Stop me if you have heard this one before. A man and a woman fall in love, and get married. The man has bad credit and the woman has great credit. But they work together to get both of their credit scores as high as possible. One day, the man slips up and makes his payment to the credit card company late. Should this make the wife worried about her credit score? What should they do in that situation?
That Husband of Mine is Killing My Credit!
Well, slow down because your spouse may not be hurting you at all. First of all, you have different credit cards. That is the first thing to remember. So you are not completely sunk. If you still make your payments on time and make sure everything is ok then you should be alright. In fact, if you two keep your accounts separate, then you will come out unhurt in the situation. If your name is not on his account, and his name is not on your account, then every thing is grand. By not having your names on each others account, then neither one is liable for the other.
The problem comes when you have a joint account. Once you sign on to another persons account, or they sign on to you then both people are equally responsible. What you do will affect them and what they do will affect you. So you need to make sure everything is ok with their credit. It is a way you can help them maintain good credit while watching out for yourself as well.
Try To Get the Creditors to Have Mercy
Now, you may be able to swing one past the creditors. Usually these people pay excellent attention, because it is their job to focus on your score. But it might be possible for you to contact the creditors and explain the situation. If you let them know that if was not your account, but your joint account with your spouse then you might be alright. Either that or they can just tell you tough luck. But it is worth a shot. You may have to write a letter to them explaining what is happening, and you may have to wait a bit for the response. But if it works, then it will be worth it.
Help Your Spouse Control Their Credit
The easiest way to make sure nothing happens is to help your spouse keep their credit in order. Work with them to make sure bills get sent in on time and that no payment goes missing. Take a bit of control, and help them. It will be something you both can appreciate when you have no credit worries in the relationship.
Additional Resources:
0% APR, even though it can be limited, is a great thing. It can be very beneficial in the short time that you have it. So why wouldn’t you just apply for cards, and use them until the 0% APR expires, then just apply again for another card? Well it actually can be quite damaging.
Misuse of 0% APR
- You may just get cut off from getting cards.
The company will notice that you either keep applying for cards and only use them for that period, or they may notice that you are misusing these cards. They can then reserve the right to deny you any future use of the cards.
- You run the risk of missing a payment
All these free wheeling on these cards may cause you to be late on a payment. Since the companies are allowing you the opportunity to get 0% APR, they will be stricter on the payments. If you miss one, they you are in trouble. Then your APR will be very high.
- Opening and closing credit cards affects your credit history
This is a big one. If you keep up the process of opening and closing cards, then you may just run yourself right out of the cards that have 0% APR. So in your haste to catch the 0% APR, you may be limiting the overall time you can qualify for those cards.
- You will not be looked upon favorably if you cut corners
Companies thrive off your interest you pay. So if they notice you are just transferring your debt among cards with 0% interest, they will not be happy. Especially if this is something you are constantly doing. It may seem like a great thing to do, but know that you may be running the risk of getting reprimanded.
Be Smart About Your Use of 0% APR
Like I said earlier, 0% APR is a great thing to have. But, just like anything else, if you take it for granted then you can find yourself in some trouble. Do not take try screw the system, because you will be the one with the problems. These companies will work with you more if you work with them. So in the long term, even though the continuing 0% APR seems great, you may be better off with using that service and getting on with life after it runs out.
Additional Resources:
It is not an uncommon practice for someone to have more than one credit card. In fact, upwards of 5 credit cards is not that uncommon either. But is that a bad thing? Many people may have 4 or 5 but only use one of those. Does that hurt your financial standing? Even if you only use one and set the other 4 aside?
Those Other Cards Are Backups
First of all, having 5 credit cards may not be that great of an idea to begin with. But only using 1, and keeping those other 4 hid away for the merchants does not actually affect you. The less you can run up in credit card debt or payments the better. So you actually are doing yourself a favor by not spending freely on multiple cards. Multiple cards can be become troublesome when you decided to use all of them, for whatever reason. That is why it is always stated to be smart with your finances and know what you are getting into. Because having 5 cards is a good way to lose control and make some mistakes that will cost your credit score and finances dearly.
Don’t Keep Applying For Those Cards
The real trouble comes when you keep applying for credit cards. If you have 5 credit cards, and applying for them over a good amount of time, then you won’t take a major hit on your credit score. If you applied for, and receive 5 credit cards at the same time, then that is not good. That sends off some sort of red flag with the creditors, and makes them believe you cannot handle your finances in a good way. That is not something you want to make them think. But do not go and cancels those cards at the same time either. That is equally as bad. That also sends off the same signal of not being able to control your finances. You would think that by canceling accounts you show them you are managing things better. But it could make them think that things were getting on top of you.
So what you want to do is find a nice midrange. So maybe only apply for a card every 9 months or a year. But when you have reached 2 or 3 cards it will be time to stop. Because you have already stated that you do not need 5, which is why 4 are rotting in your wallet. So just do not have them. If they are store credit cards then that is another thing. But you really want to steer clear of store credit cards anyways. They do a lot more harm than good.
Don’t Become a Slave to the Credit Cards
Do not think you need to apply for credit cards by the bundle. Just stick with you 1 or two, and manage those correctly. That is your best options, and can save you from a world of hurt. Show that creditor who is boss. Do not let them push you around.
Additional Resources:
The Wedding Industry
Perhaps the most alarming thing about the wedding industry is just that. It’s an “industry”—like how space, big tobacco, steel, coal, pharmaceuticals, Hollywood, Detroit, OPEC, Martha Stewart and nuclear fusion are all “industries.” Over the last twenty years, wedding industry profit margins have increased by over 75%, proving that even when it comes to two people celebrating their entrance into a lifelong covenant of unconditional love and mutual solidarity, the business of America is still business. Perhaps the quintessential, albeit comic, image of the wedding industry first appeared in American theatres in 1991 with the release of Steve Martin’s remake of the1950 Vincente Minnelli classic that originally stared Spencer Tracy and Elizabeth Taylor: Father of the Bride. A critical, and humorous, difference between the 1950 film and 1991 remake is the pure absurdity of the 1991 wedding’s decadence. But while satiric absurdity rakes in money at the box office, the growing social expectation of a decadent wedding may leave many consumers coming to the altar with empty pockets and maxed out credit cards.
Reasons for NOT Charging a Wedding
$125 billion is roughly the size of Ireland’s GDP. It is also the amount of money Americans spent on 2.1 million weddings in 2005. The Fairchild Bridal Group estimates the average price of a US wedding at $27,327. Depending on how much you plan to spend on your wedding, paying for a wedding using a variable interest rate loan, such as a credit card, is a poor strategy if you plan to accrue a substantial amount of debt for the occasion. Additionally, if a couple uses a credit card with only one of their names on the account, the named member is legally responsible for the debt. This can be problematic in a country where credit card debt lasts longer than some nuptials.
Healthier Alternatives to a Plastic Wedding
Sit down with your fiancé and decide if you can postpone your wedding for one year to 16 months in order to save enough money to pay for the wedding in cash. Not all couples can wait. For example, if you happen to be a woman who happens to love riding bicycles or singing in public, and your fiancé happens to be a US citizen, and the State Department happens to be threatening to deport you back to Saudi Arabia when your student visa expires next Tuesday, then by all means marry your lucky sweetheart faster than Maureen Dowd can say “Robert Mapplethorpe”. Otherwise, consider postponing your wedding. You may also want to ask your family for financial support. Consider asking your respective parents if they can help alleviate wedding costs.
If You Must Pay for Your Wedding by Credit...
Protect yourself and your spouse-to-be! If you are paying for the wedding on separate credit card accounts, divide the cost of the wedding according to the percentage of money each of you brings to the marriage budget. If you produce 60% of your newly-wed income and your fiancé makes 40%, then place 60% of the wedding bill on your card and 40% on your fiancé’s. Most importantly, agree with your partner on a reasonable, time-specific plan to pay off the credit card debt once you are married. If the two of you cannot agree upon a reasonable plan to pay off the wedding debt within nine months or less, consider downsizing the wedding until it fits your budget, or postpone the wedding as you both continue to build your savings.
If you are an engaged couple, then you will want to look into The Knot Credit Card from American Express. This card helps you with all your wedding related expenses, and you do not have to worry about large fees.
Click here to apply for The Knot from American Express
Once you are a happy newlywed then you will want to check out The Nest Credit Card from American Express. When looking to transition into a joint account, and all other newlywed financial obligations, look no further then this card. It looks out for all new couples.
Click here to apply for The Nest from American Express
Additional Resources:
What Exactly is "Piggybacking"?
Having a poor credit rating can be detrimental if you are applying for a long-term loan, such as a mortgage. The difference of a single percentage point in your loan interest rate can translate into thousands of excess dollars owed to your lender. A poor credit score can even force your lender to deny you application altogether. Consequently, clever consumers are always on the lookout for smart ways to raise their credit.
Piggybacking is a financial process that allows consumers with poor credit to “buy” a better credit rating. The process is simple. Credit card holders are allowed to add multiple names to their accounts. Generally, this is used by married couples or by parents who want to help their children build credit history. A person who is newly added to an existing credit card shares the credit history of that account simply by virtue of being added. If the account has a long, established history of timely payments, the newly added person’s credit rating has the potential to increase—sometimes dramatically.
Piggybacking Can Be Profitable—For Everyone Except the Bank
Credit building groups, such as instantcreditbuilders.com (ICB), approach people with high credit ratings. Depending upon personal credit rating and the length of time a credit account has been open, groups like ICB will pay a consumer with good credit $100 to $150 to add a new name to an existing account. ICB will then charge a consumer with poor credit seeking to raise his or her credit rating $900 to facilitate being added to the account. ICB ensures that both parties do not have access to each other social security numbers. They also ensure that the newly added member is never issued an actual card.
Legal and Ethical Complications
Once the credit card agency makes its periodic report to the credit bureau, the consumer with poor credit is dropped from the account. However by virtue of having been on the account during the credit bureau report, his or her credit rating improves. This allows a window of opportunity in which to apply for a loan with an artificially inflated credit score. While piggybacking is technically not illegal, many lawmakers have begun to question its ethics and are threatening to address the practice through legislation. Fair Isaac, the organization that tabulates credit rating, has also announced plans to begin calculating credit rating in such a way as to close the “piggyback loophole”. Additionally, some financial consultants are concerned that lenders may possibly in the future attack piggybacking borrowers for “knowingly misleading” them into believing they had better credit and subsequently sue piggybacking borrowers for perpetrating a fraud.
Fraud and Identity Theft
Identity theft is a primary risk of piggybacking. Groups like ICB need tremendous amounts of sensitive identity information in order to facilitate the piggybacking process. While these groups strive to ensure that the right information never falls into the wrong hands, consumers need to be cautious when selecting a piggybacking firm.
Additional Resources:
The variety of credit cards available to consumers today can be daunting. The overwhelming number of options might make selecting the right card for you seem like a difficult decision. Don't despair, though, because there is an ideal credit card out there for everyone, and you can find it by following a few simple guidelines. By asking yourself some basic questions and doing a little research, you can discover the perfect card for your unique lifestyle.
Crunch the Numbers (and Read the Fine Print!)
Before searching for your ideal card, you will want to familiarize yourself with the difference between fixed-rate and variable-rate cards. Generally, financial experts recommend low, fixed-rate cards over low, variable-rate cards because variable-rate cards can change your rate regularly without prior notification. To find out when and if your rate may be changed, read the fine print that is usually buried in the mail credit card companies send you. Companies sometimes include loopholes whereby they may drastically raise your rate if you are late on a payment, for example. Also be aware of a card's APR, annual fee, grace period, penalties, late payment charges, over-the-limit fees, and cash advance interest rates before you sign. Knowing this information will serve you well both before and after you've found your perfect card.
Know Yourself
A large part of knowing what card is right for you involves knowing yourself and your individual needs. Several factors might influence which credit program is right for you, including credit score, income, age, current number of credit cards, spending needs, payment preferences, and special interests. Take a quick inventory of these factors to determine exactly what you want and need from a credit card. For instance, someone who pays a balance off in full every month will be shopping for a card much different from someone who tends to carry a balance month-to-month. You'll also want to consider any special interests you may have in getting a credit card. Would you like to earn frequent flier miles or cash back? Do you intend to use the card for business purposes or personal uses? Ask yourself these questions before embarking upon your search.
Don't Overvalue the APR in Your Decision
To ensure you are getting the best deal, you'll want to look at more than just the APR to decide on a card. Opting for the card with the lowest interest rate, or APR, doesn't necessarily guarantee that you are getting the card that will take the least amount of money out of your pocket. Other charges, such as late fees or annual fees, should also inform your decision. If, for example, after honestly reviewing your credit history you realize you probably will be late on a few payments, a higher interest rate card with lower late fees might be a better fit for you. In general, lower APRs mean you will spend less in finance charges, so look for a card with a low introductory rate. However, make sure you know how long this intro rate lasts, what the new rate will be, and whether anything else in your agreement will change at that point.
What About Pre-Approval and Card Perks?
Don't let pre-approval and/or special perks unduly influence your final decision. Pre-approval does not mean much; in fact, it usually just means the credit company has researched your credit history. Pre-approval does not mean that you will automatically get any special rates or deals by signing up.
Similarly, card perks can lure customers to credit cards for good reasons, but they can also be deceptive and costly. Some perks are worth slightly higher interest rates, some aren't. Be sure to weigh any special perks with your need to save money in finance charges. Often, perks that seem so attractive come with higher APRs, so try to find a balance between the two.
Additional Resources:
We all know that life brings many stresses with it. One of those stresses is credit card payments! We are all human, and sometimes we make mistakes. Those mistakes can be as little as losing car keys, or even worse, not paying your credit card bill. Both are bad, but the credit card bill is probably a tiny but worse. So if that happens, what is the worst case scenario for you? Can you actually be jailed for not paying your credit card?
The Slammer, The Clink, The Hole, The Cell, Your Destination?
I appreciate the concern you have for not paying your credit card bill. But honestly...jail? You will not be thrown into jailed if you do not pay your credit card bills. We are not dealing with a criminal issue here. This is only a civil issue. So do not worry about the police knocking on your door dangling handcuffs. The worst thing that can happen to you is a person showing up at your door with papers telling you they will see you in court. The creditors have the right to get their money. They want to recover that money quickly. So they will just start off by mail you notices, then move up to phone notices. When that option is exhausted, then comes the lawsuit.
Let’s Not Make Lawsuits An Option
Like stated earlier, the creditors want their money. They will be kind at first, and that is the only stage you need to be concerned with. The key factor is that they are being nice to you, even though you are late on your payments. So do not make them upset, and pay those bills immediately. You have been granted leeway, and you should be thankful for that. Do not be happy there is no jail time involved, and become relaxed on payments. If this happens too much, then your credit will be so messed up that you might as well have been in jail. Because you will be getting no credit or any financial backing anyways, because of your poor credit.
Jump On Your Problems Before They Jump On You
Remember, if you take control of your financial situation before it controls you, then these things will rarely happen. I know that unforeseen things will arise, and troubles may happen. But whenever you can, make sure you are doing the right thing with your money. Pay off bills on time, or as soon as possible. Do not let these things get over 30 days, because that is when the trouble begins to mount. So just be careful, and make sure you are also acting in your best interest. These creditors will always act in their best interest, because this is how they have managed a successful company. So do the same for yourself, and make sure you do not let things get out of hand. In the end, you do not want to find yourself in a court room having to pay extra fees on top of the ones you already owe.
Additional Resources:
We all are familiar with that little magnetic strip on the back of the credit card. We all know that it is very important on the card. But what happens if that strip gets ruined? Will your card still work? Don’t get all panicked…breathe and let’s find out what will happen.
The Magnetic Strip: The Key to Important Information
The Magnetic Strip on the back of the credit card is extremely important. Its name is CVV1. It is the holder of all the important information on the card. Information can be stored on there at anytime, and it can be accessed at anytime. But it can only be accessed by those who know the code to get the information (often through a PIN number). This is the most important part of the credit card, essentially. This is how you can make purchases, and access your bank information. So it is very obvious why you would need to keep this part of the card protected at all times. Some great damage can be done if someone unauthorized to use the card got a hold of it. Credit cards offer many important safety features to help you stop fraud from happening to your account.
What Happens If The Strip Gets Ruined?
Well, first of all, do not panic. You should definitely get a new card, but if you cannot, or you have to wait a while, then you can still use the numbers on the front of the card. All your information can still be accessed through the use of the number. But since the strip isn’t working, most retailers will recognize this and you will be asked to provide some extra information. This can be something like a zip code, and it is done for verification purposes by the bank or card issuer. This is done for your protection as a means to deter people who may have stolen your card or accessed your information. But you will want to get a new card as quickly as possible. Just know that in the mean time, you can still use your card. Just as long as the numbers are still readable on the front. Because credit card companies know accidents happen when it comes to their cards, they have expiration dates that help you have a fresh card frequently.
The Strip is Meant to Help You
It holds all your important information, and is the key to your finances. You can understand why it is a good idea to keep it safe. It is especially important to cut up your old card when you get the new one! Even if the strip does not work any longer you still need to cut through it, and cut through the numbers on the front. Protect all your information! Because you do not want the strip to fall into the wrong hands. It may seem like it does not work any longer, but people will still find a way to pull all your key information off of it. This is not something you want to happen ever. Just be careful and everything will be fine.
Additional Resources:
Amanda Robbins
Team Your Credit Network
Now, you may have been on top of things like bills and payments for the past year, and you are really cleaning up your act. Oops! You make a payment late! So you rush to the mailbox and make this payment. When will the credit card company report back to the credit bureau that everything is taken care of?
Reporting To A Credit Bureau
The most common practice of reporting to credit bureaus is every 30-60 days. 60 days is the extreme, with most everyone practicing the 30 days (or once a month) rule. So do not worry, they will acknowledge your payment within the month of turning it in. That is one of the perks of having a card that will report to credit bureaus. They do it for you, and all you have to do is make sure you check to see that it has happened.
Do I Get Credit For Turning In A Payment On Time?
Actually, there is nothing that states a company is required to turn in information whether it is good or bad. So if they are reporting only the bad and not the good, call them and ask that they to do so. It is not fair to be denied good standing when you do make payments on time. You should want to improve your credit score, and they should too.
This also is true if you are using your credit wisely. If you rarely ever go over your credit limit, then get them to report that. It shows them you are responsible. Start to make sure you build up trust and confidence as well. It will help you in the long run when applying for other necessary things.
My Company Does Not Report, Or When They Do They Only Report Bad Credit
Well if this happens, then let them know. You need to be with a company that respects you when you do well. Do not let them control you. You need to be in control at all times when it comes to the issue of your finances. If you are only aware of the bad, then other people will be too. You know you do twice as many good things as bad, and that should be your defining credit quality. And above all, there are many benefits to having a good credit score.
How does a credit bureau arrive at their score?
When you request your credit score from the bureau, it should come with the following:
- The information on their credit scoring model
- The range of possible scores
- What key factor may have affected the credit score
- The date the credit score was officially created
Just a tip on what you should look out for. This information will be important to look over so that you may have a better understanding of how your credit score has been determined by the credit bureaus.
Additional Resources:
Jay Dobbins
Team Your Credit Network
Sometimes time flies by, and important dates may pass us. Important dates like credit card expiration dates! We have all had it happen to us; noticing the expiration month is upon us and we forgot to order a new card. How much time do you have? When does the credit card officially expire?
Time has come for a new card
Don’t worry if you forget to get a new card right away. You actually have until the end of the month to use the card. But when that month is up, you better have that new card. Usually, the card will expire 4 years to the month that you got it. So, you have plenty of time to plan ahead and get a new card! Ok, I know…that is easier than it sounds. It would be easy for me to sit here and tell you to pay attention, even though it has happened to me as well.
Waiting for my new card……
Unfortunately there are not a lot of tips out there on what you can do while waiting for a new card. If you know your card will not come in time, then make sure you have enough cash for the few days you will be waiting for your new card. You will not need much, just enough to keep you a float for a few days. Also, make sure you plan ahead so that you will not need to make any large purchases with your card the closer you get to the expiration date.
The wait may seem like a long time, but it’s ok. The inability to spend money for a few days may work out to your advantage!
Don’t just throw out your old card!
Remember, the number on your old card will be the number on your new card. So you do not just want to throw out your old card, because unfortunately, someone could take it. Then they will have your card number, which is definitely not good. They could then run charges on your account.
So what you want to do is cut it up into small pieces, so it cannot be put back together. I hate to make you paranoid, but better safe then sorry!
If you do not want to cut it up, then here is a great use for it: Prison Shank From Canceled Credit Cards
Additional Resources:
Trey Knox
Team Your Credit Network
Credit inquiries are not something that should always be feared. Sure, they can harm your credit score. But they are also harmless in many ways. The trick is to make sure you do not make multiple inquiries for many resources within an extended period of time. Sometimes that is difficult to control. There are also instances when companies will need to make an inquiry about your credit score in order for you to obtain one of their services. I know this can be troubling, and unwanted. So is there a way you can prevent those companies from making those credit inquiries every single time?
Unauthorized Inquiries
First of all, you need to make sure every inquiry that is made about your credit report is authorized by you. If it is not, then get it taken off your report immediately. You do not want something to potential hurt you, especially if it was not authorized by you. Don't be fool by someone telling you that you have been pre-approved, or anything of that nature. There is no reason to settle for something, especially if there are inherent negative effects. The goal is keep your credit report as clean as possible at all times. Things like unauthorized inquiries can negatively affect you and are not worth it. Get those things removed as quickly as you can. Because it is not something that you want hanging over your head.
Is Prevention An Option?
Well unfortunately, companies will require an inquiry if they are going to allow you to apply for whatever they are selling. That is just the way it is. But many times you can prevent this by already having your credit report on your person. You also need to be familiar with it so you can answer the questions that will potentially prohibit people from making that inquiry. So there may not be much you can do to stop companies from inquiring, but there are ways you can get around it. It will just vary on the nature of service you are applying for, and how the company deals with the credit inquiries.
All you can do is be aware of how the inquiries work. If you are familiar with the process, then you can look for advantages. Also remember to be aware of how your credit report looks. That will save you a lot of time and trouble in the long run. That even applies to other aspects of your finances, not just inquiries. So do not panic, because inquiries are not the end of the world. Just know that there can be a limit, and be aware of when that limit is approaching.
Additional Resources:
Trey Knox
Team Your Credit Network
Let's just be honest, because we are all adults here. A credit card is the only reasonable financial device there is out there. Men, credit cards are like that gal that hangs out you, watches football and only talks during commercials. Women, credit cards are like that guy who goes to an off Broadway show with you, then engages in deep conversation with you afterwards over a mocha latte. Credit cards are reliable and will never leave you with any deep emotional trauma. The problem comes when you get tricked into relying on Credit Card's evil little financial brothers.
Payday Loans: Wait I Get Extra Paydays?
I know I just made a lot of you cringe out there. If you have had troubles with payday loans before then you know what I'm talking about. If you haven't then listen up! Payday loans are dangerous. Unless you think paying unhealthy amounts of interest is the starter to an exciting Saturday night. We're talking about up to 100%+ interest for one of these. They are called payday loans because you need money before payday, and then you will pay those loans back ON PAYDAY. Best of luck with that. You needed a payday loan because you did not have money. Now, are you going to take out another payday loan to pay off the first payday loan? Let the vicious cycle begin. Even payday loan sites like Personal Cash Advance say in their FAQs, "reliance on payday loans can create serious financial difficulties." Hey, they are just being honest.
Cash Advance: Free Money?
"Money given for you to use at your discretion." Ahh yes, it is as simple as that. Here is some money, have fun, and make sure to buy yourself something nice. Cash advances aren't grandpa. Grandpa will not make you pay back the money for your new shoes, plus money for him to get new shoes! Cash advance can't trick us, they simply just want to replace the hated name of payday loan. It seems to me like someone wants to deny the fact that they are on the same level as a payday loan company. I don't blame them.
Secured Loans: Low Interest?
You might have heard of these when walking into your local bank. They offer a pretty enticing deal when you look at the posters of low rate loans. But there is a definate catch to those tempting deals: Your house, your car, your boat, any item or asset you sign off to them on the contract can be forfeited to your lender if you have issues paying the loan back. Don't believe me? Check out the terms and conditions of the contract or the definition of secured loans. You give the bank the title to your assets and they hold on to it until the debt is paid back in full. Do you want to worry about loosing your livelihood if you have a problem making a payment? Maybe that low interest rate isn't worth it after all...
Unsecured Loans: Possible Answer?
Maybe your thinking of turning to a unsecured loan instead. It doesn't seem that bad of idea at first, but now it's time to look deeper. If you are in need of quick cash, it is likely your credit score isn't that great. Unsecured loans are beneficial when you have a very good credit score, as you will recieve a lower interest rate with a bank that trusts you. What about those with not so great credit? It just like a paydayloan, you will recieve a high interest rate. And even after you go this route with a credit union or your bank, you will end up spending the large lump sum quickly. Credit cards don't give you this temptation.
Credit Cards Welcome You with Open Arms
Listen, the concept of the payday loan or secured and unsecured loans is great. You get money when you need to use how you want. I wish that was something we all could get. But there is a reason why you need to rely on those loans, and I don't think shifting the cost over to quick loans makes the financial burden go away. Credit cards aim to love, not destroy. There is a reason you are extended credit, and not forced to pay overbearing interest charges. We know trouble will arise, and that you need a way to make things easier on you. I do not think anyone sits around wishing they could fall deeply into debt because they enjoy the action. There is a reason you can keep a credit card on you at all times. The card is a mainstay. It will not love you, then leave you on payday and take half your possessions. Rid your life of any evil financial giants, and let a credit card pull you through the dark times.
Additional Resources:
Trey Knox
Team Your Credit Network
So you have always made sure you followed all the rules set out by the credit card company. But one day they lower your credit limit, after all your hard work. Other then being frustrated, what can you do? I know you may feel helpless at first, but there are things you can do to find out why this happened.
Tips If Your Credit Limit Has Been Lowered
- Consult your credit score
In order to keep up to date with your credit, you should be doing this anyways to make sure you always know where you are standing. Check to see if any numbers have been drastically changed in any way over the past year to six months. If you stay on top of it, this step should be easy. A change in your credit ranking will definitely effect what amount the credit card companies will offer you.
- Make sure you find out if you were late on any bills
You may have sent your credit card bill in on time, but the mail service could have misplaced them. Unfortunately some companies will not be generous on their late terms. This can affect your credit score if it happens often. You can always be cautious and send in your bills before the end of your grace period or even early so that you will not have to worry about late fees or the effects on your credit score. Find out how late is too late with your credit card company, and pay your bill on time.
- Be aware of your financial situation at all times
Manage your money and your credit cards correctly. Make sure you don't do anything that would give them a reason to lower your credit. Try to keep a budget and an account of all your spending as you need to make sure you do not have any fraudulent charges on your account. Don't assume the online account summary is correct, take the time to sort out your expenses.
- Contact your credit card company directly
If in doubt, go to the source. If they cannot give you a complete answer, then something is definately wrong. They will be able to inform you of why it happened and how you can cure the situation in most cases. Generally they will even send out some form of a letter when your credit has been lowered to make you aware of the situation. Don't hesitate to ask the company if you have any questions; as much as they have lowered your line of credit, they do value your business.
People make mistakes, and the credit companies understand that. Every step of the way look for errors or things that could have affected you negatively. Don't rely on a mistake, but just be aware. The slightest mistake can be damaging. When you have found the mistake, learn what you can do to correct it in a timely fashion. Overtime the credit companies will forgive you. Keep at raising your credit score, and you will find the many benefits of having a high credit ranking.
Be Aware At All Times!
The main point of this blog post is to make sure you know what is happening financially at all times. If they lower your credit limit find out why and ask questions until you understand. Then find out how you can fix it. Don't just sit there and let it affect you. If there is a way to lower your credit limit, there is also a way to raise your line of credit back up. So be proactive and go find out how to improve your financial life!
Additional Resources:
Trey Knox
Team Your Credit Network
If you have had credit troubles, you may have had trouble obtaining and successfully managing a credit card. So, you often find yourself opening new cards (when you can), and closing out ones that you have tapped out. Well one day you just get tired of the cards you have and decide you are going to eliminate some. Do you really want to close out multiple cards at the same time?
What Should I Do If I Have Multiple Cards?
If you are tired of your cards and want to get rid of some, first thing you need to do is make sure you pay them off as quickly as you can. This should be something you are doing anyways. One way you can show you are financially responsible, which will raise your credit score, is to pay off your credit cards sooner rather than later. This shows that you are stable, and you will not appear to be a risk to the credit card companies. They like it when their customers are not potential problems; it makes them happy. You really should not put yourself in a situation where you have a great quantity of credit cards, but it is understandable where they may happen.
Well Is It Ok To Cancel Multiple Credit Cards At Once?
In a word, no. This should be avoided at all cost. Even if you have paid them off, which is good, canceling cards all at once is not looked upon as a stable thing to do. Remember, credit cards companies love stability. It can hurt your credit score if you keep applying for and canceling credit cards. It shows that you may be a risk at handling the amounts of credit you are allowed. So all that good you have done by paying off your debt, which helps your score, will go away. This unfortunately means that the mess will begin when you apply for many cards.
Tips For Avoiding A Dimemma
- Don't open multiple cards at once.
- Avoid store credit cards! They hurt your credit score, and may do more harm than good.
- Pay off your credit cards as quickly as possible.
- Manage your finances. You may find that you did not need all those credit cards in the first place.
- Don't close multiple credit cards at once.
You may think by canceling cards it shows that you have mended your ways, and now you are ready for great financial responsibility. Wrong! Just the opposite is true. The companies look at it as you saying you messed up in the beginning and did not realize what you were getting yourself into. Just avoid it!
Additional Resources:
Trey Knox
Your Credit Network Contributor
So you say you just maxed out your credit card and unsure what steps to take next. Such an event could be crucial to your financial status and lower your credit score if you don't act fast. This was your only card and you have always given thought into applying for another card, maybe even two more, but just never got around to it. Before getting putting a financial burden on yourself let's explore how many credit cards are too many to have.
ARE YOU A HEAVY SPENDER?
One of the main factors in determining how many credit cards you should own is your spending habits. Charging a lot on your cards is not that bad, it just depends on how long it takes you to pay back what you spend. If you are always mismanaging your charges, then that should be a red flag. The more cards you have, the riskier it will be for you to relieve debt and it may end up damaging your credit score. Adding the extra financial risk could cause you more problems than you want to create for yourself.
If you are unsure how to go about budgeting yourself and managing your money then you can always seek help from professionals. It is very important that when you have credit cards you can manage your other financial obligations as well. Getting in too deep if you are a heavy spender can leave you with large bills that might be hard to pay month to month.
LEARN A SIMPLE DEBT RATIO
Make it a rule never to go over 50% of your credit limit. If you have a credit limit of $6,000 then start to cut back once you reach $3,000. That way you are always aware of your situation. Plus you don't have to worry about reaching your limit and stalling your credit. This debt ratio can help you minimize the need for added credit cards. Plus it shows you that you can manage things without applying for extra cards.
BE AWARE OF THE STORE CREDIT CARD
Now here is a trick in figuring out the right amount of credit cards you should have. Store cards that save you 10% off each time you shop may look good, but looks can be deceiving! Each time you open one of those accounts, 20 points are taken off of your credit score. These cards may not be the best idea when looking for credit cards that can improve your score if it is low. If you do feel like you should open one of these cards for the holidays, pay it off immediately and close it. Having the card hanging around can be tempting and if not paid off can hurt you. If you cannot pay these cards off for a while, then steer clear. The interest that may add up could be higher then that 10% you saved.
MANAGE YOUR CARDS
Make all your payments on time. Waiting is not an option because it can hurt your credit score and you can pay more in interest. How many credit cards are too many? The best answer for that question is, more than you can handle. Do not get yourself into a financial burden that you can not handle. If you are financially stable then you might be able to handle 3 cards, but for some this is overwhelming. If you have many other bills a month then 1 or 2 cards might be more feasible. You should always make sure you are using legitimate cards from creditable companies. Visa, MasterCard, American Express are respectable credit companies that can be trusted with good service. Stay smart on budgeting your cards and it will payoff in the long run and cause less hassles.
Additional Resources:
What is a credit score? Why does a three digit number seem to control all financial aspects of your life? Are there any benefits to improving your credit rating?
These may be questions you find yourself asking, but first let's start with a quick overview of what a credit score really is. Your score is a numerical value that deems how much credit you have. The more popular way of determining a factor is a credit bureau risk score, and this risk score shows how likely and quickly you are to repay any money that you borrow through a loan. All this information comes from your credit report, so the higher the score, the better your rates. We cover more information about credit score basics at:
What do all these Credit Score Terms mean?
How to Improve Your Credit Score
What Can A Good Credit Score Do For Me?
So you may already understand the ins and outs of good credit rating, but what are the benefits of keeping your credit score high?
First and foremost is the ability to get a lower interest rate on loans - this is by far the most rewarding benefit! If you show a lender your great credit score, they will know you are reliable and able to make on-time payments; therefore, they will feel as though you are a low risk candidate and allow you to borrow without having to pay a lot of interest. If your credit is low, then they will not be so quick to give you a loan - but if they do then you will probably have a higher interest rate.
In many ways you are your credit score, and like it or not this is the only standardized way that lenders can judge your credit worthiness. The most unfortunate byproduct of this entire process is the fact that the highest interest loans are given to the people who are the least likely to pay them off; in short, a smaller loan with high interest often takes more time to pay off than does a larger loan with low interest.
Another reason for you to maintain a high credit score is for the ability to qualify for a no or low doc loan. These loans require less documentation of your income and assets than normal, since a higher credit score infers more responsibility. Once again, this is because of trust associated with higher credit scores. The higher your score, the less you have to actively document before a lender approved you.
Bad Credit Ratings...
If you have bad credit you may not be able to buy a home, or even rent an apartment since your credit score shows that you are just not be a risk that your landlord will be willing to take. Those places that may take you will often times require some sort of deposit, which can be non-refundable. This will be looked at as a payment in the event that something goes wrong. If you are planning on buying a home or car in the near future, a bad credit score will really affect you, and it may set you back as far as a year while you seek ways to repair your credit.
Trust Is The Main Factor
Now I'm sorry for my overuse of the word "trust" when it comes to credit scores, but come on! It's easy to see that good credit scores come from good payment habits, and the longer you maintain these habits the more likey you are to gain more trust from creditors as evidenced by things like lower interest rates or increased credit limits.
The moral of the story - stay on top of your credit score & spending habits at all costs, or it may end up costing you more than you bargained for!
Quick Credit Score Maintenance
Here are a few ways you can maintain good credit:
- Make all your payments on time. It sounds simple, but you can fall behind quickly and one missed payment can be enough to reduce your credit score substantially!
- Avoid closing old accounts and opening new ones. You want to show that you are stable if you can help it!
- Don't spend over your budget. Spend only what you can, when you can so you don't fall into credit card debt.
- Communitcate with your creditors. If you fall on hard times, tell them rather than just missing a payment. Most creditors have a payment program in place that will avoid you costly dings on your credit report, so often times a simple phone call is all you need to make!
Trust, stability, low risk - let this be your good credit score mantra!
Additional Resources:
James Thelander
Your Credit Network Contributer
Today we will be discussing which credit cards you can get if you have just recently turned 18 years of age.
When an individual turns 18 it is often difficult to get a typical unsecured credit card because a long-standing credit history is lacking (in most cases). However, there are a few routes you can take in order to get the credit card you need – you just need to consider where you are financially and where you’d like to be within the next 2-4 years.
Step One: Evaluate Your Current Conditions
Now that you’re legal you have the opportunity to take out a credit card in your own name, but since the world of credit is probably new to you choosing just one card from hundreds of options can be overwhelming. The first question to ask yourself is whether or not you’re going to be in school – if you are, then there are student credit cards available to you with some decent promotional rates and custom rewards programs:
Citi mtvU Platinum Select Visa Card
This credit card is for students who are looking to get a credit card for the first time. The benefits of having this Citi Platinum Visa Card is that it allows the individual to build credit as well as gives them reward points. The rewards are granted from spending money at specific businesses like move rentals, restaurants, book stores, etc. and are redeemed different depending on the student's GPA. This not only is an incentive to build your credit score, but also to get good grades while you are in school.
(For additional credit cards made especially for students, see our student credit card section.)
If you aren’t going to college or pursuing a higher education, don’t fret… you still have options! You may want to consider:
Total Visa Credit Card
This credit card is normally issued to individuals who have poor credit, or limited credit. In your case, for not having any credit at all it is the most likely to approve you.
New Millennium Bank Black Diamond Visa/MasterCard
This credit card is for individual who are having difficulty in obtaining a standard unsecured credit card (this credit card is by far the most popular for people who are looking to establish credit history.)
All Access Prepaid Visa Credit Card
This credit card is very easy to get approved for because it is a prepaid credit card that you must reload. If you do not reload this card with cash, then the you cannot spend money at all. It is a great way for someone to build credit without the risk of destroying it, especially since your spending is reported to the various credit bureaus.
(For additional credit cards for bad credit or people with no credit history, visit our bad credit credit card / no credit credit card section or our prepaid credit card section.)
If you apply for a student credit card and you’re not in school there may be consequences, so it’s best to build your credit with cards that are designed to help establish and build credit history.
Step Two: Establish Healthy Borrowing & Repayment Habits
Student credit card or otherwise, it is important as a new consumer of credit to establish healthy spending and repayment habits with your new credit card. Not only will these first few months of borrowing weigh very heavily on your credit report, but you will likely be paying much higher interest than most “regular” credit card customers with established history. Why? Because you don’t have credit history, credit companies try to prepare for the worst by giving you a higher interest rate; these rates often indicate higher-risk clients since about 70% of first-time cardholders max out their credit cards within the first six months. Even worse, of that 70%, and additional 53% go on to default on that debt within a two-year period, so it’s easy to see why they would hedge their bets with a higher interest rate.
Step Three: Mark Your Calendar
If you can successfully maintain good credit habits, you should generally try to apply for a new credit card of the regular variety within 8 - 12 months of your first credit card. At this point you will have established a solid history and will finally be eligible for higher limits, lower interest rates, and better reward programs. While most low interest credit cards might still be off the table (most require 3-5 years of near flawless credit history) that doesn’t mean you still can’t get a good deal. Try looking for credit cards from major issuers such as Citibank, Chase, or Bank of America that require “good to excellent” credit – though you may not have excellent credit just yet, you’re well on your way to getting there.
Additional Resources:
Margo Keith
Team Your Credit Network
So you just got a rejection letter in the mail regarding the credit card you applied for a few weeks back. Now the question becomes, how long should you wait before applying for another card? This can often be a burden, especially if the first try did not go so smooth. In order to make the process easier, you need to understand how and why you got denied in the first place.
Why Creditors Usually Deny Credit Card Applications
The first thing you need to do is make sure that the credit card company denied your application for a legitimate reason. Although mistakes of this type aren't usually made by creditors, they can happen. When you get rejected you are, by law, supposed to receive two different documents: the first document details the exact reason why you were turned down; the second document should provide you with the information of the credit bureau that provided the information to the issuer. If anything appears to be inaccurate within those reports, then you should follow up as soon as possible (this information is likely impacting your finances in many ways that you may not realize). Get your credit report from that same credit bureau and look over what they have done and why they have done it. If you find an error, make sure to have the false information modified or removed altogether. Then send back the new application to that same creditor explaining where you found the error and how you changed it. If you do not find anything that misrepresents your credit standing, you may also try to appeal the application; however, this process has a relatively low rate of success and that time would be better served working on ways to rebuild your credit score.
For information regarding how a credit score is developed please visit our blog post about what all those credit scores & terms mean.
It is also important to note that creditors encourage signs of previous responsibility. Make sure to show any previous experience in this area by making regular payments on old or bad debts - this helps them feel like you're good for the money no matter how old your debts may be.
Preventing Denied Credit Card Applications in the Future
There are steps you can take in order to make sure that you prevent these troubles from happening in the future. A few examples are:
- Pay your bills on time. If you have had trouble with bills recently, then get caught up.
- Pay off any debt you may have instead of shifting that debt around.
- Make sure you stay aware of your credit score. By constantly managing your score, you can stay in control.
Click here for more information about improving your credit score.
How Long Should I Wait Before I Apply for a Credit Card Again?
This leads back to how long you should wait before reapplying for a credit card after being denied the first time around. Understand the guidelines that the company has set out when applying for the card; because each company is different there isn't a hard and fast rule, but wait at least 90 days to allow any of your credit rebuilding efforts to post to your credit reports. When you reapply, make sure that the credit card's target credit rating is within your credit limit (more on credit scores...) That could be the original reason why it was denied. If this is the case, then instead of reapplying for same that card, you may consider apply for a credit card in a lower tier..
If you have gotten turned down for a credit card, do not continue to reapply numerous times for that card over and over again. First see if any mistakes were made, and if so, correct them. If not, then look to another company for a credit card. If you get denied by multiple companies, then stop applying and examine your credit score - 9 times out of 10 this is where the problem is occurring. Use the time you would normally be using for applications (typically 90 days for the same card) to start to raise your credit score. Pay off debt, catch up with any outstanding bills, and refocus your financial situation. The extra time it takes to restore your credit, may be worth the wait. Because using up all your time, just to get rejected for the credit card can become tiresome and pointless.
Phillip Sunders
Team Your Credit Network
For years we’ve been telling people to watch their interest rates and pay off credit cards as quickly as possible, since there is no reason you should be eating interest. Now for an even more important public announcement: Don’t eat your credit card!
Why shouldn’t you eat your credit card? Well, in addition to it making it difficult to purchase overpriced gasoline or a new TV to replace the one you broke due to a certain Wii mishap, it turns out they really aren’t that good for you. Who knew?
Ingredients:
Polyvinyl chloride acetate (PVCA) core consisting of multiple layers of fused, laminated plastic
Various inks and dyes for coloring
Various plasticizers for physical consistency
Magnetic inks and metal oxides
Ingesting PVCA isn’t exactly a good idea. While the alluring aroma and mouthwatering taste may be too much to resist, PVCA isn’t the modern man’s non-soluble fiber. Just look at how this little guy reacted to the lab tests:
Inks and dyes will probably stain your teeth more than that 10yr old cabernet sauvignon, and if you get a little too much magnetic ink, well, you might end up like this girl:.
Metal oxides are no laughing matter either; consult poison control immediately.
We hope that in some small way, this public service announcement helps you to steer clear from the dangerous habit of eating credit cards. Next week we’ll tackle the bitter taste left behind by sub prime mortgages.
Carrie Farnsworth
Your Credit Network
Source: Credit Card Manufacturing @ Answers.com
Earlier this month the Senate Banking Committee began a process that will take a long, hard look at the way American banks handle the credit card industry. Some of the items on the agenda include annual fees, credit card expiration dates, universal default pricing, double-cycle billing and late payment policies (to name a few). Each of these banking practices plays a major role in the way issuers handle your account, and the changes may very well impact your favorite credit card program. For the next few days, we’ll take a look at what each of these industry terms mean and how they affect your everyday life.
Day Four: Double Cycle Billing
Perhaps the most disturbing method of balance computation out there, double-cycle billing is practiced by over one-third of the credit issuing banks in the United States. The idea behind this billing method is the charging of interest on the total amount lent to a consumer during a billing cycle – not the amount remaining after that consumer pays their monthly bill. This means if you charged $2,000 on a credit card that computes interest using the double-cycle method and paid back $1,800 of that balance, you would still be assessed interest on the full $2,000 charge rather than the remaining $200 that you did not pay back completely.
Double-Cycle Billing By The Numbers
Let’s take a look at the numbers behind this practice. We will continue to use the $2,000 charge with $1,800 payment as previously mentioned. We will also assume an 11.24% interest rate in both cases, which is currently a fairly decent rate for people with good-to-average credit.
Double Cycle Billing Method
$2,000 x (11.24% / 12) = $18.73 paid in interest
Regular Billing Method
($2,000 - $1,800) x (11.24% / 12) = $1.87 paid in interest
The card with the double cycle billing paid $16.86 extra in one month – this means the card could cost them upwards of $200 per year extra just because of the billing method!
How to Avoid Double Cycle Billing
A recent Consumers’ Union study showed that more than 68% of people who used cards with double-cycle billing had no idea that their account was affected. What’s more, 92% of those consumers had non-double cycle billing cards available to them (sometimes double cycle credit cards are the only option for consumers who have less than perfect credit.)
What does this mean?
Some credit card companies will lure you in with fancy reward programs and other options, keeping the billing computation method in the fine print all the while. Say no to double cycle balance computations – make sure you know what you’re getting into before you apply!
Additional Resources:
Kimberly Carte
Team Your Credit Network
It can not be stressed enough how important having good credit is, it is the ultimate determining factor on how much interest you are going to have to pay when taking out a loan. Having a high credit score means less in interest therefore you save and for a low credit score vise versa. If you can increase your credit score by 100 points, you can pay less interest, pay more principle and get out of debt more quickly. In this country having a good credit score can make or break you.
Student Loans: A Good or Bad Thing?
Everyone knows that student loans can be very helpful while in school and your financial needs are high. Taking out those students loans have a huge impact on your credit scores. That small payment plans that they set up can seem like a helpful way to pay off the loans without having to sacrifice too much when you start paying back the money. If fact those small monthly payments could be hurting your financial wellbeing through increased interest payments on all your other bills.
When you have any type of loan, it shows the maximum credit, the outstanding balance and your payment history. The credit score takes into consideration the total amount of outstanding balances. The more you owe, the lower the score. Student loans almost always report to your credit report with inflated amounts. So, for your credit score, when you owe only $10,000 in student loans, it computes your score as if you owed $30,000! This can have a huge impact on the amount of interest you pay on the next loan you try to take out.
These student loans, in most cases are very needed towards schooling, are hard to turn down when they are willing to give a loan out to students that might not have much credit to start with. The thing that students taking out loans should remember is to always know what is going on with there credit scores and to always make the payments on time and if they can try to throw more money that way the loan will be paid off faster.
Looking Down the Road
For the future we all want to have the highest credit scores we can because it is only going help us save money and it will be less of a hassle getting money when we need it. Student loans are a form of a loan designed to help out students while they are in school. Most student loans do not have to be paid back until one graduates from the school they are attending, so it is important to know what is happening with the money.
If one is able to stay on top of they finances and pay off these loans then that will have a huge impact on your score. You may see a huge rise in your credit score just because of the fact you were able to stick with the loan and pay off what you borrowed plus the interest.
Student Loan Tips
There is much advice that can be given on the subject of student loans, some good some bad. It is important to your financial health to know what is going on with your credit score and what needs to be done to ensure that your credit score does not get ruined.
Here are a few great pointers to keep in mind:
- Pay your student loan bills!
- If you can pay the interest on the loan while in school, then pay more towards the principle once done with school.
- Consolidate your student loans to improve you score.
- Always understand what you owe and your credit score.
Although some of these tips might seem like common sense they are very important and can have a major impact on your credit score if you neglect paying attention to them.
Additional Resources:
Phillip Sunders
Team Your Credit Network
Diamond. Platinum. Gold. Regular. Silver. Perfect. Premier. Elite. Rewards.
These are just a few of the words used to describe the 200+ credit cards offered by Your Credit Network – the trouble is, how do you as a consumer know the difference? From perfect to platinum, and rewards to regular, this blog entry will explain the basic differences between the various credit card types so you can make the best decision when applying for a credit card online.
No matter which word a credit card company chooses to use to describe a credit card, there are two basic types: platinum and regular. These two types of cards are usually issued to a consumer based on their credit history, and though the differences in specific reward programs can vary from company to company, the basic principles behind why certain features are available remain constant.
Good credit can take years to build, but a sure fire way to get on the path to great credit is by making regular payments every month. We cannot stress enough how much missing a payment with hurt your credit rating – you’d be surprised how many platinum credit card applications are rejected on the basis of just one missed payment!
Platinum Credit Cards and Their Perks
Platinum credit cards often have many perks available to their members, due to the fact that the cardholders usually have very high or great credit scores. Platinum cardholders work their way up the ranks by paying and establishing better credit for themselves. Some of the great advantages that may be associated with platinum credit cards are:
- Lower interest rates
- Higher credit limits (and more frequent credit limit increases)
- No annual fee
- More benefits, savings & rewards, including:
- travel accident insurance
- fraud protection service
- cash back programs
- frequent flier miles
Platinum credit cards offer such great rewards because credit issuers are trying to cater to people with excellent credit. If a credit card company sees that you have outstanding credit they are going to want to keep your business, which is why so many offer platinum credit cards to set you apart from the people with just good credit. Being offered a platinum credit card is a company's way of rewarding you for having great credit, while at the same time trying to attract (or maintain) your business.
Regular Credit Cards
Regular credit cards (such as gold, silver or cards without fancy titles) are more for establishing or rebuilding your credit. You might not be getting the same rewards as a platinum card, but you are building your credit while taking advantage of the customer service for which many banks are well-known. With these cards, you are not offered as high a limit and you may face higher charges if you fail to make payments. As long as you pay the bills on time and build your credit then you may be offered a platinum card in as little as three months.
In many cases these cards are used by people that don't have as many assets at their disposal – students would be a great example of this. Students usually don't have platinum credit cards because they do not have excellent credit, nor do they often own homes or other larger assets with which credit might be built. Even though regular cards don't have the same perks as a platinum card they do offer some attractive features:
- Fair APR
- Reasonable credit limits
- Low annual fees
- Limited benefits & rewards, including:
- cash back programs
- extended warranties
How to Get Platinum Credit Status
With most cases platinum credit cards are just not for everyone, especially if you have a troubled credit history. It may take years to earn the status that comes along with being a platinum card holder, but establishing yourself as borrower who can pay off debt in a reasonable amount of time is the first step toward gaining great credit. Once you have shown credit card companies that you have the ability to pay your bills and you're not a risk, they just might offer you a platinum credit card.
Additional Resources:
Phillip Sunders
Team Your Credit Network
Earlier this month the Senate Banking Committee began a process that will take a long, hard look at the way American banks handle the credit card industry. Some of the items on the agenda include annual fees, credit card expiration dates, universal default pricing, double-cycle billing and late payment policies (to name a few). Each of these banking practices plays a major role in the way issuers handle your account, and the changes may very well impact your favorite credit card program. For the next few days, we’ll take a look at what each of these industry terms mean and how they affect your everyday life.
Day Three: Universal Default Pricing
One of the more controversial processes used by credit card companies to compute an individual’s interest rates is called “Universal Default Pricing,” which maximizes a cardholder’s interest rate if the cardholder defaults on any of their other financial obligations. This practice has been met with significant protest from consumer advocate groups and other credit reform lobbyists, but businesses defend their actions by claiming self defense – that is, they are protecting themselves from credit consumers like you.
The concept of a “universal default” is not new, but it is a practice that is becoming more commonplace in the credit card industry. The idea behind a universal default is simple – if you default on a loan or financial obligation in one location, you are likely to start missing payments with other companies as well. A credit card company would then issue you default rates even though you may be in good standing with them as a means to offset the cost of a missed payment you haven’t yet made; with a universal default, you have the potential to pay the price for one mistake at many locations and with many accounts.
It’s easy to see why this practice has done far more than raise a few eyebrows, but should it be legal? Who benefits? How do you know if this even affects you?
Universal Default: Who Wins?
The credit card companies obviously win with increased APR and fee structures, especially since a universal default is by definition a preemptive process that anticipates a period of financial difficulty on the part of the consumer. If they collect additional money from an individual to whom they impose a universal default and that person never misses a payment, then the issuer has earned extra cash without any extra work (it’s basically free money); if the client were to miss payments, then they will have recouped more funds than they would have otherwise (industry standards have net loss on universal default accounts at close to 10% as compared to non-default losses of 45%.)
Surprisingly enough, some consumers benefit from the practice of universal defaulting as well. Most of the larger credit issuers say that the money collected from the process allows them to extend credit to people that would not otherwise be eligible, so universal defaults do actually benefit consumers to some degree.
Universal Defaulting: Who Loses?
People with financial worries tend to be the ones who are cheated by the universal defaulting process, and many would argue that these people are the last ones who need any sort of added financial consequence since one default will have already been punishment enough. Most consumer advocate groups argue that imposing additional fees on financially troubled clients for actions they haven’t yet taken is entirely unfair and violates privacy restrictions as imposed by the FTC.
How to Spot Universal Default on a Credit Card Application
About half of all the major credit card banks use universal default practices in some form of another, though they each have their own ways of describing the process. The best way to know if you’re at risk of a universal default pricing measure or provision is to call your issuer and ask – they’ll know what a universal default is. Additionally, be completely aware of the rates when you apply for a credit card!
Kimberly Carte
Team Your Credit Network
Earlier this month the Senate Banking Committee began a process that will take a long, hard look at the way American banks handle the credit card industry. Some of the items on the agenda include annual fees, credit card expiration dates, universal default pricing, double-cycle billing and late payment policies (to name a few). Each of these banking practices plays a major role in the way issuers handle your account, and the changes may very well impact your favorite credit card program. For the next few days, we’ll take a look at what each of these industry terms mean and how they affect your everyday life.
Day Two: Shorter Expiration Dates on Credit Cards
 Another credit card attribute up for discussion at the aforementioned Senate hearing is the duration of expiration dates; specifically, why shorter expiration dates should become the standard as opposed to the usual three-to-four year span to which we are all accustomed. Today we talk about why credit cards usually expire 4 years after the month it was issued, and why you would benefit from a shorter expiration date.
Expiration Dates: A History
When you visualize a credit card in your head, what do you see? Embossed numbers? A Visa, MasterCard, American Express or Discover logo? The all too familiar shape and texture? Are you missing anything?
 Yes – the magnetic strip! (Learn more about magnetic strips here.)
A magnetic strip what makes your credit card your credit card to the millions of machines out there that could potentially process a purchase; the trouble is, the magnetic strip has a shelf life of (you guessed it) three to four years if used gently. Keep in mind this standard was developed way back when credit cards were first introduced and it hasn’t necessarily evolved to the credit card-based economy that we know and love today, so the primary reason a credit card expires after four years is simply a means of getting you a fresh credit card strip since yours is likely to be worn out. (These days credit cards last about 18 months on average, so the old ways are already grossly out of date.)
What Does the Expiration Date Do Now?
63% of all consumers report that they order a new credit card well before the expiration date rolls around, so why have an expiration date at all? Why can’t we just let the credit card run its course and let the consumer decide when to get a new one?
The answer: cardholder verification. (Sort of.)
 Credit card companies have shifted the importance of an expiration date from the simple convenience of a stress-free swipe to a means of verifying that the cardholder actually has the card in their possession. This is handier for non-electronic transactions since both the credit card number and expiration date are recorded on the magnetic strip, so once again the expiration date is becoming more obsolete as everything is processed either online or through an electronic payment processing system.
Credit Card Expiration Dates: Protecting Your Consumer Rights?
At last we arrive at the new crux of credit card controversy – expiration dates as a means of safeguarding consumers against the “predatory lending practices of credit card issuers,” as was phrased by one of the advocacy groups testifying at the Senate Banking Committee hearing.
The argument: expiration dates no longer offer convenience by anticipating the breakdown of the magnetic strip (they fall short by several years); they no longer protect against point-of-purchase credit card fraud (92% of all credit card purchases are handled electronically in the United States); why, then, could we not use the expiration date as a means to regulate the contract between the cardholder and the creditor?
Why is this important?
The financial climate has altered significantly from the inception of an “ideal relationship” between a lender and a borrower, so the credit card industry practice that exists is not only completely advantageous to the issuer, it also keeps the cardholder largely in the dark about changes to their accounts that could easily impact them in a very big way. Here are some examples:
- Most credit card contracts allow the issuer to change the terms of an agreement with just 15 day’s notice; this means promotional balance transfer APRs or other special rates could change in the middle of a billing cycle, thus costing you added interest expense without giving you adequate opportunity to move the balance elsewhere if you chose to do so.
- Credit card contracts are the only instance in the United States common law where the party with the superior position can change the contract at any time for any reason without mediation.
- Contract/rate changes are often included in very light print on the back of a credit card statement, making a seemingly normal credit card bill morph into a codified document of acceptance without the obvious indicators of a legal document.
The consumer advocacy groups argue that credit card expiration dates ought to be shortened to a year, and at that point a consumer could review the current state of the lender/borrower agreement and make sure it meets their expectations; if it didn’t, they would be given plenty of time to seek other creditors. They would also be proactively replenishing the life of their magnetic strip and protecting themselves on the rare occasion that they did need to use the expiration date for verification purposes.
Wrap Up – Aspire to Expire
 This is much less controversial than the previous post about mandatory annual fees for credit cards, since it just makes sense to reduce the expiration dates to meaningful number that keep a credit consumer in the know about their account rates and status. If you are interested in having your voice heard on this particular issue, tell your senator and they will forward your opinion to the Senate Banking Committee.
Kimberly Carte
Team Your Credit Network
Earlier this month the Senate Banking Committee began a process that will take a long, hard look at the way American banks handle the credit card industry. Some of the items on the agenda include annual fees, credit card expiration dates, universal default pricing, double-cycle billing and late payment policies (to name a few). Each of these banking practices plays a major role in the way issuers handle your account, and the changes may very well impact your favorite credit card program. For the next few days, we’ll take a look at what each of these industry terms mean and how they affect your everyday life.
Day One: (Mandatory) Annual Fees For All Credit Cards
Today’s topic is the policies behind annual fees on credit card offers. At the moment, there is no regulatory law or rule in place that governs how the banking industry chooses to impose annual fees on credit products – but one of the things being discussed is the possibility of a mandatory annual fee for all credit card consumers. You read that correctly… a mandatory annual fee for all credit card holders. While this may seem to be an outrageous suggestion that benefits no one, let’s examine what an annual fee does and why the Senate is talking about making everyone pay one.
Credit Cards & Annual Fees – A Definition
Annual fees cover the average cost of a credit card holder to the issuer by guaranteeing a stream of revenue from every client at least once a year. Every time you access your bank’s website, make a phone call to a customer service representative, or mail in your payment, it costs the credit card company something to process the transaction. If you pay an annual fee for the services your credit card company provides you, then their costs for maintaining you as a client are covered; alternatively, if you do not pay an annual fee they must seek that revenue elsewhere.
The Government Accounting Office estimates that 50% of all credit card holders pay their credit card bill back in full at the end of each month. This essentially means these clients are getting an interest free loan from their credit card, which makes their value to the credit card issuer significantly less than a person who continually carries a balance and pays interest on that amount. Annual fees began to disappear from the more mainstream credit card products in the late 1980s as a means to lure consumers from competing banks; by the mid-to-late 1990s these fees were all but eliminated. In order to make up the lost money, banks began pressing the people whop are the least capable to pay them back – the clients with fair to poor credit ratings.
What Annual Fees Are Doing Today
Interest rates for people with poor credit are insanely high, but (perhaps more interesting) so are the rates of people with great credit who happen to miss a payment or two. The “no annual fee” craze brought about a wave of change that no one could have anticipated – a change in the way credit card companies do business. It makes sense if you think about it: credit card companies don’t have a guaranteed source of revenue, so they have to maximize every opportunity to make money off of every client in order to guarantee that they will serve their stakeholders and remain profitable. This gave rise to more hostile rate increase practices, steeper late fees, and less leniency when it comes to any sort of credit dispute.
Wrap Up – To Fee or Not to Fee?
Let’s examine both sides of the argument:
Mandatory Annual Fees work because they will lessen the pressure on banks to collect money at any needs necessary. This translates to less interest rate gouging toward less affluent groups (those with bad credit) and more opportunity for good credit clients to make mistakes without fear of unfathomable wrath in the form of rate increases. Another argument for this mandatory practice is the fact that all clients who use a service ought to pay for it, so while using a credit card is basically free at the end of the month if you pay it off entirely, that does not mean you shouldn’t be paying for the convenience of the service.
Imposing Mandatory Fees is a Bad Idea because it should be up to the credit consumer to decide their own financial fate. While it is true that individuals with poor credit may pay rates up to 10 times higher than that of a good credit customer, they are also not obligated or forced to take on this responsibility and therefore do not have to apply for a credit product.
Where do you stand? What do you think? Let us know!
Kimberly Carte
kimberly@youcreditnetwork.com
Team Your Credit Network
Today we’re taking a break from the usual facts and figures offered up by the Your Credit Network Blog to answer some of the fun credit card trivia questions that have been rolling in. Here are the top three that we received in January:
Why Are Credit Cards All The Same Size?
Credit cards are all regulated to meet the same ISO 7810 standard, which is also the same standard used for identification cards (such as your driver’s license) around the world. ISO stands for the International Organization for Standardization – a multinational association responsible for settings standards for any number of products that you use every day. This makes sense if you think about it… how else would ATMs or merchants in Canada, the United Kingdom, or any other country be able to accept your credit card if you traveled abroad?
Credit cards are 3.375 inches wide by 2.125 inches tall, with an average width of 0.76mm (or 0.02 inches). This size was supposedly established by Bank of America in the 1950s with the introduction of the “Bank of Americard” credit card; this credit product would later evolve into the Visa network as we know it today.
What Information is Contained in the Magnetic Credit Card Strip?
The magnetic credit card strip contains three sets of data, also known as tracks, which contain information about you and your credit card.
Track one contains the most detail about you and your card because this track can hold up to 210 bits of information per inch; as such, it is also the only track that may contain letters of the alphabet. It is also the most sensitive of the three tracks, which means it can be easily damaged by magnetic fields or normal wear & tear.
Some of the fields on this track include:
- Primary account number (not to exceed 19 numbers)
- Name (not to exceed 26 characters)
- Expiry/expiration date (4 characters)
- Extra data, such as your Personal Identification Number (also known as PVV, or the Personal Verification Value)
Track two contains the most basic set of information needed to process a credit card transaction and may only hold 75 bits of information per inch. This track allows for basic processing of credit card transactions in the event that the first track is too corrupt to process.
Track three is the oldest of the tracks and is not used for the most part. Most of the major credit card issuers do not even issue credit cards with this track in order to reduce the size of the magnetic strip that is present on their credit card products.
How Do They Pick Credit Card Numbers?
Credit card numbers are determined using a sequence called the Luhn algorithm, which doubles every other number in a credit card’s sequence and then takes the sum of all numbers and divides that by ten. If the resulting product is a whole number, then the credit card number used is valid; otherwise, the credit card number is not valid. The final digit of a credit card is used as a checksum to provide additional security to the Luhn sequence – this ensures that all attempts to fabricate a credit card number have a 10% chance of working from the get-go.
The first six digits of a credit card number determine which of the major credit card networks issued the card in question.
- Visa credit cards begin with 4xxxxx.
- MasterCard credit cards begin with 51xxxx, 52xxxx, 53xxxx, 54xxxx or 55xxxx.
- American Express credit cards begin with 34xxxx or 37xxxx.
- Novus/Discover credit cards begin with 6011xx.
Additional Resources:
Kimberly Carte
Team Your Credit Network
Alright, instead of posting an article about where credit as been within our society and where it is going, I thought it’d be more fun to make a play on words, and choose the credit / finance / real estate blog that I thought was the most influential, informative, or entertaining; one from every state. It wasn’t easy to track them all down, since some states obviously have more blogs than others, a lot of blogs are registered privately, and there are a ton of great blogs that happened to be in the same state as some other wonderful credit blogs, but thankfully I think it worked out, and I learned a lot!
Without further ado, the states of credit. Links are to the most recently read blog post for each blog; you’ll want to add these to your RSS feed reader, because they really are great sources of information.
If you enjoyed this and want to see more, or if you want to see something completely different, e-mail us at carey@yourcreditnetwork.com and we’ll cater to your every credit whim.
Carey Farnsworth
Team Yourcreditnetwork
It shouldn’t be a secret to anyone that low interest credit cards are typically reserved for people who have excellent credit scores, but if you’re like most Americans you have a bittersweet relationship with your credit history. While this may prevent you from getting the low interest rate you want in the short term, there are certainly a number of things you can do in the long term (6 to 12 months) that will significantly increase your chances of qualifying for a low interest card in the future. This blog entry will discuss more details about your credit score, what trends creditors look for on your credit report, and what you can do to improve both of these indicators just by making a couple of changes in the way you handle your income.
There is no quick fix for people with less than perfect credit scores, so don’t let anyone tell you otherwise! Fixing your credit is a long process that requires mastery of your budget and a lot of self control – only then can you realize the low interest rates and excellent rewards programs that are available to people with above-average credit.
Credit Scores Defined
Have you ever wonder asked yourself any of these questions:
- What is a good credit score?
- What is an excellent credit score?
- What is a fair credit score?
For the purposes of this entry, let’s enumerate what these and other descriptors for certain credit ratings mean:
Low interest credit cards are most easily issued to people with above average / good credit scores, or in this case people with a 700+ score according to the chart above. People with a credit rating greater than 700 pose a low level of risk to credit companies and will obtain credit cards more readily. If that’s not you, keep reading – we’ve got some tips to help you get your credit where it needs to be!
How to Raise Your Credit Score
Your credit score is based off your credit history, so you need to establish a long listing of good credit practices in order for the bureaus to lift your score. This can take anywhere between 6 to 12 months to see a significant change in your score; the credit bureaus do this to ensure that any short term changes you make aren’t just you trying to temporarily raise your score (they’ve gotten wise to many tricks over the years!)
When credit companies render a decision about your credit, they look at four basic types of entries on your credit report:
Your Payment History
- Make payments on time.
This is perhaps the most sensitive area of your credit score and is most definitely the most easily impacted by your behavior. Missed payments and/or frequently late payments can have a devastating impact on your credit score.
- If you have missed payments before, get your account current.
History is the lesson here – the more often you pay your bills on time without interruption, the better your credit score will be.
- Collection accounts / overdue debt will remain for 7 years.
If you had an account in collections or had a massive overdue debt, getting this paid off is helpful but it will remain on your credit report for seven years. Some companies can help you remove negative items from your credit report faster than that for a small fee.
How Much You Owe Creditors
- Keep your credit card balances low.
Large amounts of debt on any one account (excepting naturally large accounts such as mortgages and student loans) will adversely impact your credit score.
- Don’t move your debt around (pay it off instead.)
This is the easiest thing to do to help in this category. Many people are tempted to take advantage of no interest balance transfer credit card deals (read more about balance transfers) to avoid paying down their debt, and while they may not be accumulating interest they are most certainly lowering their credit score.
- Closing down accounts / credit cards is not the answer.
Closing credit accounts in any form may do more harm than good, since a part of your score is determined by how much credit is available to you that you aren’t using. Closing accounts lowers this ratio and, in turn, your credit score.
How Often are You Applying for New Credit
- When shopping for credit, focus your efforts during a specific window of time.
Frequent credit inquiries over a long period of time make you look desperate for credit and will lower a bank’s confidence in your score. Smaller bursts of credit inquires in a short period of time are often grouped together and are viewed as one inquiry instead of several.
- Re-build your history.
Opening new lines of credit in the form of credit cards, second mortgages, auto loans, etc. is a good way to show that you can handle credit over the long term. Start small and work toward a goal you have set in your mind (i.e. get a credit card today to build credit that will qualify you for a boat loan next year.)
How Much Credit History You Have
- Do not open many accounts in a short period of time.
This is especially important if you have limited credit history. Opening many accounts quickly poses a significant risk to banks that might offer you credit in the future, so try to do this in moderation.
Now What?
Unfortunately you just need to wait and see what putting these tips into action will do for your credit report. It’s a good idea to get a copy of your credit report now for comparison purposes and then check back once every few months to monitor your progress. Some credit report websites offer a credit report monitoring service that will keep you updated with this information automatically – all you need to do is wait until you reach your target credit score.
Why is Improving My Credit Score Important?
Low credit scores allow you to more with your credit for less interest expense. Because this is a credit card site, let’s talk about what it means from a credit card perspective:
- Qualify for lower interest rates
Higher credit scores mean lower interest rates, so you spend less money lining the bank’s pockets and more on your own purchases.
- Better rewards with fewer restrictions
The best credit card rewards programs are available to people with excellent credit scores, since a company wants to do everything they can to make sure you aren’t motivated to switch credit card programs.
- Eligible for larger loans
Better credit scores will give you access to larger loans that would not have been available to you previously. This is especially important if you’re looking for a business credit card, since your personal credit rating will impact your company’s ability to borrow if you are one of the signatories on their accounts.
Additional Resources:
Kimberly Carte
Team Your Credit Network
It's January, the traditional time for people to make resolutions for the upcoming year. Most people resolve to lose weight, exercise more, or finally take that trip to Europe. I can't recall the last time I heard someone make a resolution about their credit. Actually, I don't think I've ever heard anyone do that. Here are a few suggested resolutions for you.
- Pay down the balances on my high interest cards.
- Get my interest rate reduced.
- Transfer my balance to a better card if my current bank won't reduce my rate.
- Figure out if my rewards card really rewards me, and if it doesn't, switch to one that does.
- Use my credit cards responsibly.
I could go on and on, but the list needs to end somewhere. Take the ones that apply to you. I just hope you're more successful at keeping them than most people are about the weight loss resolution.
M. Gray
Team YourCreditNetwork.com
If you're transferring balances constantly, the answer is yes. If you're constantly moving balances from one card to another, you probably aren't making a significant dent in your credit card debt, so the transfers are just helping to delay the inevitable.
Perhaps more importantly, the pattern of opening new accounts and transferring balances can negatively affect your ability to obtain new credit. Each new credit card requires another credit inquiry. Too many inquiries can lower your credit score. Also opening new lines of credit can lower your score as it increases the amount of debt you could potentially rack up. Creditors will see the pattern of transferring balances, and that may affect their decision to grant you a line of credit, even if it hasn't lowered your credit score.
For a balance transfer credit card to benefit you, you have to be willing to pay off the balance quickly. Those attractive balance transfer interest rates do not last forever – 6 months is typical. After that, they go back up to the normal rate which may be higher than on a card that doesn't offer an attractive rate on balance transfers. The good rate will generally also disappear if you're late making a payment, so it is important to pay on time every time.
While you're thinking about a balance transfer credit card, it couldn't hurt to call your current issuer and ask about getting your interest rate lowered. They'd rather have your business at a lower interest rate than have you move your balances elsewhere since they can't make any money off you if you have no balances with them.
Team YourCreditNetwork.com
Maybe.
It depends on whether your credit card issuer reports the missed payment to the credit bureaus. Maybe they will, or maybe they won't, but you should assume they will. One missed payment isn't likely to put you into the bad credit category if you're currently in the good credit category. It usually takes a series of missed payments or some other blemishes on your credit combined with a missed payment to do that. A missed payment certainly isn't going to do anything good for your credit, so you should still do everything in your power to make your payments on time.
Keep in mind that missing a payment will make next month's bill that much bigger. You'll owe this month's payment, plus next month's payment, plus any late fees the credit card issuer charges. Being late with a payment can also end any promotional deals you might have. That 0% APR for 12 months? It's likely to be gone if you miss a payment. So even if it doesn't hurt your credit, missing a payment will hurt your wallet. Team YourCreditNetwork.com
Do you have the bad credit blues? With the holiday season in full swing, it is estimated that up to 20% of the American population may be experiencing some degree of depression associated with their financial situation; desperately wanting to buy something for that special person, but not having a credit card, is a devastating feeling. Thankfully, help is available.
Short-Term
One of the quickest ways to get your credit back on track is to have your credit reported to the major bureaus; some of the cards within our bad credit section can help you do just that. The key to these credit cards is to pay your bill; the more regular you are with your payments, the higher your credit will climb.
Long-Term
Fixing all your credit problems can take time, so it is recommended that you visit a credit repair service, to make sure that all previous financial indiscretions can be accounted for and hopefully removed.
Have a safe, happy holiday season. If your credit is bad, don’t get the blues, just get it fixed.
Team Yourcreditnetwork.com
With the holiday season in full swing, now is a good time to use a rewards card. You're likely to be spending more than usual anyway – you might as well get a few perks in the process.
Which rewards card is right for you depends on a couple things. First and foremost, you want the card with the lowest interest possible. A rewards card isn't much help if you'll be paying more than the value of the reward in interest.
You also need to choose a reward type that's right for you. If you're afraid of flying, a card that offers airline miles probably isn't a good choice. However, if you travel a lot, it can be a great choice. Rewards cards offer three basic types of rewards: rebates, points, and miles. Rebate cards give you back a percentage of what you spend – usually 1-2%, but it varies from card to card. Some cards let you earn more for certain types of purchases, or give you an extra incentive when your reward is applied towards certain purchases. Point cards give you a certain number of points per dollar spent – 1 point per dollar is common. These points are then redeemable for various merchandise or gift certificates. Miles cards give you frequent flier miles for each dollar spent. These miles can then be redeemed for airfare. Type that's right for you depends on what you like to do. If you're constantly doing home improvement tasks, a card that offers points towards gift certificates at a home center might be a good choice. If you get new cars every couple of years, a rebate card that offers a bonus for buying a specific brand of car might be useful to you.
It's up to you to check out the rewards on offer and determine which suits your needs. If you look at our rewards credit card page, the basic type of reward for each card is listed under "Reward type" and the full review details the specifics of the rewards program.
Team YourCreditNetwork.com
This post isn't about ways to keep your credit card safe. It's about ways your credit card keeps itself safe. So you won't be hearing about keeping your PIN away from your card. You will be hearing about transaction monitoring. On to the features!
Signature Strip
The signature strip on the back of the card is its first line of defense. Merchants are supposed to check the signature on the back of the card against the signature on the receipt. If the signatures don't match, the merchant is supposed to refuse the transaction. Visa and MasterCard go a step further by saying that a card is not valid unless it's signed. 'Check ID' is a not a good substitute for your signature. Suppose you lose your unsigned card and a thief finds it. All they need to do is go get a fake ID in your name and then their signature will match every time. Adding 'Check ID' in addition to your own signature is a good idea.
CVV2
This is the 3 digit number printed in the signature strip on Visa and MasterCard cards or the 4 digit number on the front of American Express cards. When you make a purchase online or over the phone, the merchant is supposed to ask for this number to help verify that the customer has the card in their physical possession.
Verified by Visa
Visa has a program called Verified by Visa whereby you can enter a password on Visa's site to verify that you are the card holder when making a purchase. When you enter your credit card info on a merchant's site and click on checkout, you'll be sent over to Visa's site, where you enter your password. You then get sent back to the merchant's site to complete your transaction. Unfortunately, this depends on both merchant participation and on you having a Verified by Visa identity set up. If the merchant doesn't participate, or you don't have an identity set up, your transaction will still go through. However, it does provide an extra layer of security when both conditions are met.
Liability Limits
Generally speaking, you are only liable for, at most, $50 worth of fraudulent charges made with your card. Your particular issuer may set lower limits. Check your agreement for details. Visa has gone a step further for online transactions. They offer zero liability for any fraudulent charges made online.
Transaction Monitoring
Credit card issuers and networks monitor your transaction history. If all you've ever used your credit card for is buying gas twice a month at the station down the street, and suddenly there's a $6000 charge originating in Bucharest, Romania, it's going to raise a red flag. (Unless, of course, you live in Bucharest, and you buy $6000 worth of gas twice a month.) Address changes, name changes, shipping address being different from billing address and other factors can also raise flags. So if you're going to do something unusual with your card – like finally take that European vacation you've always dreamed about – it's a good idea to alert your issuer before you go. If you don't, you might find yourself in a foreign country unable to use your credit cards.
Photo Cards
This is just a credit card with your photo on it. It provides a merchant an easy way to verify you're the rightful card holder. However, some issuers are phasing these out as they've found the extra costs associated with producing photo cards out weigh the benefits from reduced fraudulent charges.
Your credit card isn't just a piece of plastic. It's helping to keep your credit safe.
Team YourCreditNetwork.com
The holiday season is getting into full swing. Thanksgiving is only two weeks away, and Christmas is only month after that. As much fun as the holiday season is, it's an expensive time of year. Thanksgiving dinner isn't cheap to put together, even if you do cook it yourself. There are Christmas cards to send out and parties to attend. Then there's the big expense – Christmas gifts.
It's quite likely that you'll put a good portion of those expenses on a credit card. There's nothing wrong with that so long as you don't spend more than you can afford. Too many people treat credit cards as free money and charge way more than they could otherwise afford. Don't fall into this trap. It will only cause problems for you down the road. Team YourCreditNetwork.com
I hope everyone knows that they should pay their credit card bill on time. However, you might not know why you should.
The most direct reason is that the card issuer will charge a late fee. Typically, this will be $29, but check your agreement for details. This fee is over and above whatever new purchases you make and the associated finance charges. It also gets added to your balance and therefore you get charged interest on it.
Your issuer might up your interest rate for being late. Late payments can take you out of the "in good standing" interest rate. Not surprisingly, the interest rates for customers in good standing are lower than for customers who aren't. You want to be in the good standing category.
After enough late payments, your issuer might put an entry on your credit report. This can affect your interest rates for all of your debts. It makes you look like a bigger risk, so your creditors will charge more interest.
When it comes time to pay your credit card bill, the due date listed on your statement does not mean the check has to be postmarked by that date. It means the check has to get to the issuer by the date. To be safe, you should plan for your check to arrive a day or two before that to allow for processing delays at the issuer. Mailing your bill a week before it is due should be safe, but if you live out in the middle of nowhere, you might want to allow for more.
Team Yourcreditnetwork.com
If you're like most people, you're probably confused by a lot of what's printed on your credit card statement. Don't feel bad. Those statements aren't the most clearly written pieces of text and much of it is legalese in tiny print. While that legalese does define exactly how the issuer calculates your balance, I'll try to explain the basics of the various methods used.
Average Daily Balance
This is the method your credit card issuer probably uses. Any payments you send in are credited (i.e. deducted from your balance) the day the issuer receives them. The issuer calculates a series of these daily balances for the duration of the billing period. Whether new purchases are added to your balance depends on the particulars of your credit agreement, but cash advances are almost always added. The series of balances are added together and then divided by the number of days in the billing period. The result is your average daily balance.
Adjusted Balance
At the end of the billing period, right before they print and mail your bill, the issuer subtracts any payments made during the current billing period from the balance at the end of the previous billing period. New purchases are not included. Adjusted balance is usually the best for you as it gives you the rest of the billing cycle to pay part of the balance and avoid paying interest on that amount.
Previous Balance
This one is just what it sounds like. It is simply the amount you owed at the end of the previous billing period. No payments or new purchases made during the current billing cycle are included.
Two-cycle Balances
Some issuers use methods that include 2 billing cycle's worth of activity to calculate your balance. The use of two-cycle methods is not as common as the other methods and they vary a bit from issuer to issuer. Carefully read your credit agreement to find out if your issuer uses a two-cycle method and what specific method they are using.
Reading your agreement carefully is good advice for anyone with a credit card. It spells out your rights and responsibilities along with many other details about your card. If there are parts you don't understand call your issuer and ask them to explain.
If you’ve been browsing our site, you’ve may have noticed that some cards say they are for people with average, limited, poor, or bad credit history. These terms are a bit vague. What do they all mean? While there are some general guidelines as to what constitutes good or bad credit, every lender has their own standard, so a bit of vagueness is unavoidable.
Most people have a general idea of how their credit is. If you own your own home and have always paid your bills on time for at least the minimum amount due, and don’t use credit excessively, you likely have excellent credit. On the other hand, if you’ve had several credit cards go to collections, had your house foreclosed on and your car repossessed, your credit is probably poor. These terms “excellent”, “poor” and others correspond to a credit score.
Each of the three major credit bureaus calculates a credit score according to a secret formula, so your credit score will vary a bit from one bureau to the next. However the credit score from each is intended to measure they likelihood of default. So if your car has been repossessed for non-payment that indicates that you’re more likely to default on a loan. On the other hand, if you’ve paid all your bills on time that indicates that you’re not likely to default. The bureaus take your credit history and come up with a number that represents how likely you are to default. Low scores mean a high likelihood and high schools mean a low likelihood.
Credit scores range from the mid 300s on the low end to the mid 800s on the high end. Scores above 730 usually indicate excellent credit. 700-729 indicates good credit. 670-699 is average. 585-669 is fair. Below 585 is poor credit. These are just general guidelines. Every lender has their own standards, and those standards can vary between products.
Keep in mind that lenders don’t just look at your credit score. They may also consider how much collateral you have and your current financial status (income, debt and cash on hand). Even if you have excellent credit, you’re not likely to be approved for a mortgage if you’re unemployed and have no income.
Why do I want a good credit score?
It’s quite simple. Debt is cheaper when you have good credit. Your credit score tells the lender how risky it will be to lend to you. The higher the risk, the more interest the lender will charge you. This might seem a bit counterintuitive. You might think that the people who get higher interest rates are exactly the people who are least able to repay, and to a certain extent, this is true. However, since these people are a high risk investment, the lender wants to be paid more to offset the risk. Perhaps an analogy will help. Suppose Jane asks Bob to go get her a hamburger and that the hamburger place is just down the street and there’s little traffic. Bob, says ok, on the condition that Jane buy him a small French fries. Low risk, low payment. Now suppose that Jane wants that same burger, but that in order to get to the hamburger place, Bob has to cross a minefield and go down a street filled with snipers. Bob says ok, but now he wants payment of $250,000 plus the fries. High risk, high payment. Similarly, interest just reflects how much risk the lender is assuming. More risk equals higher interest.
E-Loan has a great FAQ about credit scores and what factors go into calculating them.
Credit cards are one of the great
conveniences of modern life. They
eliminate the need to carry around large amounts of cash for large purchases or
emergencies. They make it possible to
make online and mail order purchases without having to wait for the post office
to send your check to the merchant. All
of this power creates new risks to your finances. Fortunately, it’s easy to protect yourself with
just a few simple steps.
First: Keep
a copy of your credit card number and the issuer’s phone number somewhere safe
– i.e. not in your wallet. This is in
case your credit card is lost or stolen you can report it quickly. This is especially important when you go on
vacation as you won’t have easy access to a copy of your billing
statement. Also, make sure that
strangers will not have access to this information – i.e. keep it locked up.
Second: If your credit card is lost or stolen, report
it to the issuer immediately. Yes, your
credit card agreement probably says you are only liable for $50 of any charges
the thief makes, but this is usually contingent upon you reporting the loss in
a timely manner. Besides, you cannot use
your credit card in physical stores unless you have the actual card and your
card issuer will not send you a new one unless you report the loss.
Third: Do not give out your credit card number to
any company that calls you out of the blue.
Sure, they could be a legitimate company offering legitimate services,
but you have no way of knowing that.
They very well could be a scammer that just wants your credit card
number so they can either use it or resell it.
If the company has a product that you want to purchase, look them up in
the phone book and check with the Better Business Bureau. If it is a charity, have them send you a
donation card in the mail. Any reputable
charity will do so. While you are
waiting for the card, do a little research on the charity. Check them out with the Better Business
Bureau’s charity division. If they check
out with the BBB, then you can contact them and make your purchase or donation.
Fourth: Monitor your statement closely. Look for any charges that you did not
make. If you are sure you did not make
them, report them to your credit card issuer.
This is similar to the recommendation to monitor your credit report once
or twice per year, but you can and should check your credit card statement
every month.
Fifth: When you use your card in public try to keep
the number hidden. Thieves will try to
get your credit card number any way they can.
That includes looking over your shoulder and memorizing it while you are
in line at the store. An easy way to
keep the number hidden is to keep your finger over the numbers on one side and
keep the other side close to your body.
A better way is to keep the card in your wallet as long as possible and
put it right back in your wallet as soon as you can.
Sixth: Shred your statements and receipts when you
dispose of them. Dumpster diving is a
great source of personal info and your credit card statements have your credit
card number of them. Before you put your
statements in the trash, shred them. A
shredder that cuts paper into little bits of confetti is preferable to one that
just cuts strips. Strips are relatively
easy to reassemble into a readable piece of paper. With bits of confetti, it is much more
difficult. If you want to be really
safe, you should probably burn the bits of confetti, but most thieves will move
on to an easier target rather than trying to collect and reassemble the bits of
your statement.
It may sound like a lot of work, but
it boils down to keeping your credit card number out of the hands of people who
have no legitimate need to have it.
Would you hand out your Social Security Number to just anyone? Of course not. Treat your credit card number the same sort
of protection. With these few simple
steps, you can protect yourself and your credit from thieves.
Team Yourcreditnetwork.com
When you
have more than one credit card, there are a lot of complicated financial
transactions that are possible. There
are balance transfers, paying down a credit card, using each card evenly,
managing where to keep each balance and whether or not to keep each card.
Some people will try to hold
multiple credit cards to help raise their credit score. This can help, but if done incorrectly, can
have very detrimental effects on your score.
For example, if you had three credit cards and each carries a balance,
you will receive three separate bills in the mail. This may mean that you have to pay much more
per month than if you only had one bill.
A big mistake that many people make is that they chose to only pay one
or two of the cards in the hopes that paying some on time will counter the
negative effects of not paying the others.
This is not the case. The
negative effects of not paying on time far outweigh the positive effects of
making a prompt payment. Another big
mistake is that people think that when they do pay their delinquent bill, the
negative marks in their credit report will magically disappear. They won’t.
When you have multiple credit cards,
there are other metrics that come into play.
One thing that is used to calculate your score is the ratio of amount of
credit used to the amount available. For
example, if you have a credit card with a limit of $10,000 and your balance is
$3,000 then your utilization rate is 30%.
A lower utilization rate is seen as a sign that someone doesn’t use
their credit loosely.
Another metric is the age of a
card. Older credit cards are better for
you and show a longer term credit relationship.
Furthermore, holding 11 credit cards is probably too many. You should reduce this number to fewer than
5. This will help you keep better track
of your cards and too many credit cards may lower your score. If you do cancel cards, start with the newest
cards and try to retain your older ones.
You should also look at the different terms of your cards. If your older cards have very high APRs or
yearly fees, you might consider canceling those in favor of better terms.
Team Yourcreditnetwork.com
The sheer
number of credit cards available can be bewildering if you are in the market
for a new credit card. There are cards
with low APR, cards with low intro APR, cards with airline miles, cards with
rewards at your favorite store, cards that support your favorite team, cards
that support your favorite charity, cards with cash back and all sorts of other
cards. How do you choose the right one? It all boils down to not paying more than
necessary. Fortunately, there are a few
key features to look for to help you determine whether you are paying more than
you need to be.
The most important feature to
consider is the APR or annual percentage rate.
You want the APR to be as low as possible. This is the single biggest factor in
determining the cost of carrying a balance on you credit card. One or two percent may not sound like much,
but it can mean paying hundreds or thousands of dollars in extra finance charges
while you have a balance. The second most important feature to
consider is the annual fee. There is no
reason to pay an annual fee. The credit
card industry is so competitive that you should be able to find a card with
identical features that does not have an annual fee. If the card with the annual fee provides some
extra services like getting you concert tickets to sold-out shows or some other
sort of concierge services, it might be worth it to you to get the card that
charges an annual fee. However, it only
makes sense if you are going to take advantage of those services. If you are not going to use services that
will cost you money, there is no reason to pay for them.Now that we have covered the two
biggest concerns, we come to one of the most popular categories of credit
cards: rewards cards. Like non-rewards
cards, you should first consider the APR and annual fee. Some rewards cards charge a higher interest
rate than regular cards. There is no
reason to apply for a card that does so.
There is usually a nearly identical card that has the same reward, but a
lower interest rate. Get that card instead.
However, suppose that you cannot find a card that does not charge a
higher rate, what do you do then? You
could do some math to figure out whether the value of the rewards offsets the
higher interest rate. It almost always
will not. You would be better off
getting a regular card with a lower rate and then using the money you save
towards whatever reward you would have gotten with the rewards card. If you can find a card that offers a reward
that you would use and has a competitive rate, by all means get that card. You should also make sure that the reward
fits your lifestyle. If you never travel
anywhere or have a severe fear of flying, a card that gives you airline miles
probably is not the best choice.Some credit card issuers offer cards
that support your favorite team or school.
Many of these cards just have some sort of logo on the card and do not
cost any extra money. Treat these cards
like any regular card. Go for a low APR
and no annual fee. For example, my card
has the logo for the local baseball team on it.
It happened to be the default design offered and did not cost any extra
money, so I went for it. It happens to
be a professional team, so if it had cost any extra, I would have refused and
opted for a no-cost design. However,
some cards are for college teams and a portion of your charges goes to benefit
the school or team. If you are planning
on donating money to the school or team anyway, this is an easy way to do so,
but only do it if it does not cost you any extra. Otherwise, just send the school a check every
year.
Similarly, there are cards that
support your favorite major charity like the World Wildlife Fund or the Red
Cross. Treat these the same way as the
team and school cards. If the card is
competitive even in the absence of the donation and you were planning on
donating anyway, go ahead and get the charity card. However, if the card has a higher APR or
charges an annual fee, get a normal credit card and then donate the money you
save to the charity.
You may be wondering why I am
recommending against the charity cards if they cost you more than a regular
card. You might be thinking the extra
cost is simply the price for donating to the charity. Depending on the card, you may or may not be
right, but even if that is indeed the case, I would still recommend getting the
cheaper normal card. The reason I
recommend getting the cheaper card is in case your financial situation takes a
turn for the worse like if you lose your job or in case of severe illness. In those sorts of situations will usually
have to cut back on expenses like giving to charity. If you just send in checks periodically, it
is easy to cut back – just reduce the amount you send or stop altogether. If you donate in form of a higher interest
rate on your card, you lose that flexibility.
However, if you can find a charity card that does not carry a higher
APR, by all means, go for it. A final thought on donating to charity is the tax
deduction that often follows. If you
donate money to charity, you can deduct it from your income reported to taxes,
but if you give to charity through a credit card, they get to make the donation
and also claim the tax deduction.
If you have a lot of debt on high
interest cards, you might be looking for a card that offers low APR on balance
transfers. Some even offer zero percent
for six months to a year. You should still
treat these like a regular card – get a low regular APR and no annual fee. If your debt is small enough that you can pay
it off during the six to twelve month period and you will not be making any new
charges, it still makes sense to get a card that offers a low APR on balance
transfers even if the regular APR is a bit high. You should be aware that many credit card
issuers will apply any payments towards the balance with the lowest APR
first. So if you have a $2000 balance
transfer at zero percent and then you charge another $1000 of purchases at the
regular APR, any payments you send in will go towards the $2000 until that
balance is paid off. In the meantime,
the $1000 of purchases will be accruing interest at the regular APR. Your issuer may also retroactively apply any
interest on the balance transfer once the six months or a year is up. That is why it is important to get a low APR
and to pay down your balance transfer as quickly as possible and keep new
charges to a minimum until it is paid off.
These policies can vary from issuer to issuer so you will want to ask
your issuer.
It may seem like there is a lot to
consider when picking a new credit card and there can be. However, as long as you keep in mind that
your goal is to pay as little as possible for the use of your card, the picture
becomes much clearer. Find a card with a
low APR and no annual fee and you will do fine.
As with all matters involving a contract, you should read it thoroughly,
and ask questions about any parts you do not understand.
Team Yourcreditnetwork.com
Welcome to
our blog; we here at Yourcreditnetwork.com wanted to establish this blog as a
way to keep in touch with past, present, and future customers. In addition to
providing educational posts on everything credit, we plan on letting you know
about the latest trends in the credit industry, which cards people seem to be
requesting, and in general, help you make the right credit decisions for you.
We look
forward to serving all your credit needs, and hope you find this blog
informative! Team Yourcreditnetwork.com
|