Credit Card News

Finding the Right Credit Card

2009-06-02T23:44:00.000-07:00

Posted by Search EzineArticles.com on: 2005-08-12 20:24:29

There are so many credit cards out there to choose from that deciding which one to get can feel really daunting. What makes one offer better than the hundreds of others you’ve seen? Take this little quiz to find out what you should look for in a card.

First, Are You a Student?

If you are, then you’ll be best off with a student card – you’ll probably have trouble getting accepted for anything else. It would be best to contact the bank where you have your student account before you do anything else.

Do You Have a Balance to Transfer?

If you do, then you need to be looking for a card with a low APR on balance transfers – preferably one that stays low for more than a few months, unless you intend to switch often.

Are You Planning to Make New Purchases?

If so, then pay more attention to the APR for purchases, which is usually entirely different to the one for balance transfers. You should also look at what kind of grace period different cards offer, so you don’t end up paying interest on your purchases straight away.

Do You Pay Off Your Balance In Full Every Month?

If you have a lot of money or you only keep a credit card for emergencies, then you might just pay it all off each time you get the bill. If you do, then you’re in a position where you obviously don’t need to worry about the interest rate much at all, since you won’t be paying any interest (make sure there’s a grace period, though).

Many people don’t realise, but the credit card company still makes money from you even if you pay no interest – the money shops pay to be able to accept credit cards. The credit card companies want to give you some kind of reward for letting them make this money without causing them any trouble, and you basically have a choice of three things:

Get cashback. For always paying everything off, they’re quite willing to throw a few dollars your way. If you spend much with the card, this can add up to a tidy sum.

Take vouchers. You might, for example, be able to earn points as you spend that get you money off flights, or other rewards.

Give it away. If there’s a charity or other cause you support, the chances are that you can donate money to them using an affinity card. This is a credit card that gives a very small percentage of each transaction to your chosen cause, and over time it adds up to a pretty decent donation for them.

Take Your Time…

Don’t let anyone pressure you into making a decision before you’re ready. Any offer that says it’s for a limited time only is one you should ignore, as there’s no reason to do it other than as a sales tactic. Think hard about your spending habits and what you want the card for, consider all the options you can find and then, once you’re sure, go for it.

Ken Austin is the webmaster at Debt Consolidation Solutions and Credit Relief Solutions

Your Credit Card Payment Is Rising: Warning & Tips

2009-06-02T23:43:00.000-07:00

Posted by Joel Walsh on: 2005-09-19 20:25:47

Summary: Did you know your minimum credit card payment is rising? A new government program working to get Americans out of credit card debt is pushing credit card issuers to raise minimum monthly payments. Will you be able to make the higher monthly payment? Here are some tips for getting by.

If you're an American, your minimum monthly credit card payment may soon be doubling. If you're only paying the minimums now, you'll have to be careful to adjust your budgeting to pay more.

Who's Raising Your Monthly Minimum Credit Card Payment?

Whose idea was it to increase credit card minimum monthly payments? The Office of the Comptroller of the Currency, a bureau of the U.S. Treasury Department that has become more and more involved with reigning in the abuses of credit card companies. Yes, this credit card minimum payment increase was thought up by people trying to help you.

Who will be raising their monthly minimums? So far, some of the largest credit card issuers have agreed to the new standards. Bank of America has already been asking for the higher monthly minimum payment. MBNA, Citigroup (a.k.a. Citbank), Discover, and Chase (on some of its cards) will be breaking the news to their cardholders as Fall 2005 progresses.

How Much Will Credit Card Minimums Increase?

For many credit cards, such as MBNA and Bank of America, the new rates mean that monthly minimum payments will double.

Right now, the monthly minimum payment is only 2% of the balance on most of these cards. The new rate will be around 4% (the actual number may vary from card issuer to card issuer). This means that if you have the average American credit card balance of about $10,000, your minimum monthly payment will go from $200/month to $400/month.

Of course, if you have any additional fees, whether a late fee or a cash advance fee or any of the other fees that the credit card guys cook up, you will have to pay that, too.

Why the Credit Card Minimum Payment Increase?

You may be wondering why anyone would want to make you pay a higher minimum monthly payment. The basic reason for making you pay more is: for your own good.

According to Mike Peterson, co-founder of American Credit Foundation, by doubling the amount you pay per month toward credit card debt, you will cut down on what you pay toward interest by much more. Look:

Old monthly minimum payment of 2% of balance, $2,000 credit card debt at 18% percent interest:

* Time to pay off debt in full: about 30 years.
* Interest paid: about $5,000–two and a half times what you initially borrowed!

New monthly minimum payment of 4% of balance, same debt:

* Time to pay off debt in full: about 10 years. Time saved vs. old payment: 20 years.
* Interest paid: about $1,100–slightly more than half what you originally borrowed. Amount saved vs. old payment: $3,900.

Tips for Paying Double Easily

How do you pay off your new, higher credit card balance?

Stop Charging

Yes, you will have to make major sacrifices to stop using your credit card. But just look at all the money you'll have in ten or thirty years that you wouldn't have if you had to pay all that credit card interest. If you have trouble resisting the temptation to charge, here are some solutions that have actually worked:

* Give your credit cards to a friend or family member to hold in safe keeping.
* Freeze the cards in a block of ice.
* Never carry more than one credit card with you.

Economize on the Small Things

According to Michael Peterson of the American Credit Foundation, even tiny savings really add up when it comes to debt. His favorite example is the Diet Coke example:

* If you buy one Diet Coke a day at $1/day, that's $365/year.

* If you instead invested that one dollar a day at 10% interest (the average yearly return on major stocks over the last half century), you would be a millionaire within 56 years.

* Of course, with credit cards, this logic works in reverse: if you are lucky enough to be paying only 10% interest, fifty years of charging Diet Coke to your credit card will mean you've lost the same amount, not only in interest paid, but in the lost opportunity to save and invest.

* You don't have to put aside one dollar a day for fifty years to see a big difference. One dollar a day is $30/month, 15% of the average $200 increase in credit card minimum monthly payments.

* In order to get that entire $200 increase out of your daily budget, you would only have to save $200/30 or less than $7 a day. OK, maybe you aren't drinking seven Diet Cokes a day. But there are very few credit-card-holding Americans who can't cut $7 a day out of their spending.

* Saving weekly rather than daily, $200/month works out to about $45/week, or the cost of a restaurant meal for a small family--another luxury you might want to skip until you're debt-free.

Bigger Savings

* Taxes. Most Americans could pay hundreds of dollars less tax each year if they just took all the deductions they were eligible for upfront, rather than waiting to get a refund in April. By April, you will have spent a big chunk of money on interest on debt that you wouldn't have spent if you'd had the money at hand.

* Pleading. Call the credit card companies and ask if they can allow you to set up a payment plan, or at least provide a brief extension. Simply calling and letting them know you haven't forgotten about them can help keep you out of the worst trouble.

* Credit counseling. Credit counselors can talk with credit card issuers to help you get a repayment plan you can keep up with. They can also open your eyes to untapped sources of income you never knew you had, like kicking the $1,000,000 Diet Coke habit.

In short, don't panic. With only a little bit of planning, you can make the higher minimum monthly payment work to your advantage, just as the policy's authors intended. About The Author: Joel Walsh has written more articles on credit card debt counseling: http://www.debtguru.com [Publish this article on your website! Requirement: live link for last URL, anchor text: "debt counseling" OR leave this bracketed message intact. Permalink: http://debtguru.com/articles/credit-card-payment-rising.html]

Avoid Payment Holidays When Offered

2009-06-02T23:42:00.002-07:00

Posted by Jay Jackson on: 2005-10-13 00:47:58

Once you’ve been paying off a credit card for a while you might be offered a ‘payment holiday.' You’ll get a letter stating that since the company knows it’s difficult for some families around Christmas they’re offering you a month off from paying as a ‘special present.'

Why Would They Do That?

Offers of payment holidays typically have a very high acceptance rate. People think it’s great that they can take a month off from the stress of paying back debt. What they don’t usually realize is that these ‘holidays’ aren’t a present at all. They’re a great money-spinner for the credit card company. For the company it’s a win-win situation. They get to make big profits just by making their poorer customers happy.

How Can Letting Me Off Paying Earn Them Money?

That's the trick. If you read the small print you’ll find that the payment holiday isn’t interest free! You’re still being charged interest. And, since you’re not paying anything back that month the interest will be there next month for you to pay interest on - called compound interest.

This is interest paid on interest. That might feel a little hard to grasp, so here’s an example. Let’s say you were paying back $1000 of debt at 1.5% per month, about 19.5% per year. Your minimum payment each month is 2% or 26.82% per year.

If you pay the minimum for all 12 months of the year, then you will pay back $233.51 and owe $941.62 at the end of the year. Your debt has been reduced by $58.38 and you’ve lost $175.13 in interest.

With the payment holiday though, you pay 2% per month for only 11 months. So, you pay 24.3% back on the debt over the year. That’s $217.80, and you’d owe $960.55 at the end of the year. Overall, you’ve paid $37.86 for your payment holiday from a payment of about $20. In other words, your month off cost you almost two months of payments!

Don’t worry if you don’t understand all the math. It’s been deliberately designed by mathematicians and marketers to be as confusing as possible, to stop you working out what a bad deal you’re getting. Just remember, don’t fall for it. The more you owe the more that ‘holiday’ will cost you.

If It Sounds Too Good to Be True

Anytime they offer you anything, it’s because they’re going to make a profit on it. If you can’t see where their profit is coming from, be suspicious. About The Author: Jay Jackson writes extensively on eliminating your credit card debt from your life nad being free from debt burden. More tips, articles, resources and information are on his advice website: http://www.bustcreditcarddebt.com

Best Credit Cards

2009-06-02T23:42:00.001-07:00

Posted by Matthew Bourne on: 2005-10-13 00:20:50

Choosing the best credit cards to meet your personal credit needs is an important step to take. Credit cards are the best for short-term credit borrowing, and if you choose the best credit cards wisely, you won't be struggling with unmanageable cards payments either. But how do you go about choosing the best cards for your circumstances?

Making a decision about the best cards to carry

Deciding on the best cards to carry in your wallet or purse should not be left to chance. The best decision is to shop around for credit cards instead of plumping for the first credit offers that hit your doormat, as these credit offers are unlikely to be the best for you. Your starting point when looking for the best cards should be an evaluation of how you best intend to use your credit cards, as the best credit cards for you will vary with personal circumstances. For instance, if you want to use your credit cards as a convenient replacement for cash / debit cards when shopping, and your best intention is to pay off your credit balance every month, then the best cards are those that offer the best / longest interest-free period on purchases, and are available without an annual fee. On the other hand, if you are making a large purchase where the best part of your credit balance is to be carried over for several months then credit cards with a high personal limit and low APR rate are going to be the best.

Many people choose to carry several credit cards so they can move their debt around to the best of their ability without incurring substantial interest payments. The best cards for this purpose are those that provide 0% interest on balance transfers. The best credit companies will offer this for a limited introductory period, after which they will begin charging interest on the balance. The best way to further extend interest-free credit for a card debt is to open new credit cards that offer 0% on balance transfers when the introductory offer on your best credit cards expire.

Best credit cards - additional benefits

Aside from low interest rates, special balance transfer deals and the best personal credit limits, the best credit cards companies also provide a plethora of add-on services designed to be the best and attract us to sign up. Badged credit cards supporting a charity or prestige credit cards that provide discounted membership to associations such as vehicle breakdown services are popular, although they may not be the best cards for your circumstances. Many of the best credit companies also offer the best low-cost payment protection cover on their cards, so best protecting you in the event that the minimum payment cannot be met because of redundancy or ill health. Some of the best cards also allow you to service your credit cards account online.

About The Author: Matthew Bourne has been working in the loans, mortgage and life insurance industry for over 10yrs and is currently working for http://www.loansgalaxy.com

Top Credit Card Mistakes

2009-06-02T23:41:00.001-07:00

Posted by Sandra Lovelace on: 2005-10-14 01:20:42

When you’re dealing with credit cards, you’re playing with fire. Unfortunately, there are plenty of people out there who don’t realise that, and make all sorts of dangerous mistakes with their credit cards every day.

Paying Late.

If you don’t set up any kind of automatic payment, then it can be tempting to just put your credit card bill on a pile and get to it when you have time. Before you know it, a few weeks have gone by and you’re late. If you leave it to the deadline, you might find that the payment won’t get there quickly enough – it’s not a deadline for sending the money, it’s a deadline for them receiving it.

Paying late is a big mistake for an awful lot of reasons. You will almost certainly be charged a late payment fee, and your late payment will go on your credit report for everyone to see. You may also find that you lose any good rate you had, and your debt is automatically thrown onto the very worst rate the company offers.

To avoid late payment, you should always post your payment a long time before the due date (at least a week). If you’ve left it to the last minute, phone up and try to pay that way.

Being Taken in By Rewards.

It is never, ever worth getting a higher-interest card simply because it offers some kind of loyalty points, flight miles or whatever. Even if it offers a cash reward, it is unlikely to be more than you would pay in extra interest – after all, why would they give you free money? All ‘rewards’ do is pay you off with your own money to make you feel like you’re getting something for nothing. You’re not.

Collecting Cards.

Seeing some people opening their wallet or bag is a scary experience. It looks like they have about a hundred credit cards in there, some of which they haven’t used in years. They have trouble keeping track of all the different cards, balances and interest rates. Don’t be one of these people. You should limit yourself to a maximum of three cards at a time – any more starts to make you look over-committed in your credit report, and could get you turned down for a bigger loan.

Maxing Them Out.

Your limit is just that: a limit, not a minimum! Whatever you do, don’t get a card and immediately spend your whole limit. This looks very bad. It is better to spend about halfway regularly and pay it back. Wait for the company to increase your limit (which they quickly will), and then you’ll get that extra money without the stigma of having a maxed-out card.

Not Reading the Terms and Conditions.

Finally, as ever, don’t sign anything you haven’t read! I know it’s hard going and you’re busy and all, but if you can’t manage to read the terms and conditions then you shouldn’t get the card. Pay special attention to any future increases in rates, and what kind of fees you can be charged. About The Author: Sandra is a credit advisor who has helped hundreds regain their credit scores to respectable levels. Her blog can be found online at http://www.mycredit-card.com.

Credit Card Security Advice

2009-06-02T23:39:00.000-07:00

Posted by Search EzineArticles.com on: 2005-08-12 20:23:59

Which of the following is the biggest threat to your credit card security?

a) Shopping online with a credit card
b) Shopping in a real store with your credit card
c) Ordering something over the phone with your credit card

The answer may surprise you. It's b - shopping in a real store with a credit card. Despite all the controversy and publicity surrounding internet phishing and identity theft, shopping online is a relatively safe process. Credit card fraudsters are far more likely to get your credit card numbers and ID information by hacking into a bank or credit card company computer than they are to hack into an online store's server.

The truth is that there are some dangers to using credit cards in ANY situation - and there are ways to safeguard your information and security no matter where you shop with your credit card.

When shopping online…

·Only shop reputable sites. If a shopping web site has been around for a while, it's a pretty good bet that they're legitimate.

·Use an online money transfer service rather than your usual credit card. You can fund an account with a service like Paypal via your credit card or bank account - but your information isn't freely available. When you pay via PayPal, the only information that the seller gets about you is your email address.

When shopping in a real store…

·Keep your eye on your credit card. Stores with the latest tech in credit card scanning won't ever even handle your card - you slide it in the scanner yourself and it never leaves your possession. In stores that aren't that hip yet, keep your eye on what's happening with your card, and ALWAYS take your credit card receipt. Until everyone is using the latest scanners and printers that only print out the last four digits of your credit card, discarded credit card receipts are the easiest way for thieves to get hold of your credit card numbers.

When shopping by phone…

·Never, ever, ever give your credit card numbers to someone who called you. No matter how good a deal sounds, insist on being given the time to confirm the identity and company of the person you're speaking with.

As you can see, for the most part, common sense is all it takes to keep your credit card information safe!

Joseph Kenny is the webmaster of the credit card comparison sites http://www.credit-cards-info.com/ and also http://www.creditcards121.com/