, these tips will help you plan and survive the day:

1. Prepare your shopping list
If you’re looking to get the best deals on Black Friday, you don’t want to waste time browsing for gift ideas, so make sure you have your list ready. Decide for whom you need to buy for and what you may want to buy for them. If you need ideas, scroll through some of the ads or do a little online research.

2. Figure out your budget
Now that you know who and what you want to buy, figure out what your spending budget is. Be sure to leave a little extra cushion room when setting your allocated amount. While we don’t want to encourage going over budget, sometimes unexpected purchases or expenses can arise and you should always be prepared. Advance planning will help ensure you stick to your allotted budget goals. To make things even easier, use moneyStrands to set up your budget. The system will automatically track your budget as you spend!

3. Monitor for deals
Check out all the black Friday ads to figure out where the best deals are. You can get an advanced look from sites like blackfriday.info, gottadeal.com and bfads.net. Keep in mind you want to look for items that truly are a GREAT deal. If you’re only saving a couple dollars, it may not be worth standing in line for. Quickly Google the item to find the current price and verify it’s a great deal. Once you find the items you want, make a list of all items and note what time the sale starts and what time the sale end.

4. Prioritize
The longer you browse in stores, the longer the lines will get, so now that you know what deals you want to go for, prioritize. Figure out which deals are most important and worth the time (e.g. big ticket items like electronics will most likely be the best deal and harder to get, so they should come first. Smaller items may not be a huge deal and will last longer on the shelves). Put the deal items you want to buy in order of priority to help you with the next step.

5. Map your route
Now that you know which items you need first and what stores to obtain them from, you can map your route. Try to find shopping plazas where multiple stores are located to help you steer clear of traffic, avoid parking hassles and save time. Even if you have to drive a little out of the way, it may be worth having all shops in one location so you can walk to all the stores you need to go to.

6. Fill up on gas
Make sure your car has gas before Friday morning. You don’t want anything to put you off schedule. Every minute counts!

7. Bring your rewards card
If you have a rewards credit card, Christmas is a great time to use it, as long as you have budgeted the money to pay off the bill at the end of the month. Use your rewards card to make all purchases so you can collect the points.

8. Bring your ads
There’s nothing worse than the cashier telling you your item is not the price you thought it was, or holding up an already long line. Be sure to bring the advertisement you saw your item listed in so you can dispute any conflicts about pricing. Similarly, make sure the items you pick up have a price tag.

9. Wear comfy shoes
It’s likely to be a long day and you’ll probably have to stand in some long lines so don’t go for fashionable, go for comfort. Wear a good pair of shoes and layers to keep you warm when needed.

10. Eat a big breakfast
Depending on how many stores you need to go to and how long the lines are, it may be a long day. Make sure you eat a good meal, drink lots of coffee and bring some water for the road!

Now that you’re plan is in place, you’re ready to go. Here are some useful websites you can also check out before you get started:

• If you’re shopping online, check out Coupon Sherpa’s list of retailers offering free shipping
• If you want to try and save a little extra money, consider buying a gift card from giftcardgranny.com. The site contains a list of gift cards that people are selling for the less than the value they are worth. For example, currently there is a Barnes and Noble gift card worth $30 being sold for $17.50. That’s a 41.6 percent savings!
• Check your balances on the go or monitor the budget you created on moneyStrands by going to m.money.Strands on your mobile browser. If you’re an iPhone user, download our free app by clicking here and get a full tutorial on the app here.
• If you’re shopping online, there are dozens of coupon sites to check for promotional codes. See our most recent list- 10+ Websites that will save you money.

And remember, if you miss Black Friday don’t forget about Cyber Monday. Many retailers will be offering great online sales the Monday after Thanksgiving. The best part- you can shop without getting out of bed!

New advanced features give you absolute control in analyzing your cash flow

Today we’re pleased to announce a new set of advanced features on our free personal finance management application. Here’s a run down of what we added based on what you most requested:

1. Split Transactions
Sometimes when we shop, we buy items that fall into various categories of our spending. In order to accurately get a picture of where you are spending your money, you need to be able to categorize every purchase appropriately. This is why we’ve added the ability to split your transactions!

How it works: I went to Safeway and spent $73.48. About $50 was actually spent on grocery items, $16 was spent at the pharmacy for my flu medication and $7.48 was spent on magazines. With the new split transaction feature, you can easily divide this transaction and categorize each amount appropriately.

On the details tab, choose the transaction you want to split and click on the split transaction icon.

Click on the split button and name the first split. If you want to split it into two, you can stop here and click the ‘Save’ button. If you want to continue splitting, hit the split button until the entire amount is utilized. Your remaining balance will be shown near the bottom of the panel.

Click ‘Save’ and now you’ll see your transaction split appropriately.

2. Custom Rules
It can be tiring to always have to re-categorize or tag expenses that you incur on a regular basis. To make things a little easier, we added the ability to create advanced rules that allow you to tell the system how to categorize, tag or name a certain type of transaction.

How it works: Lets say I travel often for work and have a lot of business expenses. I want all my travel expenses tagged as business expense, but I don’t want to do it manually all the time. With the new rules feature, I can tell moneyStrands to tag any transaction containing the word airline or Expedia [where I book my travel] and Enterprise [where I book my rental cars].

Click on the create rule icon on your details page.

Choose the “create new rule” button.

Give the new rule a name [in this case, I chose Business Travel] and using the drop down menu to the right, choose which account it should be applied to [I chose all accounts]. You can then choose the merchant(s) you want to set the condition for [I chose Expedia and Enterprise], and how you want those transactions to be categorized or tagged [in this case I chose to tag them as a business expense].

3. Pending Transactions
A simple, yet useful new upgrade we’ve added is the ability to see which transactions are pending. Now pending transactions will appear italicized at the top of your details list. Once cleared, the system will automatically show the transaction in regular text.

4. Budget Goal Hints
Setting up a budget is a great way to track and manage your spending and moneyStrands makes it even easier by auto-categorizing your transactions and applying it to the budget goals you set. However, if it’s your first time setting up a budget, you may not know where to start with your allocated limit. Today we’ve added new functionality that tells you the average amount other moneyStrands users are spending in that particular category. This gives you a general idea of how much you should allocate, based on what others are spending in this category.

How it works: I want to set up a budget to limit and track how much I spend on groceries each month. Because I’ve never tracked my spending before, I’m not really sure how much I should allot myself to spend for the month.

To begin, I go to the Overview tab in my moneyStrands account. I find my budget widget and click the “add new budget goal” button. I choose to create my budget by category and on the drop down menu; I select the category food/dining, then the sub-category groceries.

More exciting features are on the horizon. If you have questions or feedback, feel free to contact us anytime at feedback@moneyStrands.com

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MoneyStrands $250 Thanksgiving Giveaway Winner

To say thanks to our 100,000 registered users, two weeks ago we decided to give everyone a chance to win some extra holiday spending cash by entering our $250 Thanksgiving Giveaway. Today we are pleased to announce that Caitlin Riley is our official winner!

A BIG thanks goes out to all who entered and provided their thoughtful responses. We received an overwhelming number of entries and some really great feedback! As you all know we’re consistently adding new features to moneyStrands and we always love to hear new ideas from our users. If have any feedback you’d like to share, please let us know by emailing us feedback@moneyStrands.com or dropping a note on our forum.

Also, please don’t forget about our weekly $25 giveaway we’re doing on Facebook until the end of the year. Click here to enter.

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