The One-Two Punch of Holiday Bills and Tax Time

Right now, many Americans are facing a financial one-two punch with high holiday credit card bills and higher heating costs. And here's another blow: Tax time is coming. Don't worry, here are some simple tips to help you start saving money now.

Don't miss a credit card payment. Opening that first credit card bill of the year can be daunting, but there are more reasons than ever not to miss or be late with your payment. Nothing makes a credit card company happier than customers missing their payment or sending it in late.

While most credit cards have a grace period, often missing just one period can send your interest rate soaring by as much as 25 percent. Add that to the late payment fee, which averages $29 but can go as far as $39 depending on your balance, and suddenly your credit card debt can get much worse.

Even if you can't pay the minimum, send in what you can on time. You'll avoid the late fee and prevent the card company from automatically raising your interest rate.

Beware the deadline time your credit card payment is due. Some credit card companies have a deadline of 9 a.m on the day your payment is due -- impossible to meet if you're mailing in your payment. Even online payments are tricky because there's no guarantee that it will get there on time. And, if you miss the that 9 a.m deadline, you'll get hit with the increased rate and the late fee.

Make sure you know your company's card policy so that your payments arrive before the company's deadline.

If you're going to transfer your credit card balance to card with a lower rate, make sure there aren't any hidden costs. Credit cards want you to pay them -- and not another company -- with interest. So, if you want to transfer your balance on to another card, they will often charge you a transfer fee that could be as high as $75.

Also, transferring your balances to zero-percent cards may not be smart saving. The zero-percent rate cards will be relentless if you miss or skip a payment, often sending the zero percent rate soaring to nearly 30 percent. And once you clear your transferred balance, watch out! The interest rate will definitely move skyward after the payment period expires.

If you're due a refund, file your taxes electronically right now. Nearly 66 million tax returns were e-filed in 2004. Take advantage of technology because it can get you a quicker refund. If you use direct deposit, you can get your refund in approximately two weeks.

Don't pay to file your taxes electronically. Plus, if you file electronically, you'll make fewer computation errors with tax return software. E-filers have less than a 1 percent error rate because the computer software automatically checks your math.

"Rapid refunds" can cost you money. Refund anticipation loans may be a good deal for the tax prep company, but not you. These are loans, meaning you will pay interest and probably several fees. You should do the math before you take that loan.

For example, if you are due a refund of $1,200 and you go to a company that offers rapid refunds. You would likely pay a $29.95 fee for the loan, plus a $45 finance chage, plus a minimum fee of $50 for doing your taxes. So you would be paying at least $125 in fees, reducing your refund to $1,075.

If you file electronically using the free filing alliance and direct deposit, you can get the full amount of your refund in about two weeks.

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