I’ve started seeing advertisements for a Discover it™ Card and having never seen it before, I was curious what it was. Other than a different looking card, it’s actually not much different than their base Discover More card. If you recall, the Discover More card was as straightforward a card as they come – bonus cashback on rotating categories, no annual fee, and a few other little features that most credit cards offer.

So I was surprised when I saw the Discover it™ card because I thought maybe there was something special. There is… kind of. The biggest draw of the card is that it offers an 18 month 0% APR balance transfer (3% fee) on top of the types of features you expect from a Discover card – no annual fee, no foreign transaction fee, and 5% cashback on rotating categories (first 1st quarter of 2013, it’s on restaurants and movies).

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Credit cards aren’t simple. Nothing having to do with money or banks is simple but the new Citi Simplicity® Card aims to change that.

Maybe this sounds familiar to you: One of the reasons that consumers end up paying a bunch of fees is because they don’t understand the rules. They aren’t going to read all of that fine print that comes with a credit card because not only is it so small that it makes their eyes cross trying to read it but the wording is so confusing that even if they could or wanted to read it, they don’t understand it.

You’re going to be amazed at how un-credit-card-like this credit actually is and for once, the rules work in your favor. If you’re rebuilding your credit, you’re tired all of the fees, or you want a card that allows you to pay down your debt for two years without charging you interest, the Citi Simplicity® Card offered by Citigroup may be worth a second look.

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I still remember getting my first credit card. It was an AT&T Universal card that still exists today, albeit in a different form. It was one of the first few days of school and I stopped by a desk outside of Doherty Hall at Carnegie Mellon. I signed up not because they were offering free t-shirts or food (they were offering free shirts, though pizza would’ve been more appealing) but because I thought I needed a credit card. As I was filling out the form, I was amazed at how much information the thing required and how they had scanners setup to scan our driver’s license. Looking back, and being a few years wiser, I’m absolutely stunned my identity wasn’t stolen. I think people in general are savvier now but in 1998, when I’m sure identity theft was still a huge business, people just wasn’t as aware of it.

The other amazing thing was I remember asking the guy what I should put into the “income” field, since I clearly had none. He told me to put $30,000 because that’s how much tuition was. First, tuition wasn’t $30,000 (it wasn’t that high, plus I had a ton of financial aid so it wasn’t our out of pocket cost). Second, that’s not income. I don’t get paid $30,000 a year. Either way, I was approved.

The best perk of the card was free long distance minutes every month, which meant free phone calls home. This was before I got a cell phone, which wasn’t until the following year, and long before Skype and other free tools. That card lasted about two years before I discovered cashback and started using a Discover Card (a card that I still have) almost exclusively.

What was your first credit card?

As the economy improves, I expect to see a lot more activity in the balance transfer space. For the moment, there hasn’t been much change from April to May. Citi ended the Citi Dividend Platinum Select MasterCard’s promotion they launched last month (0% Intro APR on Balance Transfers for 18 months and 0% Intro APR on Purchases for 12 months) but extended the limited time offer that included $100 cash back after $500 in purchases within the first 3 months of account opening. This matches compares very favorably to the Chase Freedom offer, which offers the same bonus and similar introductory periods.

Here are this month’s best 0% balance transfer offers:

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One of the best things you can do for your finances is to pay down your credit card debt. Credit cards are notorious for high interest rates and fees. Once you are trapped in the cycle of making credit card payments, it can be difficult to get out. And, worst of all, the interest that you pay on your credit card balances goes straight into someone else’s bank account. Interest, paid for the privilege of borrowing money, offers you no other benefit. It’s pure expense.

If you want to improve your finances, and move along the path to financial freedom faster, it is best to pay down your credit card debt as quickly as possible. Creating a debt pay down plan can seem a daunting task, but it doesn’t have to be. You can put together a credit card debt reduction plan in 55 seconds or less:

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After the recent economic meltdown, a lot of people decided to cut up their credit cards and go to an all cash lifestyle. Whether it was self-preservation or just anti-big banks, a movement that started at least a decade ago has really picked up steam and been the subject of a lot of press lately. I’m a big fan of credit cards, for all of their conveniences, and it’s sometimes harder for me to see the reasons for going all cash, but I know that there are plenty.

If you think I’m here to say “learn to use credit card responsibly and you get all the benefits!” – I’m not. First, I’m not so arrogant that I think I should ever tell you what to do. Second, I recognize what credit cards are and the reality that they aren’t for everyone. Credit cards can be a very useful financial tool and they can be a very dangerous financial tool. The fact that there are people with $10,000 in credit card, let alone $20,000 or $50,000, is a sign that credit cards can be far more dangerous than they are helpful.

A lot of personal finance writers like to liken it to a tool like a shovel or a hammer. I think that gives credit cards too much, well, credit. I think credit cards are more like alcohol. When used responsibly, both can make life easier and more entertaining (though neither are required for a more entertaining life). When used irresponsibly, the results are disastrous. Having $10,000 in credit card debt isn’t like accidentally hitting your finger with a hammer, it’s more like waking up hugging a toilet after a night you can’t remember. People get addicted to charging everything to plastic, much like they are addicted to alcohol, no one is addicted to digging holes in the ground with a shovel.

That said, I can’t imagine going to an all cash lifestyle but I want to better understand why some people choose to be that way. If you’re an all cash adherent, please share your experiences and your motivations! If you’re not, tell us what you feel about going all cash and why you choose to use credit.

I’m one of the moderators of the Personal Finance sub-reddit (at Reddit.com), which routinely sees plenty of credit score related questions. This recent one made my blood boil when user wooga told me that his lender advised him to carry a balance to improve his score.

wooga: I was told by the lender that if I paid down to 1/3 of my balance that it would improve my score by 100 points in a few months, more then it would to keep a zero balance(or pay off each month) which is what I normally do. I didn’t believe it. …

I’m glad he didn’t because it’s flat out wrong.

Lenders would like you to believe that your credit score improves when you pay interest but it’s simply not true. Credit cards report your balance when your statement closes. They report it again when the next statement closes. They are snapshots in time with no information about what happens between those two moments. The reports are the same whether you carry a balance or pay off the balance in full, so carrying a balance does not improve your score.

It’s important to remember that the FICO credit score is designed to calculate the likelihood you will default on a loan. Whether or not you carry a balance is not any better an indicator than your balance at statement’s close. If you charge $500, pay off $500, and then charge $500, you are no riskier than someone who charges $500, pays the minimum plus interest, and carries the $500 forward.

Don’t carry a balance if you can avoid it and certainly don’t do it because you think it’ll improve your credit score.

One of the ways you can use credit cards to your advantage is to choose rewards cards that offer travel bonuses. You can do even better if you get a credit card associated with one of the airlines. Most of these cards are through major issuers, so you can use them for everyday purchases, while building up miles at a specific airline. If there is an airline that you prefer, you can use an airline credit card to boost your frequent flier miles, and enjoy other perks.

However, you do need to think twice before getting an airline credit card. Airline credit cards often come with high interest rates, so they are not for those who carry a balance. If you carry a balance, it won’t take long for the interest charges to effectively negate the benefits of your airline rewards. Also, keep an eye out for annual fees and other costs. These cards are usually best for the frequent traveler.

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