Everything About Credit Cards

The first thing to watch for is an annual fee. If you have to pay to carry the card you might have to spend quite a bit just to break even. So unless that annual fee offers some other benefit, such as an extremely low interest rate, you probably want to keep looking.

Next is the kind of cash-back. Is it actual cash, or is it points? If it’s points, how many do you have to accumulate before you can turn them into cash?

Some cards offer cash-back but with a combination of expiration dates and payment thresholds that mean you have to spend a lot in order to ever see the cash back. If the threshold is say, $100 and you’re earning 2%, you’d have to spend $5,000 before you get your rebate. And if your rewards expire at the end of each twelve month period, you could have spent $4,900 without seeing a dime returned to you.

You want rewards that roll over from one year to the next, or that automatically pay out at the end of the period, no matter if you’ve only “earned” $20.

Check to see how you go about getting your cash back – will they automatically send a check or credit your account? Will you have a choice of how to receive it? Or will you need to fill out rebate forms in order to get your money?

If you use your card for business and thus charge and pay off large amounts each month, it makes sense to use a card that rewards you. But be careful, some credit card issuers put a cap on how much you can earn. Some cap your earnings at $300 per year.

Look for restrictions. If the card rewards grocery, gasoline, or restaurant purchases, don’t assume that just because you bought groceries, gas, or a meal that the purchase will qualify. Many of the credit card issuers have significant and surprising limitations with regard to which stores, gasoline outlets, or restaurants qualify.

The bottom line is that if you want to get a card that fits your lifestyle, and will truly give the promised cash back, you have to read all the fine print. It isn’t easy – those agreements are filled with legaleze and the print is minute, but reading it all is the only way to know if you really are going to get what you expect.

High credit scores will assist the student’s entry into the working world in many ways.

First, they will help them land that first job, because many employers do look at credit scores before hiring. Next, they’ll help them find a home or apartment to rent – because landlords check credit scores, too. After that, they’ll help with the ability to get a cell phone, sign up for cable TV, and of course, buy a car or a home.

Used as a tool, credit cards will help build those credit scores.

Start with one, use it carefully, and then in about 6 months, make application for another. Owning 2 or 3 cards that are reporting good things about you will help you enter the work world with high scores.

What is careful use? Use the card sparingly and charge no more than 30% of the card’s credit limit in any one month. Then pay it off each month when the statement arrives. Always pay on time, and if you absolutely can’t pay the entire balance, pay all you can – at least the minimum.

If you’ve had to go above the 30% for an emergency, go on line and pay the card back down to that level before your statement is issued. The amount that shows as owed on your credit report is the amount listed on the statement, so you can avoid going over that limit by paying early.

If you can’t get a card of your own, ask a parent or other financially responsible person to allow you to “piggyback” on his or her account. You’ll be added to the account and that person’s good financial activity will be reported to your account. You don’t need to have or use the card yourself unless they never do. The account does need to show some activity at least quarterly.

If you choose this route, be sure to choose wisely. Someone who charges more than the recommended 30% or who pays late will do you harm rather than good.

If you must, obtain a secured card with a credit card issuer who reports to the credit bureaus. Yes, you’ll be using your own money, but yes, you’ll be building your credit scores, and that’s what this is all about.

“Fee-harvester” cards, for instance, stand to lose as much as 46% of the revenue they’ve been generating from these subprime credit cards. These cards, which are typically issued to people who do not qualify for standard credit cards or student credit cards, carry fees which can right now run as high as 71% of the card’s initial limit.

Fees can include: Application fees, program fees, account set-up fees, annual fees, and monthly participation fees. In one example, a card with a $250 credit limit carried $178 in immediate debt – before the cardholder even had a chance to access the $72 left in his credit line.

Under the new law, credit card issuers will be restricted to charging 25% of the card’s credit limit in such fees. However, there will still be no limit on the interest rate charged.

Over limit fees will also become a thing of the past for some consumers. Right now, you will likely be allowed to charge over your limit – saving you the embarrassment of a “turn down” at a retailer’s check-out counter. But that privilege carries a heavy fee – often $39 or more for each overlimit charge.

Under the new law you can opt out of the privilege to go over your credit limit, which may cause embarrassment, but will prevent overlimit fees. In addition, the credit card issuer will be limited to charging one overlimit fee per billing cycle, rather than a separate fee for each transaction.

Consumers will now have the option to pay either on line or over the phone – with no fee. Presently many credit card issuers offer free on-line payments, but charge as much as $15 for accepting a payment over the phone. Card issuers will still be allowed to collect a fee for expedited payments, so you should still pay a day or two ahead of time or at least early in the day on the due date.

For mail-in payments, card issuers will be prevented from charging late fees for payments received on the due date, or on the next day if the due date falls on a Sunday or holiday when mail is not delivered. When payments are made at a local bank, they must be credited the same day.

Owning a secured credit card can be one of the most effective ways to raise your credit

In order to obtain a secured credit card you simply deposit a sum of money into a savings account which is held as security against charges you’ll make on the card.

Some question the reason why anyone would want such a card – when they have to put up the money ahead of time to get it. One reason is convenience.

As long as you aren’t over-limit, a secured credit card will be accepted in places where a check is not. So if you don’t have the cash in your pocket, you can still make a purchase. And of course, when you want to save money by shopping on line, a credit card is a must. It’s true that you can use services such as Pay Pal by accessing your checking account – but since merchants have to wait several days for payment, not all will accept that form of payment.

The second reason is that using that secured credit card will help you build a good credit score.

By keeping your purchases under 30% of your credit limit and paying every statement as soon as it arrives, your credit scores will begin to climb. The savings account itself is a boost to your credit rating too.

When you have consistently “paid as agreed” for a period of time, you can contact the credit card issuer and ask to have your secured credit card upgraded to an unsecured credit card. At that time, you’ll get back the savings account money, with interest. But since having a savings account as well as a checking account does increase your credit scores, you should continue keeping that money in a savings account. Adding to it regularly is also a good move.

Once you have established your ability and willingness to pay your accounts on time, you’ll be able to ask for a higher credit limit, which will also increase your credit scores.

Remember to limit your use of the secured credit card – and later the unsecured credit card – to 30% or less of your credit limit. Even if you pay the balance in full each month, the balance at the time the statement is issued is what goes on your credit report. You don’t want your credit report to show that you have “maxed out” on any credit card.

The new laws, most of which will go into effect in February 2009, will reduce credit card issuers’ revenues significantly. That means they’ll be looking for new and different ways to boost their profits. Phasing out rewards credit cards may be one way.

Why will the changes harm the banks’ profits? Because several provisions of the new laws will limit their ability to increase interest rates at will.

Right now a card issuer might mail a promotion promising a low “non-promotional” rate that convinces consumers to transfer balances - or simply to spend more than they should. They begin to carry a large balance, but don’t worry because the interest rate is so low – until they open a statement one day and find that their old 5.99% is now 25.99%.

What happened? The credit card issuer exercised its right to raise rates at “any time for any reason.” One common reason right now is a late payment – even if that payment was mere minutes late – or a default or late payment on some other account.

Experts predict that this prohibition alone will cost the credit card issuers an estimated $10 billion in lost revenue.

Banks will still be able to raise your rate on existing balances – but only if your payment is 60 days or more late. And then… if you make the next 6 payments on time, they’ll be required to drop the rate again.

The ban on rate hikes doesn’t apply to introductory rates, which you accepted with the clear understanding that the rate would raise on a set date. That date, by the way, must be at least 6 months from the date the card is issued or the convenience check written.

Since these changes don’t go into effect until February or later, credit card issuers will be spending the next few months raising rates, adding fees that weren’t covered in the law, and cutting costs.

Since Rewards cards are often used by those who pay their bills in full each month, they may be seen as an additional drain on profits, and be phased out. If you have a rewards card, you should collect on those rewards now, and do so often. If the programs disappear you may not be able to collect on unused rewards credits.

BestRateforCreditCards.com your resource for credit cards, business credit cards, student credit cards, secured credit cards, and prepaid credit cards. We also provide a weatlth of information about the importance of having credit cards and how they will benefit you.

Credit card issuers set up tables on college campuses to entice passers-by to sign up for student credit cards in exchange for stuffed animals, pizza coupons, CD’s, and other gifts. The urgency to “fill this out right now” discourages these students from reading the fine print, so they sometimes have an annual fee charge on their account before the card even arrives.

With high interest rates and high credit lines, many students find themselves deep in debt to credit card companies long before they enter the job market.

Some of that is about to change.

Under the Credit Cardholder’s Bill of rights Act of 2009, credit card issuers will have a few rules to follow regarding student credit cards.

First, they will, in most cases, be prohibited from extending credit to any person under the age of 18. (If a parent or guardian is the primary account holder, they can still carry a card in their own names.)

Creditors will be prohibited from opening a student credit card account for any student who doesn’t have a verifiable income – or if they already have a credit card account with that company or any of its affiliates.

If the student does have a verifiable annual income, the maximum credit extended cannot exceed 20% of annual gross income, or $500. The maximum for all credit card accounts may not exceed 30% of gross income. This rule can be waived if the student has an approved co-signer.

Since the interest rates and annual fees for student credit cards varies from one issuer to the next, parents and students should do the research and choose the correct card. Responding to a solicitation in the mail or filling out an application in order to get a free gift can lead to a credit card with undesirable fees and interest rates.

But there’s good news on that score too. Should your child sign up for a student credit card only to find that owning it is not in their best interests, they can cancel the card within 45 days. The card issuer will be required to report cancellation to the credit bureaus – freeing up the student to obtain a better card.

You’re out of it – home free – right?

No, wrong. If you both signed the application forms for credit cards, if you both signed for the purchase of that car, or installation of that TV satellite, or that home mortgage, you’re both on the contract and you’re both liable.

Credit issuers don’t care what a judge says about who is responsible. When you signed the application or the agreement, they treated you as an individual person, and they still consider you an individual person – one who owes them money.

If the judge decreed that one of you must pay a debt and you don’t do it, the other can haul you back into court for more proceedings. But in the meantime, the creditors want to be paid. When they aren’t paid, the report goes to the credit bureaus, and both you and your spouse will see your credit scores decline.

So what can you do? If you can deal with each other in a civil manner, you can divide your debt. You can each get new credit cards, in your name only, and transfer the appropriate portion of your old balances to your new cards.

If you were listed only as an authorized user, your spouse’s debt will not be your responsibility, but it will still show up on your credit report. If that’s the case, ask your spouse to remove your name. If he or she does not, and it shows up on your credit report anyway, you can contact the credit bureaus and let them know that this is not your account. You’ll probably have to file a dispute, but you can get it off your report.

Because you are responsible for any accounts you hold jointly with anyone – be it your spouse, your child, your sibling, your parent, or even a friend – you should think twice before entering such an agreement.

And, if you are about to marry a person whose outlook on financial responsibility is different from your own, you should take care not to be added as a joint card holder, or even an authorized user. Get your own cards, in your own name. Consider these same consequences when you decide to purchase a car or a home.

As long as you don’t mix your finances, one of you can still maintain a good credit rating, even if the other does not. That could be beneficial to you as a couple – and will definitely be beneficial should you divorce.

First, investigate your alternatives. Read all the fine print in the offer you received, even if you need a magnifying glass to do so!

Then, considering what kind of credit card you need or want, click the links on this page to compare the cards available to you.

Once upon a time, credit cards were all pretty much alike, but no more.

If you’re looking for a rewards card, you can choose from a wide variety – getting back cash, merchandise, or airline miles. And each offers their own version of when you’ll be rewarded.

Some will give you a rebate for every purchase. Others will reward you for buying gasoline or eating out or using an airline. Student rewards cards often focus on book store purchases, pizzas, video rentals, or movies.

So first decide what you want and how you’ll use the card. Choose the one that will reward you for the most frequent use.

If you’re looking for an “emergency” card to use after you’ve had credit problems, choose the one that costs the least in annual or monthly fees. If you’re trying to rebuild your credit, you aren’t going to be using it often or carrying a balance, so the annual percentage rate isn’t as important to you. But some “poor credit” cards charge a fee each month even when you don’t use them. Again, read and compare to get what’s best for your own situation.

When your credit scores are high, you can probably choose any card you want, so consider how you’ll use the card. If you think you’ll need to carry a balance, go for the card with the lowest annual percentage rate – and check the fine print to see how long that rate is guaranteed. If you’ll pay the balance in full each month, then search for a card with the greatest rewards.

You can actually make money using your credit card if you get cash rewards and pay the balance each month – as long as you aren’t paying an annual or monthly fee to carry the card.

You’ve come to the right place to make comparisons, so start searching for your perfect credit card right now!

Credit card companies are working to entice their favorite kind of customers: those who carry a balance of $5,000 or so, run it up occasionally, and then pay it back down. That keeps interest payments coming in regularly without exposing the card issuer to too much risk.

To keep these customers happy, and to gain more like them, credit card companies have been using rewards programs. Now they’re offering savings plans as well.

Some cards automatically deposit a percentage of your monthly usage into a savings account. Other, such as Discover, offer rewards for paying down your debt.

Under one of their programs, customers who make 6 on-time payments in a row are rewarded with cash back in an amount equal to the next month’s interest.

Not surprisingly, polls taken on behalf of the credit card industry show that up to 75% of all consumers prefer cash back to merchandise, hotel discounts, or airline miles.
The new cash back offerings are an attempt to establish customer loyalty by giving them what they want on a consistent basis.

So how can the credit card help me get out of debt?

First, choose a card with no annual fee, a reasonably low interest rate, and cash back on all your purchases.

Next, ask for a credit line equal to at least twice the dollars you intend to spend monthly. This is to keep your debt to available credit ratio down. If you can, that will allow you to charge all your monthly expenses without going beyond 30% of your available credit.

Now, use that card, or a combination of cards, for all of the purchases you would normally pay by cash or check. This includes gasoline, groceries, drug store purchases, clothing, etc.

Next is the tough part: Resist the urge to let a balance ride. Pay that bill in full, on time, each and every month. Remember, you won’t have been spending any money out of your checkbook aside from things that can’t go on the card – such as your mortgage.

If your monthly bills total $2,000 and you get 1% back, that’s $20 extra that you can apply to your mortgage or your car loan – or to some other credit card that you need to pay down.

You may be worried about job loss in the future, or if the state of your health is questionable, you may worry about being unable to work due to illness.

Those worries could cause you to consider opting in to a credit card protection offer from your credit card issuer. But think twice and do your research before you make the decision. If you know your company is about to announce widespread layoffs, it might be a good idea – but only if you’ve read the fine print and know that the coverage will actually be there when you need it.

Some plans require that you’ve been employed for a set length of time, that you’ve had the coverage for a set length of time, and that you’re a full time employee. They may also state that the coverage doesn’t extend to existing medical conditions.

Many programs require you to wait for coverage until you can show that you’re receiving unemployment benefits. And that, as you may know, takes a couple of weeks. If you’re off work due to illness, the coverage may require you to send in a monthly note from your doctor.

Job loss from disability may be non-existent, due to the fine print in some plans. These state that you must be physically unable to perform any work for pay. So, if you make your living climbing tall structures as a steel worker and you suffer from a broken leg, you may be out of luck. Why? Because that broken leg wouldn’t prevent you from taking a job as a bookkeeper, a telemarketer, or anything else you could do while seated.

If you read all the fine print and determine that yes, the coverage is genuine, then you need to consider the cost vs. the risk you face.

Credit protection plans can effectively increase your overall cost of credit by more than 100%. The offer is presented to look inexpensive – only 99 cents per $100 per month.

That doesn’t sound like much, until you apply it to your entire balance and compare it to your interest charges. Say you’re carrying a balance of $2,000 at 9.9% interest. Your interest charge is about $16.50 per month. Now add the fee of 99 cents per $100. That’s 99 cents times 20 – or an additional $19.80. Ninety-nine cents per months translates into 11.88% per year if you were calling it an interest charge.

Some card issuers charge less – perhaps 50 cents per $100 – that’s still an additional $10 per month that you could be using to pay down the debt instead.

BestRateforCreditCards.com your resource for credit cards, business credit cards, student credit cards, secured credit cards, and prepaid credit cards. We also provide a weatlth of information about the importance of having credit cards and how they will benefit you.