Credit Card Articles

What to Do When Your Credit Card Company Tells You to Get Lost

Tue, 30 Jun 2009 00:00:00 GMT

You’ve just been informed that your credit card account is closed. But why? You’ve been a responsible cardholder and you’ve never had problems before. The good news is that you’re not alone in this situation. The bad news is that, well, you’re not alone in this situation. Credit card cancellation is on the rise, and there’s very little you can do if your card issuer decides to cut you off. Here are some helpful tips for anyone who finds themselves in this situation.

First, Don’t Panic

The closing of your account might have nothing to do with your behavior as a cardholder. Some people have been shocked to find that their accounts were closed even though they’d never missed a payment. Sometimes accounts are closed because the lender sees too many credit inquiries on the file. This is a sign of the times; credit card issuers are trying to minimize their risks, and anything they interpret as risky behavior can result in a decreased credit limit – or a closed account.

Talk It Out

It never hurts to call the credit card company and ask why your card was cancelled. You may have to speak to several people before you get a straight answer, but try to stay patient and polite. When you finally get the answer, calmly explain your situation and ask if there’s a way to get the account reinstated. If they won’t work with you at all, take your business elsewhere.

Practice Good Credit Etiquette

When your account was closed, you lost access to that line of credit. Now you’ve got less available credit, and your credit utilization ratio has grown. This looks bad to potential lenders. That’s why it’s more important than ever to be on your best credit behavior following an account closure. Pay down your other balances as much as possible, and be sure to make all of your payments on time. Don’t apply for other credit cards or loans right away.

Take a Spending Break

To minimize the impact on your credit score, try to keep your credit card spending to a minimum for the next month or two. When it becomes obvious that you’re not going to max out your remaining cards, your credit score will rebound.

Be Honest With Yourself

Having your account closed might be a signal that you’re in denial about your debt load. Take the time to sit down and honestly assess your financial situation. What is your debt to income ratio? How does your present situation compare to a year ago? If your debt load has been steadily rising, getting dumped by your credit card issuer may be a blessing in disguise.

This article has been provided by Creditor Web. At CreditorWeb.com you can compare over 100 credit cards from multiple banks and apply for credit cards online.

Understanding Credit Card Terms (Glossary)

Sun, 28 Jun 2009 00:00:00 GMT

Understanding credit card terms is a good way to stay one step ahead. If you can read a credit card application and understand the terms of agreement on your card – you'll be in better shape to use your cards responsibly and avoid falling into the credit card debt trap. Here's a glossary of the most common credit card terms to help you with your credit card education:

Adjusted Balance method – this is a formula used by many card issuers to calculate the amount of your monthly payment. Payments you made to the credit card account during the month is subtracted from the balance, and finance charges are added on to get the adjusted balance.

Annual fee – some credit card companies charge cardholders a once-per-year fee to use the card. It may mean the card offers great rewards or travel benefits, or it may mean you've got a credit card for people with poor credit.

APR - the annual percentage rate is the amount of interest a credit card balance is charged, annually. If there is no balance on the card, then there is no interest charge.

Billing Cycle - the length of time between billing statements, which can vary from one month to the next. The fluctuations in billing cycles can change due dates.

Charge back – a transaction that gets returned due to a consumer disputing a purchase made from a merchant; or due to the purchase being noncompliant with the merchant account rules.

Credit line – sometimes referred to as your available credit, the credit line is the amount your credit card company gives you to borrow. When you spend all of it, you've reached your total available credit and can't use your credit card until you pay down the balance.

Finance charges – the total cost of using your credit card, expressed in dollars instead of percentages, including the interest and other fees.

Fixed interest rate – credit cards with fixed interest rates don't fluctuate based on economic conditions. The rate CAN be changed by the credit card company however, if they provide 15 days notice to the cardholder of the change.

Grace period – a specific period of time when you could repay your credit card balance without having to pay interest or other charges. Not all credit cards offer a grace period.

Minimum payment – shown on your credit card statement, the minimum payment is the least amount of money you can send to your credit card company before the due date, to avoid having to pay a late fee for not making the payment.

Monthly periodic rate - part of the formula used to compute someone's credit card bill. It's multiplied by the amount of the outstanding credit card balance to get the interest rate charge for the billing cycle.

Secured credit cards – require the cardholder to give up collateral in exchange for receiving and using the secured credit card. Usually a secured credit card requires a deposit in the amount of the credit limit.

Universal default – a clause that states if a cardholder makes their payment late to a creditor, that credit card company can raise the interest rate on that credit card – and any other credit card accounts the individual has that participates under the universal default, can increase interest rates, too. So one late payment can result in all of your credit card accounts getting interest rate hikes.

Variable interest rate – some credit cards have variable interest rates. Which means they change when economic indicators change. Sometimes this is called a floating rate.

This article has been provided by Creditor Web. At CreditorWeb.com you can compare over 100 credit cards from multiple banks and apply for credit cards online.

Don't Make These 5 Credit Card Mistakes

Tue, 23 Jun 2009 00:00:00 GMT

Credit cards. Those two words provoke a pretty strong emotional response in lots of people. There are those who insist credit cards are a necessary component of a good credit history. And there are others who warn people away from anything wallet-sized and made of plastic. Most of us fall somewhere in between: we carry cards and use them, but we wish we could go back and fix some of the mistakes we made as new cardholders. Read on to learn from our mistakes.

Mistake #1: Too Much of a Good Thing

It’s good to have a credit card. Sometimes you need two major lines of credit. Three can help your credit score. More than that, and you’re setting yourself up for a fall. If you apply for a lot of cards all at once, lenders might think you’re gearing up for a spending spree. This will make you seem like more of a credit risk than you really are, and may keep you from getting approved for loans. And, of course, with greater credit limits comes greater temptation. Stick to two or three good cards.

Mistake #2: Getting Suckered by Introductory Rates

Remember when you’d open your mailbox and fifty “pre-approved” “zero-interest” credit card offers would come tumbling out? Those days are gone, but introductory APRs are still alive and kicking. Always make sure you read the entire cardholder agreement before you sign up. You may find that the low interest rate you agreed to will shoot sky-high after a few months.

Mistake #3: Making Late Payments

Sometimes late payments are unavoidable. But if you’re consistently late, or if you’re more than 30 days behind schedule, your credit report will reflect it. Plus, you’ll have late payment fees and up to six months of penalty interest rates (usually 29.9%!). If you suspect that you’re going to be late on a payment, do yourself a favor and call the card issuer to let them know. If this is your first tardy payment, they’ll work with you.

Mistake #4: Overspending

Some people think of credit cards as free money. Even when you’re conscientious, it’s easy to fall into a habit of carrying a balance from month to month. Do this too often, and you’ll hit your credit limit – and exceed it. Then you’ll be subject to over-the-limit fees, as well as a high credit utilization ratio. Being over the limits on your cards will drop your credit score. Avoid doing it at all costs.

Mistake #5: Not Reading Your Monthly Statement

It’s amazing what credit card statements can reveal. If you pay your bill each month without looking at the statement, you could be throwing your money away on unauthorized charges and billing errors. Some scammers even choose to make small purchases on their victims’ credit cards, banking on the fact that the victim won’t notice. Don’t let anyone abuse your credit! Glance over your monthly statements to make sure everything’s on the up and up.

This article has been provided by Creditor Web. At CreditorWeb.com you can compare over 100 credit cards from multiple banks and apply for credit cards online.

Debit Cards Quickly Becoming the Plastic of Choice for Americans

Thu, 18 Jun 2009 00:00:00 GMT

Visa Inc reports that consumers are spending more money on debit cards than with credit cards now. In 2008, Visa reported that consumers spent $206 billion on Visa debit cards, which is slightly higher than the $203 billion spent using Visa credit cards during the same year. Previously, credit card spending was higher than debit card spending and the flip flopping of preference is attributed to the recession.

Consumers are trying to avoid creating more debt, and using debit cards gives them the ability to do that. Now that debit cards can be used everywhere credit cards are accepted, it makes sense that American's would start making the switch.

Fraud Protections Not Created Equal Between Debit and Credit Cards

The fraud protections of credit cards are still superior over debit cards in most cases. If your credit card is stolen, by law the most you can be responsible to pay for unauthorized transactions is $50. If your debit card is stolen, the longer it takes you to become aware of it and report it, the more you may be responsible for repaying.

Some banks give their debit cards the same credit card-style fraud protection coverage. Visa says they require all banks issuing debit cards with the Visa logo on them to work with any consumer who reports fraudulent use of their card in the same manner as they would if it was a credit card. This means getting the money back to the consumer in a timely fashion. Some consumers think their should be government regulations involving debit card protections, but as of now there aren't any.

Some consumers don't use credit cards or debit cards due to security concerns. There are a number of banks who issue ATM only cards – which make it possible to withdraw cash from an ATM but these cards do not have a Visa or MasterCard logo and therefore cannot be used like a credit card at a retailer or online to make purchases. The benefit of using an ATM-only card over a debit card is that you can quickly access cash even if the banks are closed – but if someone was to steal your ATM card, they couldn't use it to make purchases. The only way they could steal from you is if they also figured out your PIN (personal identification number) to make a cash withdrawal from the ATM.

Debit Cards are Familiar in Appearance and Functionality

Some specialists think debit cards have started gaining in popularity because they look and work almost exactly the same as a credit card. You whip it out, slide it through the payment terminal or hand it to the cashier, and you're done. Instead of having to pay the balance back later (with interest), the debit card simply pulls your money from your bank account, and since it's your own money- it doesn't cost you anything extra in interest fees. Since you can only spend the money you have, you don't have to worry about costly bills later that you can't afford to pay.

Debit cards can be used to buy things by phone or internet just like credit cards, just by giving your card number, expiration date, and sometimes – the little three digit code on the back of the card.

This article has been provided by Creditor Web. At CreditorWeb.com you can compare over 100 credit cards from multiple banks and apply for credit cards online.

How Much Your Credit Cards Are Really Costing You?

Thu, 11 Jun 2009 00:00:00 GMT

Since the average American family has several thousand dollars of credit card balances to deal with, it's probably a good idea to have an idea of how much those credit cards are really costing you. At first glance, you might think they're costing you $40 a month, or whatever your minimum payment is – but the reality is, credit cards cost you a whole lot more than you actually spend using them if you carry a balance from one month to the next.

Using a credit card as a budgeting tool can actually help you meet financial goals. The problem becomes when we spend more than we can afford to pay back in a timely fashion, and continue to use credit as an extension of our available cash. Learn to use a credit card responsibly to avoid paying too much in fees and interest.

If you think it's no big deal to carry a credit card balance from one month to the next, here's an example of how much your credit cards are really costing you:

Interest Charges

Credit card interest rates range from 0% to 25% (or more!). The average interest rate is hovering around 15% The longer it takes you to repay your credit card debt, the more you'll pay in interest. People who pay just the minimum amount due, or less, may never get out of debt due to interest charges accumulating faster than your payments reduce your overall debt.

Interest rates on high credit card balances can cause you to pay two to four times as much as you actually charged on the credit card if you carry the balance from month to month instead of paying it off in full when you get the statement.

If you're able to get approved, you might be better off transferring your balances to a lower interest credit card, or paying them off with a low interest loan.

Keep an eye on all communications received from your credit card company because they can also raise your interest rates as long as they give you 15 days notice of the rate change.

Late Fee Charges

If you tend to forget to send out your payments before they're due, or run into financial problems that make it impossible to pay your bills before the due date, you should know that your credit cards will charge you a late fee of about $40. The late fees become part of your total balance owed and are subject to interest rate charges. Additionally, if you are late, many credit cards will also increase your interest rate.

Sometimes a credit card company will waive the late fee if you call and ask. Also, if you know before hand that you may be late making a payment, call ahead of time and request a grace period.

Annual Fee Charges

Not all credit cards charge an annual fee, but some of the best rewards cards have steep annual fees. If you're not getting a lot of value out of your rewards program the annual fee is a complete waste of money. Average annual fees range between $35 and $100. If not paid in full before the next billing statement, these annual fees are simply added to your card balance and subject to being charged interest.

Sometimes your credit card company will be willing to waive an annual fee if you call and ask. You may need to suggest you might move your balance to a different credit card to stop paying annual fees in order to get them to do it, but it's worth the try!

Falling behind on credit card fees and debt will start you on the vicious cycle of credit card debt.

This article has been provided by Creditor Web. At CreditorWeb.com you can compare over 100 credit cards from multiple banks and apply for credit cards online.

What You Should Know about Credit Card Debt Negotiation

Fri, 05 Jun 2009 00:00:00 GMT

If you've been overwhelmed by credit card debt, negotiation might sound like a great idea. But if you do decide to negotiate, prepare yourself for a long and bumpy road. You’ll probably have to make numerous phone calls to your credit card company, talk to endless managers, and agree to terms that are less than ideal. (Nobody ever said debt settlement was easy!) Before you begin, there are some things you should know.

Your credit score could plummet even more. When you first contact the credit card company to settle your debt, it’s likely that they’ll freeze your credit limit right away. If your cards are maxed out, that won’t matter so much. But if you’re well below your maximum credit limit, your credit score could fall as a result of the lower limit.

You might have to pay taxes. If you manage to negotiate a lower sum for your debt repayment, you might end up owing taxes on the portion of the debt that was forgiven. Whenever a lender forgives $600 or more of the principal, they file a 1099-C form with the IRS. This means that if you arrange a nice lump-sum payment at a discount, you’ll have to pay taxes on the difference. Note that this only applies to the principal, not to fees or interest rates that get waived.

Bad reports mean bad credit. Do you know how your bank will report your repayment efforts to the credit bureaus? Find this out before you agree to any arrangement. A partial debt settlement can be just as bad for your credit score as a total default. Also, if the bank reports partial payments, your credit score will suffer. As part of your deal, ensure that the bank will report your payments as on-time and in full. This is the stickiest issue surrounding debt negotiation, since you have very little influence over how the lender will handle the reporting.

What can you do if you need to negotiate your credit card debt? Experts recommend being honest about your financial situation and your desire to pay. Ask to have some of the debt forgiven, or ask for a lower interest rate so that more of your monthly payments go toward the principal. If you’re considering bankruptcy, let the creditor know; that might be the little shove they need to start working with you.

Most importantly, don’t make payments until you’ve got a written copy of the agreement. That way, you’ll have the terms clearly spelled out, and you’ll be able to produce the document in court if necessary.

This article has been provided by Creditor Web. At CreditorWeb.com you can compare over 100 credit cards from multiple banks and apply for credit cards online.

The Case for College Credit Cards

Thu, 04 Jun 2009 00:00:00 GMT

There's been a lot of scrutiny and criticism aimed at college-aged kids and credit card offers. Many college students are already accumulating debt through student loans, and some of the marketing arrangements between banks and college campuses feel downright slimy. But should you panic when your child brings home their first credit card? Here are a few reasons why college kids with credit cards might not be such a bad thing after all. In fact, you might want to encourage your child to get a couple of credit cards while they still can.

The cards are easy to get. In fact, experts agree that the college years are the time when credit is most easily available. Banks offer credit to students with the hope that these young people will become high-earning professionals who don't pose much of a credit risk. Extending a line of credit to young adults with bright futures is practically money in the bank.

The limits are low. No college student will be offered many thousands of dollars in credit, especially if they don't have a steady source of income. Many student credit card limits are $500 - $1,000. While that's nothing to sneeze at, it's unlikely that such an amount will cause financial ruin for the student.

It's never too early to start building a credit history. The length of one's credit history is an important part of their credit score. The longer an account has existed, the better. If your child gets a credit card in college, they'll already have an established history by the time they graduate and look into purchasing a car or home.

Help is available. Have you talked to your kids about debt? Maybe you've tried to be a good role-model; or, perhaps you're an example of what not to do with credit cards. Either way, your kids have been paying attention. Plus, many campuses are now offering - or requiring - financial management courses for college students. This is long overdue, and there are high hopes that such classes will lessen the temptation to abuse the plastic.

If your child is nearing college age, have a frank discussion with them about debt. Explain the difference between good debt (debt that brings a return on investment) and bad debt (going into debt for consumables or rapidly-depreciating items). Most of all, teach them the importance of living within their means and not viewing credit cards as ‘free money’.

This article has been provided by Creditor Web. At CreditorWeb.com you can compare over 100 credit cards from multiple banks and apply for credit cards online.

Keep an Ideal Credit Card Balance to Avoid Future Financial Problems

Tue, 02 Jun 2009 00:00:00 GMT

The average American household carries over $8,000 in credit card debt from one month to the next. In recent years, it was almost too easy to get a credit card. New high school graduates, college students, and individuals with problems paying their bills on time could all apply for, and receive, a credit card with their name on it. As the housing market came tumbling down, and more Americans started getting laid off – credit card lenders began tightening their purse strings and making it more difficult for individuals to get approved for credit.

How to Manage Your Credit Card Effectively

You'll read credit card advertisements everywhere that discuss the benefits of credit cards and how they serve to make lives easier. What you won't read as frequently, or see on television commercials, is how a credit card can ruin your financial future if you don't manage it effectively.

Credit card debt can take over your life. If you use too much of your credit limit or spend more than your maximum credit limit, you're not only going to end up paying additional fees to your credit card company – but you'll experience a drop of your credit score.

Managing a Credit Card Balance

Ideally, you'll use a credit card and pay it off in full the same month. If you need to make payments over a few months to pay off your purchases, create a budget and stick to it. Try to pay it off as quickly as possible to pay less in interest and finance fees.

If using your card to help you finance a large ticket item, you'll want to try and keep your total credit balance 35% to 40% of your available balance. This includes all of your credit accounts from credit cards to mortgages to loans. The closer your balance is to your maximum credit limit, the more it can affect your credit score (in a negative way). People who have used a lot of their available credit appear to be higher risk than someone who has a lot of money available to them.

Whatever you do, don't skip a monthly payment! If your finances become tighter than usual, at least pay the minimum amount due before the due date. This will keep you from paying additional fees for making a late payment, and can help prevent interest rate increases that are a result of making a late payment (and being considered a higher risk for default by the credit lenders). If you can, make another small payment to your credit card before you receive your next statement. It will help reduce your balance and lower the amount you're paying towards interest a little faster than if you only sent the minimum amount due on the statement.

Keep an eye on your payment due dates, because sometimes they change! Read the back of your credit card statement to see how many days it takes to apply a payment. While most companies honor the post mark date on mailed payments; some apply them based on the date they receive them. Most credit card companies tell you to mail your payment at least 7 days before the due date to ensure it gets applied correctly. If you use automatic or online payments, keep an eye on the due date to make sure it never changes to occur before your payment will be made. The billing cycle can range up to 7 days or so, which means your due date can fluctuate in either direction, causing your scheduled payments to be made after the due date.

Credit cards are very convenient when you use them correctly. Failing to use a credit card correctly will haunt you for years to come.

This article has been provided by Creditor Web. At CreditorWeb.com you can compare over 100 credit cards from multiple banks and apply for credit cards online.

Bad Credit? Don’t Get Taken for a Ride

Fri, 22 May 2009 00:00:00 GMT

Bad credit can be depressing. It keeps you from getting good rates on loans or, particularly in this economy, any loans at all. If you’ve ever been denied for credit, you know how lousy it feels to be discriminated against because of past mistakes. Of course, lenders use your credit history to determine how much of a risk they’re taking by lending you money or extending a line of credit.

Still, the fact that lenders need to protect themselves doesn’t mean you have to settle for predatory practices. If you have bad credit, there are ways to improve your situation without getting taken to the cleaners.

First, it’s important to shop around for the very best deal you can find. All sub-prime credit cards are not created equal. Some will squeeze you for every penny, while others have fair terms and conditions appropriate to your credit rating. Don’t waste your time applying for credit cards that won’t help you build up your credit score.

Beware of sub-prime credit cards that advertise low interest rates. The card issuer will recoup that money somehow, usually in the form of hidden fees and unfair restrictions. The low rate could just be a teaser rate that will skyrocket after a period of time. Most credit card interest rates are subject to change at any time, though there will soon be laws governing this. Also, some credit cards have monthly and annual fees, or account setup fees. These cards aren’t a very good deal if you’re getting a small credit limit to boot.

When you have bad credit, some lenders act like they’re doing you a huge favor by offering you a credit card. That’s because they are. Still, you need to make sure that you can use the card issuer to improve your credit score. Whenever you apply for a card, make sure the issuer reports to TransUnion, Equifax, and Experian. You want your timely payments to count for something! There are also cards that will upgrade to unsecured after you’ve paid on time for a year. Others offer credit limit increases after such a time.

Need to compare credit card rates? The Internet is a valuable tool. Go online to find the best deal on a secured or unsecured credit card for borrowers with poor credit. You’ll be surprised by how much the terms vary. Remember: the credit card industry is still largely unregulated, so it’s up to you to find a good deal and grab it. Good luck!

This article has been provided by Creditor Web. At CreditorWeb.com you can compare over 100 credit cards from multiple banks and apply for credit cards online.

How to Use Secured Credit Cards to Rebuild Your Credit

Thu, 21 May 2009 00:00:00 GMT

If you have bad credit, you probably know from personal experience just how difficult it can be to get approved for a loan or even a credit card. Bad credit closes many financial doors. But did you know that you can not only get a credit card with bad credit, but you can also use it to help rebuild your credit?

Secured credit cards give many sub-prime borrowers access to credit that they need, but can’t get through traditional means. Anyone can get approved for a secured credit card because these cards pose no risk to the card issuer. The credit limit is secured when the borrower deposits a certain amount of money into a bank account. This account is left alone unless the borrower defaults on their card payment, in which case the funds are used to cover the outstanding balance.

The amount of the required security deposit varies. Some credit cards require a minimum deposit of $200, while others require $1,000. The credit limit will be equal to the amount deposited in the security account.

When you choose a secured credit card, it’s important to make sure that the card issuer will report timely payments to the major credit bureaus. If they don’t, your credit won’t reap the benefits of your responsible habits. Once you’ve established that your repayments will be reported, make your payments a priority. Use the credit card for small purchases, and pay off the balance in full at the end of the month. If you do this for six months to a year, your credit score will improve and the card issuer might raise your credit limit.

Like other sub-prime financing products, secured credit cards can come with hefty fees and interest rates. These high fees reflect the amount of risk the lender is taking by giving the borrower a credit card. Some of these cards can have truly predatory terms, so always be certain of what you’re agreeing to before you become a card holder. Never pay more to open an account than you will receive as a credit limit. Don’t agree to terms over the phone; get a printed cardholder agreement that you can read for yourself, and don’t sign it until you understand the conditions.

Luckily, there is pending legislation that will limit so-called “fee harvesting” credit cards – those that subject the card holder to exorbitant fees without giving them a significant amount of credit. If you have suspicions about a secured card issuer’s ethics, move on to another source to avoid getting gouged.

This article has been provided by Creditor Web. At CreditorWeb.com you can compare over 100 credit cards from multiple banks and apply for credit cards online.