You can earn money when you use credit cards. Purchases made on your credit card are in effect an interest free loan from the credit card company, as bill is paid in full at the end of the billing period.

Let us assume that in a given month you have $1000 worth of purchases. You pay for these purchases using your credit card instead of cash. The purchases could be groceries, telephone bill, insurance payments, etc. The purchases could also occur at anytime within the credit card cycle. The billing cycle of your credit card is 20 days and you are paid $500 every 14 days.

If you saved the $1000 that you would have used to make your purchases in a savings account at 4% interest you would earn $1.37 in interest. This is over a 20 day period. At the end of the year your interest earnings would be $25.

Just be careful and make sure that you pay your credit card bill in full when due. Otherwise the 28% interest charged would cost you $14. This would wipe out all of your interest earned and more.

The Numbers

Monthly Purchases: $1000
Yearly Purchases: $12,000

Billing Period: 20 days
Pay Period: 0 days - $500 and 14 days - $500

Savings Interest Rate: 4% APY
Interest Earned 20 Days: $1.37
Interest Earned 365 Days: $25.00

Late Payment Interest: 28%
Penalty Paid $1000, 20 Days: $14.00

Home Insurance Cost Factors

Saturday, August 02, 2008 | , | 0 comments »

Your home is probably your most valuable asset. Every month you pay thousands of dollars towards its mortgage and maintenance. You want to protect that investment and should have sufficient property insurance. You should shop around for home insurance. A reduction in home insurance will save you money monthly for a long time. Check you’re your insurance company if any of the discounts listed below applies to you.

Home insurance policies are complicated legal documents. Make sure you get coverage for all risks that you deem necessary.

1. Condition of Your Home. Newer houses are cheaper to insure than older houses. New houses have less wear and tear than older houses. The roof, porch, deck, plumbing, and electrical will be in better condition than an older home. A new home insurance discount could be as much as 15%.

2. Construction of Your Home. Brick homes are cheaper to insure. Brick homes are studier and are more resistant to wind damage. Wood framed houses or houses with aluminum siding are more expensive to insure. They are prone to wind and hail damage.

3. Location of Your Home. Expect to pay more if your home is in a high risk area. Risk factors that are considered are environmental such as earthquake, floods, and tornadoes. Social risks factors are also considered such as crime.

4. Location of Fire Hydrant and Fire Station. If there is a fire station located within 8 km of you home you will receive a discount. You will also receive a discount if there is a fire hydrant within 300 meters of you home.

5. Non Smokers. Smoking in your home is a fire hazard. You will receive at 2-5% discount if there all of the residents in your home are non-smokers. To be considered a non-smoker you must not have smoked for the past 12 months continuously. Insurance companies will not apply this discount if you are a smoker who does not smoke at home.

6. Age of the Home Owners. Older home owners will receive a discount over younger couples or couples with teenage children. Older home owners especially retirees are considered more responsible. They are usually home more often and spend more time maintaining their home. They are also less likely hold parties or take risks that could damage their home. This discount could be as much as 10%.

7. Insurance Deductible. The deductible is the amount that you, the policy holder will have to pay to the insurance company every time you make an insurance claim. Having a $1000 deductible over a $500 will result in cheaper home insurance. Home insurance is for major claims not for minor maintenance. You could save up to 50%.

8. Home Alarm and Deadbolts. Homes equipped with an alarm that is remotely monitored will receive a discount. Even if you home has a local alarm that is not monitored you will receive a discount. This discount ranges from 5-10%.

9. Smoke Detectors and Sprinklers. Homes equipped with a smoke detectors and sprinkler system that is remotely monitored will receive a discount. This discount is about 5%.

10. Company Loyalty. Some insurance companies will offer a discount to clients who have been insured with them for a longer period of time. This discount is usually 5% for 3-5 years and 10% for more than 6 years with the same insurance company.

11. No Mortgage. Most mortgage companies and banks require that you have home insurance coverage to qualify for a mortgage loan. If your home is fully paid off you will receive a discount on your insurance premium.

12. Home Additions. If your home has a finished basement, a deck, a pool or a separate garage structure you will pay more home insurance. Additions or renovations that increase the property value of your home will increase your insurance premiums.

13. Good Claims Record. Insurance claims within a 5 year period could result in a higher insurance premium. Policy holders with no claims will receive a discount.

14. Combined Insurance. Combining your home and auto insurance with the same insurance company will result in lower premiums on both your home and auto insurance policies. While the reduction in your home insurance policy might not be much, the reduction in your auto insurance policy could be significant. The discount could be as much as 10% on both policies.

15. Group Rates. Insurance companies offer discounts to alumni associations, members of professional associations, or employees of certain companies. This is usually because they have a preferred group discount rate.