Are you looking for a 0% balance transfer credit card or a credit card that features 0% APR on purchases? The Citi® Platinum Select® MasterCard® may be the card for you!

Citi just announced they are offering an offer of 0% APR on Purchases and Balance Transfers for up to 15 months on the Citi Platinum Select MasterCard. A 15 month 0% balance transfer offer hasn’t been available from most cardholders for almost 2 years now due to the effects of the economic crisis on the credit industry. But now that the dust is settling on the Credit CARD Act (big changes went into effect on Feb 22), it looks like some of the credit card companies are getting more competitive with their credit card offers – which means better offers for consumers!

How good an offer is a 15 month 0% balance transfer? The last 15 month 0% balance transfers went off the market in 2008. Since then the majority of balance transfer offers were 6 months, and it was only until the last few months that issuers even offered 9 or 12 month balance transfer offers. I’m not sure how long this one will last, but hopefully it is a sign of good things to come!

15 month 0% APR Balance Transfer Credit Card

The Citi Platinum Select MasterCard offers 0% APR on Purchases and Balance Transfers for up to 15 months, with a 3% balance transfer fee. This credit card offer is one of the best cards on the market for people looking to make a balance transfer or avoid paying interest on their credit card for the first 15 months they own the card. A balance transfer is a great way to help people get out of debt and the 0% APR on purchases can help people with cash flow problems get over a difficult period (or help people who simply want to keep their money in the bank earning interest!).

Competition in the credit card marketplace

The Citibank announcement came just a few days after Discover dropped the balance transfer fee on the Discover More Card, which features a 0% balance transfer for up to 12 months, and a 6 month 0% APR introductory rate offer. The transfer fee was recently 5% for 12 months, but is now 4% for 12 months.

There are still some advantages to the Discover More Card – it is a cash back credit card which offers up to 5% cash back in select categories and 1% cash back on everything else, and it offers a $50 bonus when you spend $599 within 6 months of opening your account. The Citi Platinum Select MasterCard does not offer a rewards program at this time.

Which card is better – Discover More Card or Citi Platinum Select? The decision comes down to what you are looking for. The $50 bonus and the cash rewards are nice features for the Discover More Card, but the balance transfer fee of 4% is slightly higher than the Citi Platinum Select MasterCard and the shorter 0% intro leaves something to be desired. It will be tough to match the Citibank offer of 0% APR on Purchases and Balance Transfers for up to 15 months (it is currently the best offer to be found in the industry).

Other great balance transfer credit cards and 0% APR cards

The following credit cards offer either 0% balance transfers or a 0% APR introductory offer on purchases:

• Discover More Card – Shamrock. 0% APR on Balance Transfers for a FULL 12 months; 0% APR on Purchases for a FULL 9 months; up to 5% cash back on select items, 1% on all other purchases; 5% transfer fee.
• Discover More American Flag Card. 0% for 6 months, 3% transfer fee; up to 5% cash back on select items, 1% on all other purchases.
• Chase Slate. 0% Intro APR for up to 12 months.
• Blue Cash from American Express. 0% Intro APR for 6 Months on Purchases; Earn cash rewards.

With the credit card market opening up and becoming more competitive, it makes sense to get a card that will give you more benefits as a consumer. Find the credit card that meets your needs.

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Related Articles:

1. Discover More Card – 12 Month 0% Balance Transfer Offer
2. Best Zero Percent Balance Transfer Credit Card Offers
3. 0% Interest Credit Cards for Purchases and Balance Transfers

There are many homeowners who have found themselves in the unfortunate position of being underwater on their home. Some of these homeowners live in a neighborhood where home values have declined, and others took out too much in home equity loans. In some cases both happened.

While it’s understandable that these homeowners are frustrated, some have decided to simply walk away from their homes, even though they can afford to make their monthly mortgage payments. This is known as strategic default. There are numerous problems with the decision to walk away from one’s home when the borrower has the ability to pay.

Is walking away from your mortgage moral?

First, there is a moral aspect to the decision. You signed a contract and agreed to pay a monthly price for your home. Unless the contract had a stipulation that you can walk if your home’s value falls – and I’m not aware of a single mortgage contract like that – you are not fulfilling your obligation. Some will argue that it’s a business decision, but I think it’s more than that. After all, would a homeowner whose home appreciated in value call it a “business decision” if the bank decided to increase their mortgage payment as the home’s value rose? I seriously doubt it.

I believe we are all obligated to honor our contracts unless there are extenuating circumstances which prevent us from doing so.

I want to be very clear that when I talk about the moral aspects of walking away from a home, I’m talking about people who can afford their payments. I know first-hand that there are people out there who really cannot afford to make their payments and want desperately to stay in their homes. Those people may not have a choice when it comes to giving up their home.

Who does walking away hurt?

In essence, walking away hurts the homeowner who is walking and every other homeowner out there. As homes are sold as short sales or foreclosures, the values of neighboring properties decline. If homeowners walk away from homes they can afford, it just perpetuates the cycle. The only way neighborhoods are going to recover is for homeowners to hang in there and watch out for one another.

I’m a fairly optimistic person, and I truly believe the tides will change and properties will eventually regain their values. Those who think they’ve lost the equity in their home forever are really creating a self-fulfilling prophecy by contributing to declining property values and adding to the amount of foreclosures and short sale homes that are sitting on the market.

I’ll just rent after I walk

Homeowners who think that they can walk away from their homes, rent for a bit and start over are going to be in for a big surprise.

When someone lets their home go into foreclosure, it harms their credit score and leaves a black mark on their credit report. It’s a black mark that will stay on their credit report for seven years. Many landlords do credit checks on their potential renters. Seeing a foreclosure is likely going to be a red flag to the landlord that you’re not capable, or willing, to make your rent payments on time.

The foreclosure is also going to be a red flag to lenders if the homeowner would like to buy a home or take out any new credit in the next seven years. In addition to the decision of whether or not to give a potential homeowner a mortgage, lenders also base interest rates on the borrower’s credit score. The borrowers with the best credit scores get the best mortgage terms and/or interest rates. A foreclosure is going to put the borrower in a bad position when it comes to getting credit … if they can get credit.

Allowing a home to go into foreclosure clearly isn’t something that should be taken lightly or decided quickly, especially if the homeowner can afford the monthly payments. I would urge people to consider all of the long-term effects of a foreclosure, including their plans for the next seven years, before making a final decision.

Kristen Doerschner is the public relations coordinator for a non-profit debt relief agency and a freelance writer. Through her writing, Kristen covers a variety of topics, but specializes in issues related to financial education.

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Related Articles:

1. Foreclosure Freeze – Project Lifeline
2. Comparing 15 Year and 30 Year Mortgage Terms
3. Pros and Cons of Mortgage Escrow Accounts

Are you prepared for the unexpected? What would happen if you lost your job? How long could you meet your expenses? Can you handle major car or home repairs? Have you even considered these scenarios? A financial risk test will help you answer these questions and more.

Why you need to do a financial risk test

In recent articles, we covered creating a net worth statement and a cash flow statement. These are important indicators of financial health, but they don’t give you a complete picture of financial health. They tell you where you are and where you are headed, but they don’t tell you how prepared you are for emergencies. That is why you need to do a financial risk test.

What is a financial risk test?

A financial risk test is one way to analyze your ability to handle financial emergencies. This includes looking at your overall financial situation, cash flow, employment situation, insurance, investments, and other factors that can effect your financial health and readiness.

How to perform a financial risk test

A financial risk test will help you analyze your financial situation and your ability to handle the unexpected. You want to consider everything that may effect your financial health and look at options to mitigate your risk when performing a financial risk analysis (insurance is only one option; more on that in a moment).

Each person will have different factors that effect his/her individual situation. For this exercise I have broken the financial risk test in to several major indicators that should be common to most situations: cash flow, employment, insurance, investments, and estate planning. Your situation may vary depending on your specific situation, so take some time to consider all factors that could effect your financial situation and plan accordingly.

Cash flow risk analysis

The first step is to create your net worth and cash flow statements as referenced in earlier articles. We will use the information in these statements to determine your cash flow risk. You will also want to pay special attention to your emergency fund which will help you answer these questions.

Ask yourself these and similar questions based on your specific situation:

• Can I handle a $1,000 emergency? (car or home repair, airline ticket to visit family, etc.)
• Can I handle a $5,000 emergency?
• How many months of current living expenses can I maintain if I lose my job?

Your answer to these questions will determine your next actions. If you can handle a $1,000 emergency, but not a $5,000 emergency, then you may decide to increase the size of your emergency fund.

Employment risk analysis

The last few years have taught us that there are few permanent jobs left in the U.S. Short of a government job or a tenured position, most people face some risk of losing their job.

Questions to ask yourself:

• How secure is my job?
• How likely am I to be laid off in the next few weeks, months, or year?
• What is the general outlook for my company? Industry?
• What about the local or national economy?
• Can I claim unemployment benefits if I lose my job?
• How long will it take to find a new job?
• Will I be able to to find a job with a comparable salary or will I need to take a pay cut?

Many of these factors are out of your control, but that doesn’t mean you cannot prepare for them. It is always a good idea to have a current resume and maintain your professional network. It also never hurts to work on new skills or obtain licenses or certifications in your field. Not only can they make your resume more attractive, but they may net you a raise as well.

Investment risk analysis

Analyzing investment risk is a broad topic with entire books and websites devoted to determining investment risk, asset allocation, diversification, etc. For this exercise we are looking at investment risk from a 30,000 feet view. Before we start looking at your investments from the perspective of a financial risk analysis, you will want to know how much you have invested, your asset allocation, and a clear idea of your investment goals. A good tool to help with this exercise is the X-Ray tool form Morningstar.com (you can register for a free account or a free trial to Morningstar premium if you are not already a member).

Questions to ask yourself:

• Do my investments meet my desired asset allocation?
• Is my asset allocation appropriate to my investment goal(s)? My age?
• Am I on track for retirement?
• Will I be able to retire if my portfolio drops 10% in value? 20%? 30%?

The best actions to take will vary depending on your answers to these questions.

Are you properly insured?

Insurance is another broad topic. For our purposes we want to see if you have not only adequate insurance, but the right types of insurance and the right coverage amounts. Again, your specific needs will vary. If in doubt, visit with an insurance specialist or financial planner who can help you with your situation.

Ask yourself:

• Do you have enough and the right kind car insurance?
• Do you have sufficient homeowner’s or renter’s insurance?
• Do you need general liability coverage?
• How much life insurance do you need?
• Should you buy term or whole life insurance?
• Do you need long term car insurance?
• Do you have the right health insurance for your needs?
• Do you need mortgage protection life insurance?
• Should you get pet insurance?
• Do you need umbrella overage?

You may find that you need to purchase more insurance, or you may find that your current level of insurance is more than adequate. Some people may even elect to self-insure to avoid paying insurance premiums at all.

Are you prepared for the death of a loved one?

This is the most difficult question to face, and there is no easy way to deal with the thought of a loved on passing on. But it is essential to prepare for the inevitable. One of the best ways to prepare is with an estate plan, which is an important and often overlooked part of financial planning. But it also helps to have a financial continuation plan and/or a list of instructions for carrying on your financial situation, business, or other asset.

Ask yourself:

• Do you have a will or estate plan?
• Do you have adequate life insurance?
• Do you have a financial continuation plan?

I recommend that everyone accomplish each of the items on this list. You can create a simple will for a few dollars through many online forms, or you can use a lawyer for a more complete estate plan. Your needs will vary.

Where to go from here

Performing a financial risk analysis forces you to ask some difficult questions and prepare for some even more unpleasant outcomes. No one wants to think about financial emergencies, losing his job, or death. But all of these events are not only possible, but probable at some point in your life.

Hopefully you will take the time to thoroughly complete this financial risk test. You will probably come up with some ideas that will better help you prepare for the unexpected, reduce your overall risk, and make improvements to your financial plan.

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Related Articles:

1. How to Create a Personal Cash Flow Statement
2. What Are Your Financial Strengths and Weaknesses? Run a SWOT Analysis
3. When Was Your Last Financial Checkup

There are many ways to measure your financial health. The measurement that probably gets the most attention from personal finance books and news outlets is the personal balance sheet, or net worth statement. Knowing your net worth can be important, but keep in mind that it is a snapshot in time and not necessarily a true indicator of financial health. There are many other factors that affect your financial health, one of which is your cash flow statement, which is a representation of your net monthly cash flow.

You can use your cash flow statement in conjunction with your net worth statement to get a better idea of your overall financial health. Later we will show you how to combine your net worth statement and cash flow statement with a financial risk test and debt analysis which will help you get a more clear picture of your financial health.

Why positive cash flow is important

One of the fundamental building blocks of becoming wealthy is spending less than you earn. It is one of the core concepts of becoming a millionaire. Your cash flow statement won’t tell you if you will become a millionaire or not, but it can tell you if you are on the right path – hint: you can’t build wealth if you are running on a deficit.

How to Create a Personal Cash Flow Statement

Creating a cash flow statement may remind you of creating a budget. You will need to record all sources of income and all your expenses. Then you will add the final amounts for income and expenses. Just like your net worth statement, a positive number is positive cash flow (good!) and a negative number is negative cash flow (bad!).

Factors to Consider in Personal Cash Flow Statement

A cash flow statement is designed to list all sources of income that affect your cash flow, not just your salary from your day job. Below this section is a list of income streams to consider adding to your cash flow statement. However, you should only add the income sources that are available for spending. For example, investment income and dividends are listed as forms of income, but you wouldn’t list those on your cash flow statement if they are in retirement accounts or are automatically reinvested.

On the same token, you need to record all expenses, including regular and irregular expenses. For example, some of your expenses may come quarterly, semi-annually, or annually. You may wish to break those down into a monthly approximation (examples could include insurance premiums, taxes, homeowner’s association fees, investment contributions, etc.). Groceries and utilities are also expenses that can be approximated to smooth out your cash flow statement.

The following is a list of income sources and expenses that you may wish to include in your personal cash flow statement. You will need to tailor it to your needs.

Income

Earned Income

• Salary 1
• Salary 2
• Bonuses/tips/commissions

Other Income

• Self-employment income
• Freelance/consulting income
• Government benefits (unemployment, disability, VA benefits, welfare, etc.).
• Child support/alimony
• Investment Income
• Interest income
• Dividends
• Capital gains
• Distributions

Retirement Income

• Pension
• Social security
• Annuity
• Retirement plan distributions (401K, IRA, withdrawals)

Expenses

Fixed Expenses:

• Mortgage/Rent
• Car payments
• Insurance premiums
• Property Taxes
• Alimony/Child Support
• Investment contributions

Variable expenses:

• Groceries
• Utilities
• Medical care
• Entertainment/hobbies
• Dining out
• Maintenance/home or auto
• Spending money
• Other

Calculate the Net Cash Flow

Add total income and expenses and you have a personal cash flow statement. If your cash flow statement is positive, then you have some additional cash each month that you can use to help you reach your financial goals (build emergency fund, pay down debt, invest, etc.). If your cash flow statement is negative, then it is time to look for ways to right the ship and turn things around. Look for areas you can trim back on expenses, and ways to increase income.

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Related Articles:

1. Using and Understanding a Net Worth Statement
2. Your Greatest Asset is The Ability to Create Income
3. Financial Risk Test

Do you know your net worth? Your net worth statement is a snapshot of your financial health. Like a company balance sheet, a net worth statement lists all your assets and liabilities, giving you a single number that represents your financial situation at that moment in time.

What Does Your Net Worth Tell You?

The good thing about a net worth statement is that it gives you an idea of how your wealth or debts are distributed. This information is useful in creating a financial plan or understanding more about your financial health. But your net worth statement doesn’t reflect everything about your financial situation. It’s important to look at other factors such as your cash flow, debt, employment situation, and more. We’ll cover some more of these topics in later articles.

What is in a Net Worth Statement?

The goal of a net worth statement is to accurately list all of your major assets and debts and create a personal balance statement, much like you would if you were looking at a company’s books. Before you get too far into it, we should clarify which assets to list. We are only interested in assets that have cash value or can be easily converted to cash. So you would include savings accounts, retirement accounts, investments, real estate*, valuable personal property, and similar items. You wouldn’t include items such as your clothing, furniture, DVD collection, video games, etc.

*Should you include cars and houses in net worth statements? Some people prefer to include major items such as their primary residence or cars, while others prefer not to include these items. You can choose to create your net worth statement however you wish – just make sure that you are consistent in your measurements if you are tracking your net worth over time.

How to Create a Net Worth Statement

Start with a master account list. The first thing you need to create your net worth statement is an accurate list of all your financial accounts and how much money is associated with each account. Hopefully you have a master account list, which will help you know where your money is located and how to access it. Next, we list everything and add it up.

Net Worth = Assets – Liabilities

List your assets. Now that we know what we are looking for, we need to go through our master financial account list and add up all assets from the accounts on the list.  You can record them on a sheet of paper, on a spreadsheet, or by using your favorite financial management program.

Next, do the same with your liabilities. Then we will add up all your assets and subtract your total liabilities from your assets. This will give us our net worth. A positive value means you have a positive net worth, and a negative value means you have some work to do.

Tracking Net Worth Over Time

As we mentioned earlier, a net worth statement is simply a snapshot in time, and it changes as you earn money, spend money, investment values increase or decrease, you repay debt, etc. Tracking your net worth can be a good way to visualize how the total value of your accounts has changed over time. This can easily be tracked in a simple spreadsheet or with a money management software program, such as Quicken, or one of the many free online money programs.

Using Net Worth as a Tool to Understand Financial Health

Your net worth is an important number, but be careful not to place too much emphasis on it because there can be more important factors affecting your financial health. Your net worth is simply a tool that can be useful when it is used in conjunction with other financial tools, such as a cash flow statement, debt analysis, and a financial risk test (all of which will be covered in future articles). We will use these tools to help you gather a more complete picture of your financial health and hopefully help you apply these principles to find areas for improvement in your financial situation.

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Related Articles:

1. How to Create a Personal Cash Flow Statement
2. How to Organize Your Finances with a Financial Inventory
3. Writing a Financial Mission Statement

I dropped my taxes off with my accountant this past week. We had a nice long discussion about my tax situation, which has changed a lot in the past year. In addition to my small business income/expenses, I had a few more fun things to consider. I admitted to being naughty – I did a bit of day trading bit last year at my online brokerage accounts. I took small losses on two trades, but made up for it with a slightly larger gain on another trade. I admit I shouldn’t have done it though. Not only does it muddy up my tax return, but short term trading is risky. Overall, I ended up with a small gain of a couple hundred bucks. Worth the risk? Well, the end result was good, but it just as easily could have been ugly, so probably not.

So now I just have to wait it out and see what the damage is – both for paying to have the taxes done and my state ad federal tax bill. I’m glad my accountant charges reasonable rates!

CompleteTax Giveaway Winners

This past week we held a giveaway for 5 free copies of CompleteTax, one of the top online tax software programs (see CompleteTax Review for more information about CompleteTax). The winners were randomly selected by using a random list generator from the site Random.org. Congrats to the winners, who should receive an e-mail notification shortly!

recommended financial and career articles:

• Three Things That The Earthquake In Haiti Reminds Me About Personal Finance.
• Small Business Tax Advice – The New CFO in Town.
• How to Rock Band 2.
• How Much Our Debt Costs – February 2010.
• Why Extended Warranties for New Tires Are A Waste of Money.
• International Personal Finance Carnival #1 @ PT Money.
• Carnival of Personal Finance 246: March is the month for … what?!? @ CreditCards.com.
• Best of Money Carnival #40: Snurricane Edition @ Budget Pulse.
• Xamuel.com Blog Carnival, Edition 1.
• Baby Boomers Blog Carnival Twenty-ninth Edition @ Baby Boomers U. S. (The Blog).
• The Best of the Best in Money and Personal Finance #12.

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1. CompleteTax Review and Giveaway
2. Annoucing the Flip Video Camera Winners!
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A 0% balance transfer credit card is a great way to save on your credit card interest rates and eliminate credit card debt more quickly.

Credit cards – love them or hate them, they are a big part of our society. For some people, credit cards are a curse, and for some people they are a blessing. This article will cover both sides of the spectrum and show you how you can either turn that curse into a blessing by transferring your current high interest credit card balance into a 0% interest rate credit card, or how you can further take advantage of credit cards by getting a 0% APR on new purchases, freeing up your cash flow or giving you extra float so you can keep your money in the bank earning interest for you instead of someone else.

The cards in the following lists will benefit you whether you are trying to reduce your credit card debt or take advantage of 0% APR introductory offers. All of these cards are screened and updated for the latest offers, and none of these credit cards comes with an annual fee. Click through the links to arrive at the respective official credit card site for full terms or to apply.

Best 0% APR Balance Transfer Credit Cards

The best balance transfer credit cards offer a low balance transfer fee, a long balance transfer term, and a cash rewards program which is nice to have if you plan on using the card either while you are repaying your balance, or afterward. Some of the best even offer an introductory 0% APR on new charges, and are mentioned in the section below as well. Here are the top balance transfer cards.

Best Balance Transfer Credit Card: Discover More $50 Card. The Discover More card is one of the top credit cards in just about every category – cash rewards cards, balance transfer cards, 0% APR intro offers, and it even comes with a $50 cash back bonus if you spend $599 within the first 6 months. For an all around credit card, you can’t beat the Discover More card. In addition to the $50 bonus, the Discover More offers up to 5% cash back on certain categories of spending and unlimited 1% cash back on everything else. There is currently a 0% balance transfer for up to 12 months, a 6 month 0% APR introductory rate offer, and a balance transfer fee of 4%. Sign up for the Discover® More® Card.

Other great balance transfer credit cards:

• Discover® More® Card – Shamrock: 0% APR on Balance Transfers for a FULL 12 months; 0% APR on Purchases for a FULL 9 months; up to 5% cash back on select items, 1% on all other purchases; 5% transfer fee.
• Discover More American Flag Card: 0% for 6 months, 3% transfer fee; up to 5% cash back on select items, 1% on all other purchases.
• Citi® Platinum Select® MasterCard®: 0% APR* on balance transfers and purchases for up to 12 months, 3% transfer fee, Rates are as low as 11.99% variable. No rewards benefits.
• Discover® More® Card – Monogram: 0% APR on Balance Transfer for a FULL 12 months, 2.99% introductory APR. Up up 5% cash back, unlimited 1% on everything else.
• Miles by Discover® Card: 0% for 6 months, 3% transfer fee; Travel rewards card; 12,000 Bonus Miles – 1,000 Miles Each Month You Make a Purchase for the First 12 Months.
• Discover® Motiva(SM) Card: 0% for 6 months, 3% transfer fee; Earn 5% to 20% Cashback Bonus® at Top Online Retailers* and up to 1% on all other purchases.

Best 0% APR Interest Rate Credit Cards for New Purchases

As mentioned above, a 0% interest rate on new purchases can give credit card users a lot of flexibility when times are tough, when starting a business and they need a cushion for cash flow, or even just to float expenses for awhile and take advantage of using someone else’s money. As these cards are designed for spending, emphasis is given to cash rewards, which is why the Discover More Shamrock card is #1, even though it has a 9 month introductory 0% APR and there are two other cards with a 12 month 0% APR (they have no rewards program).

Best 0% APR Credit Card: Discover® More® Card – Shamrock. This card is very similar to the Discover More $50 Bonus card, but there are a couple key differences. The Discover More Shamrock offers up to 9 months 0% APR on purchases, and up to 12 months 0% balance transfers. There is a 5% Cashback Bonus® in categories that change like travel, gas, groceries, restaurants and more and up to 1% unlimited Cashback Bonus on all other purchases automatically. Apply for Discover® More® Card – Shamrock.

Other great balance transfer credit cards:

• Citi® Platinum Select® MasterCard®: 0% APR* on balance transfers and purchases for up to 12 months.
• Chase Slate: 0% Intro APR for up to 12 months.
• Discover More $50 Card. (See above for reasons why this is one of the best credit cards on the market!).
• Chase Freedom: 0% APR for up to 6 Months on Purchases; Earn cash rewards.
• Blue Cash from American Express: 0% Intro APR for 6 Months on Purchases; Earn cash rewards.
• Blue from American Express: 0% Intro APR for 6 Months on Purchases; Earn Points rewards.
• Citi Forward. 0% APR for 7 months on purchases and balance transfers.

Why 0% balance transfer credit card offers are great

If you have credit card debt and want to eliminate it more quickly, then a 0% balance transfer may help you achieve that goal. Transferring your credit card balance to a 0% balance transfer card will move the balance from your current credit card, which probably has an interest rate around 10%-20%, to a new credit card that has an introductory 0% interest rate. Reducing the interest rate to 0% means 100% of your payment goes toward reducing the principle and none of it goes to the credit card issuer in the form of interest. The potential savings can be hundreds, to even thousands of dollars compared to making minimum payments at a higher interest rate.

Why do credit card companies offer 0% balance transfers if it means potential lost income? They make these offers to gain new customers. They may potentially miss out on a little up front money, but there is a good chance that many people will remain good customers or that not everyone will pay their entire balance off at 0% interest. They know that in the long run it will be profitable. It’s a win-win situation for customers and credit card issuers!

Why 0% interest credit cards are great

Another popular credit card offer is the 0% APR interest rate offered by many credit card companies. Why would a credit card company offer 0% interest rates on credit cards? The same reasoning applies as the balance transfer cards – to gain new customers.

There are a couple variations of the 0% interest rates offered on credit cards. They are usually offered only to new customers and in the form of a balance transfer, or a 0% APR introductory period, usually from 6-12 months. That means you don’t get charged any interest on your purchases for the entire introductory period. But watch out – you are usually required to make on time minimum payments or the interest rates will spike.

0% APR offers are great – but use them responsibly!

Credit card debt can be a huge problem so if you are using a 0% balance transfer offer to reduce your interest rates to repay your credit card debt more quickly, then be sure to stick with your plan. It can be tempting to take advantage of the 0% introductory offer, but don’t do it unless you can pay it off in cash.

As for the 0% APR introductory offers – I’m not a fan of carrying a credit card balance, but these introductory 0% APR intro offers can be useful if you having cash flow problems, need to use your credit card in an emergency, want to start a small business and need an injection of capital before the income starts coming in, or if you just want to float your charges and keep your money in the bank earning interest. Again, use them responsibly!

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Related Articles:

1. Best Zero Percent Balance Transfer Credit Card Offers
2. 0% APR Balance Transfer Card for 15 Months
3. Discover More Card – 12 Month 0% Balance Transfer Offer

If you have a personal finance book on your shelf at home, there is a good chance that the author recommends you put your emergency fund savings into a money market account.  Historically, that was good advice as money market accounts have offered higher interest rates than either savings accounts or checking accounts.

However, for at least the last couple of years, the opposite is true.

Right now, some of the money market funds that are typically the best performers are averaging a 7 day yield of between .15% – .05%.  On the other hand, bank savings accounts are paying as much as 1.45% (Nationwide Bank) followed closely with a 1.39% from Ally Bank (rates current at time of publication, please see respective banks for current rates).

Personally, I think this trend is going to continue for some time. (See comments below about changes to rules for money market funds.)

Let’s look at money market fund basics and savings account basics; then you should be able to determine which is best for your needs.

Money Market Fund Basics

Money in a money market is easy to access (liquid).  This is important for money you keep in an emergency fund.  Most money markets give you check writing privileges which makes it easier to access your money.  In addition, with a little shopping, you should be able to find a money market fund without fees.

It is important to note that a money market account is different than a mutual fund. This is a common misconception among new investors, so it is important that you understand that the two are different. A money market deposit account is FDIC insured up to $250,000 which guarantees your emergency fund against a bank failure.

New rules for money market accounts. In January, the U.S. Securities and Exchange Commission updated rules for money funds.  These changes make such investments more secure (theoretically), but also limit the potential yields of the money market funds.  Thus, it seems likely that yields will be reduced by these changes.

With a money market fund, the Interest is a variable rate.  This simply means it will change based on performance.  The money market managers do their best to keep the cost at $1 per share and share any of the additional income through interest payments.

Advantages of a money market account: Safety and ease of access (liquidity).

Savings Account Basics

Money in a savings account is very easy to access, (liquid) which is important for an emergency fund.  Depending on your bank, you can typically transfer those funds to a checking account or easily withdraw the money at the bank or using an ATM.

Interest rates at banks do change, but they are fixed in the sense that when they set a rate you know you will get that rate until the rate either increases or decreases. Many banks keep their interest rates for their savings accounts similar to competitors, which may give you more options for your emergency fund savings.

Money in a savings account is FDIC insured up to $250,000.

When it comes to shopping around for the best savings account, you can typically get the best interest rates from an online account.  Bank Rate can show you the best savings interest rates.

Advantages of a savings account: Safe, easy to access (liquid), and competitive interest rates.

Current Money Market Owners Could Open A Savings Account, Too

If the hassle of changing banks and opening a savings account just to close it later if money market yields improve does not sound appealing, then you have options.  Call your current money market fund holder and ask about the minimum required balance (without fees).  Keep the minimum amount in your money market fund and then open a new savings account.  If, in the future, the money market interest rates exceed savings account interest rates, all you need to do is keep the savings account open with the minimum balance and transfer the money back into a money market account.

This way you are in a position to easily be able to take advantage of some of the highest interest rates.

Should You Open A New Savings Account For Your Emergency Fund?

In my experience, opening a new savings account online takes about 20 minutes.

Here’s what you need to figure out when comparing money market account sand savings accounts:

What is your current interest rate on your money market account?  How much more interest could you earn if you switched to a savings account?  Based on your account balance, how much more money would you have at the end of one year.  Take that number and ask if it is worth 20 minutes of your time.

In general, if you have an account balance of around $5,000 in a money market account, you will be better off making the switch to a savings account.  But, be sure to do your own math.

In my case, I have my emergency fund in an ING Savings Account.  This account is linked to a checking account with ING Direct so I can instantly transfer money from my savings account into the checking account and then write a check.

Do you think a money market or a savings account is the best place for an emergency fund?

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2. Why You Need an Emergency Fund and How to Start One
3. Alternatives to High Yield Savings Accounts