You’ve probably received plenty of offers from your credit card issuer – urging you to use one of the “handy checks enclosed” to fund a vacation, buy new furniture, or splurge on a new wardrobe.
Sometimes they even fill in the amount on one of the checks – encouraging you to borrow an additional $1,000, $2,000 or even $5,000. Sometimes those checks come with an initial low interest period, just to sweeten the offer and encourage you to take advantage of the offer.
If you actually need to borrow money at that time, the offer can be a welcome relief. (But please don’t fall for the “splurge” enticement – it will come back to haunt you!)
You CAN use these credit card cash advances to help your financial situation, but only if you use them carefully.
Let’s take a look at the situation:
If you have a credit card balance on another card and the interest has suddenly increased from 5.9% to 25.9%, then using a cash advance check to pay off the other balance can be a wise decision. But… first look at the fee charged for the cash advance. Then look at the term. Will the cash advance check at a low rate keep that low rate long enough for you to pay off the balance, or will it revert to a high interest rate in just a few short months?
I’ve seen credit card offers charging a fee of 3% for the cash advance at 1.9% interest – and switching to 19.9% after only 60 days!
Read the fine print – all of it.
New regulations signed into law this summer will require banks to keep promotional interest rates in effect for 6 months – but will even that be long enough for you to pay off the balance? And what interest rate will you pay if you still have an outstanding balance after those 6 months?
Next, look at the interest rate you pay on purchases. Your credit card issuer may be offering you a low rate on that cash advance, but a high rate on purchases. And under current terms, your payments will apply to the balance with the lowest interest rate until it is paid in full – then will apply to high interest balances. Under the terms of some cards, your entire payment applies to the lowest rate balance and its interest. Interest on the higher rate balance continues to accrue, adding to that high interest rate balance every month.
This will change under the new regulations, but they won’t take effect until next year, so be careful.
If you use a card for a cash advance, you’re probably better off not using that card for anything else.
The Discover® Mix Tape Student Card is more than just a cool design. It also offers you cash back on all your purchases – so you save money.
You earn .25% on all purchases from your very first one. Then, when annual spending reaches $3,000 (excluding warehouse and select discount store purchase) you’ll earn 1% on all but selected warehouse and discount purchases, which remain at .25%.
But it gets even better. By enrolling in our category purchase bonus programs, you can earn up to 5% cash back. The category changes each quarter. January through March 2010 was travel. April through June pays 5% back on purchases of home and fashion items. In July, the program switches to gas, hotels, and movies – just in time for vacation travel and fun.
Then, as the holiday season approaches in October, Discover® will pay you 5% cash back on purchases in the restaurant and fashion categories through the end of December.
You’ll not only save money on holiday parties, but on all those fashion gifts you choose for family and friends (and yourself).
In addition, you’ll earn a 5% to 20% Cashback Bonus® when you buy through our exclusive online shopping site.
When you pay your balance in full each month within 25 days of your billing date, you’ll pay no interest at all. Otherwise, interest is computed on your average daily balance, including new purchases.
The annual percentage rate is 0% for the first 6 months from the date of opening your account. Then it will switch to a variable rate, which is currently between 15.99% and 20.99%. Cash advances carry an APR of 23.99%.
Applicants must be at least 18 years of age to receive the Discover® Mix Tape Student Card.
Credit card issuers are working hard to ensure that they’ll still be making profits after the new Credit Cardholder’s Bill of Rights comes into full effect in Feburary 2010. Thus, they’re making changes now.
You may have already experienced a cut in your credit line and an increase in your interest rate. After February, they’ll only be able to increase the interest rate on future purchases, not on existing balances.
They’ll also be banned from raising your rate because you’re having trouble paying a card from a different issuer. They will be able to raise the rate on your existing balance if you’re 60 days late with a payment – but bumping you up because you were an hour late will be a thing of the past.
That is, they won’t be able to raise the rate on existing balances unless you’ve chosen a variable rate credit card.
As of a July report in Bankrate.com, about 70% of all credit cards are already at a variable rate. Most believe that ratio will rise.
While the variable rate card doesn’t allow credit card companies to raise rates arbitrarily, it does give them some safeguard against offering low rates to consumers after their own “cost of money” has risen. This is because variable rates are tied to the U.S. Prime Rate.
Using the variable rate exempts the card issuer from a provision in the new law that says interest rates to individual consumers may not be raised during the first year. It could, in fact, change during the first month.
Your variable rate credit card will be a set percentage above prime – so when prime moves up or down it will change accordingly. The good news for you is that prime doesn’t usually rise as dramatically as credit card rates have in the past. It’s very unlikely that you’d see your rate jump from 10.99% to 28.99% overnight.
Interestingly, the new law does not prohibit your card issuer from switching your variable rate card to a fixed rate card without your permission.
Financial experts are predicting that when interest rates peak, more fixed rate cards will return. Then, as rates decline, issuers may either switch your variable rate card to a fixed rate or institute a “floor” on your interest rate. This is a minimum interest rate that you’ll pay even if your original agreement would have called for a lower percentage.
The new law has holes – it doesn’t prohibit switches such as these
The Baby Phat Prepaid Visa® RushCard is a “pay-as-you go” prepaid Visa® card – accepted everywhere that Visa® is accepted world-wide.
Once you’ve paid the $19.95 activation fee there are no monthly fees and no fees to add money to the card via direct deposit, anticipation loans, and paychecks. Transaction fees of $1 each are capped at $10 per month.
Cardholders enjoy free live customer service 24/7, free text alerts and phone balance inquiries, and free online money management tools. These money management tools will help you create and stick to a budget, with instant alerts any time you exceed a set budget amount. They’ll also let you see where your money is going with easy to read charts and graphs. And at the end of the month, you’ll get a statement to file away for record-keeping.
Unlike most prepaid cards, your prepaid Visa® RushCard can help you build your credit. When you enroll in our FREE RushPath to Credit, we report your deposits and recurring payments to LexisNexis® and PRBC®, a national credit reporting agency.
Even if you’ve had credit problems in the past, you can start rebuilding a positive credit file simply by paying your bills on time using your prepaid Visa® RushCard.
The FREE prescription drug card is an added bonus to carrying the Visa® RushCard. This Discount Card entitles you to discounts of 10% to 85% on name brand and generic prescription drugs. It’s accepted by 56,000 pharmacies nationwide – including national chains offering access to consumers across the country.
Two telephone scams designed to play on your fears and assure you of credit card safety are making the rounds again.
The first is an unvarnished “phishing” scheme. You’ll get a call from someone who identifies himself (or herself) as calling from the Security and Fraud department at your credit card issuer’s headquarters.
He’ll proceed to say that they’ve noticed unusual activity on your card and just want to confirm that you are the one who has been making large purchases. Of course you’ll say no, since the purchases are fake.
The caller will assure you that your money will be refunded and they’ll send verification. Often, they’ll already have your mailing address. For security purposes and to verify that you have the card in your possession, they’ll ask for the 3-digit security code from the back of the card, or possibly for the expiration date. When you give it to them they’ll say something like “Yes, that matches our records.”
Then they’ll tell you that they’re opening an investigation and if you have questions, you should call the 800 number on your card and give them a control number that they’ll provide.
Obviously, since the scam goes on, most people never make that call. If they did, they’d learn that this call did not come from the card issuer.
The second scam may be an attempt at phishing, or merely an attempt to sell you something you don’t need: Credit card loss protection.
The caller will say that due to new credit card laws, you will now be held accountable for all charges made on your card – even if they were fraudulent. Then they’ll offer to sell you protection from that liability.
Of course, this isn’t true. If your account is used without your authorization, and if you report it to your credit card issuer, you’ll be held responsible for only the first $50. If you find bogus charges on your credit card statement, you need only to call the card issuer to dispute the charge. You will also have to file a report with your local law enforcement.
Remember, this is but one very real reason why you should open and read your credit card statements on the day they arrive. The sooner you discover identity theft, the easier it will be to stop the thief, get charges reversed, and change account numbers.
These telemarketers are very skilled at sounding legitimate. They will cite phony new laws about your liability, then tell you all the ways that your card could be compromised.
And that part is true. Your card could be compromised, but what they’re selling is fake, and you don’t need it.
Easy on-line bill pay is just one of the features of the READYdebit™Card.
This card offers the flexibility of loading $20 or up to $2,500 per day. Direct deposit is free, and you may load a total of $10,000 to your card – giving you fast access to funds for any kind of expense. Your deposits are fully FDIC insured – so you know they’re in a safe place, waiting for you when you need them.
You can deposit cash at over 50,000 retail locations, and transfers between two READY debit cards is always free.
Because this is a debit card, not a credit card, approval is guaranteed. You won’t be subject to a credit or a Chexsystems™ check before your card is issued.
This card comes with an activation fee of $9.95 and a monthly fee of $4.95. ATM withdrawals are $2.25
The READYdebit™Card is accepted anywhere you can use a Visa™ or MasterCard™, making it an easy and convenient way to shop on line, rent a car, or fill up the tank at midnight when the stations are closed.
The news is full of reports of escalating defaults – on home loans and also on credit card accounts.
Credit card issuers are seeing major losses through defaults, and as a result are raising interest rates, lowering credit lines, raising minimum payments, and adding fees in an effort to bring back their profits. In some cases, they’re dropping credit card limits to less than a consumer’s outstanding balance, triggering over-limit fees as well. This is a practice called “chasing down the balance” – but when they chase it to less than your outstanding balance it can cause serious hardship.
Are these adverse actions by credit card issuers really the result of cardholder defaults, or is the rising number of cardholder defaults the result of the credit card issuers’ efforts to make more profits?
A credit card holder who was barely managing to make a monthly minimum payment of $100 is apt to miss the payment entirely when the minimum suddenly jumps to $150.
According to Bankrate.com, a study done by Synergistics showed that two-thirds of the respondents who received a change in terms had difficulty making payments as a result.
Credit card issuers say they will help. Cardholders having difficulty making minimum payments because of financial hardship should call. According to a Nilson Report, 2.7 million cardholders were afforded some kind of debt relief in 2008. This assistance included temporary forbearance, interest rate reduction, settlement, or a payment plan.
If you really are having difficulties, you should call. Numbers can be found on a web site called “Help With My Credit” and you can also find numbers on your card or your credit card statement.
But experts do warn that you should not make the call unless you really do need the assistance. Where once it was wise to call and ask for a lower interest rate just because you wanted it, now you should not.
Any request for a change will trigger a new look at your credit report and your credit scores. The card issuer may also ask for supplementary information, such as your income, job position, time on the job, etc. The combination of this information could trigger the adverse actions on your account that you were seeking to avoid.
The bottom line: keep up at least your minimum payments if possible, but if a change in terms pushes you beyond your abilities to pay, call and ask for help.
The Ace Pink Prepaid Visa® Debit Card not only gives you the safety and security of using a credit card instead of cash, it gives you a way to donate to cancer research every time you use your card – without spending any additional money.
Last year, Net Spend donated $350,000 for breast cancer research – all because consumers used their Pink Debit Card instead of cash.
Since this is a pre-paid card, you run no risk of overdrafts and have no monthly bills to pay, and Net Spend gives you two ways to participate. You can choose month to month service with a fee of $1 or $2 when you use the card for transactions, or you can choose a monthly fee of $9.95 with no transaction fees.
Fees do apply to ATM withdrawals and certain transactions such as telephone transfers, but you can load funds into your card for free by using direct deposit or by making an on-line transfer from another account. You can also load funds into your card at local distributors – however they will charge a fee.
The funds you hold in your account are FDIC insured, and should your card be lost or stolen, you have the same security that is extended to all Visa® Cards. As long as you notify Net Spend within 2 business days, you will be reimbursed for any and all unauthorized withdrawals / debits against your card.
With the Ace Pink Prepaid Visa® Debit Card you can pay bills on line, make withdrawals at ATM’s, and use the card anywhere Visa® cards are accepted.
Although we advise all consumers to take advantage of our free credit report offers and to monitor their own credit with regularity, no credit check is required to obtain the Ace Pink Prepaid Visa® Debit Card. The only requirements are that you comply with the regulations of the US PATRIOT Act.
When the CARD Act goes into effect in February, credit cardholders will see relief from many of the practices that have strained budgets and even sent thousands into default and bankruptcy.
Credit card issuers will no longer be allowed to use “universal default” to raise your interest rate on one card if you’re late on another. They’ll be prevented from raising the interest rate on current balances unless you’re 60 days late in payments. They’ll be required to give 45 days notice before they can raise the rate on future charges or make any other significant changes to your account.
But some practices will remain unaffected by the CARD Act.
For instance, credit card issuers will still be allowed to reduce your credit limit arbitrarily. Further, unless they’ve used credit data to make the decision, they don’t even have to notify you until after the fact.
The one thing they won’t be allowed to do is reduce your rate to an extent that triggers an over-limit fee. Otherwise, they can do as they please.
According to a study undertaken by FICO, 24 million consumers were subject to credit line decreases in the period from October 2008 through April 2009. Another study that covered April 2008 through October 2008 showed 22 million cardholders as having credit limits reduced.
This means that in the year from April 2008 to April 2009, 44 million credit cardholders were affected by credit line decreases. That’s about 23% of the total population for whom credit report files are kept.
They can also close your account without notice. Credit card issuers don’t like to carry accounts that aren’t making them any money, so if you’ve let your account go inactive or if you’re one of the “deadbeats” who pays your bill in full and on time each time it arrives, they could decide to simply close the account. And they don’t have to tell you they’re doing it!
They do have to notify you if the decision was the result of reviewing your credit report, but they do not have to tell you before they do it.
Having a credit card turned down at the checkout counter is embarrassing, to say the least. Thus, consumers who plan to use a credit card on a shopping trip should stop by their computers before they leave the house. Why? They should check in on their credit card to make sure they still have an available balance – and that the dollar amount of that balance hasn’t changed.
The Mango™ Prepaid Mastercard® Debit Card is the perfect choice for consumers who will load at least $500 per month into their pre-paid debit card.
While there is no activation fee and there are no transaction fees, there is a $5 monthly fee – but it’s waived when you deposit $500 per month into your account.
Loading the card is easy. You can arrange to have your paychecks deposited directly, transfer funds from a bank account, or receive money on line from another Mango Customer – all for free. Or you can add funds at thousands of retail establishments such as CVS and Walgreens for a $4.95 fee.
Cash withdrawals carry a $2 fee, plus any fee charged by the ATM owner.
Mango™ is mobile phone savvy. Using YAP mobile financial services, you can check your balance, see your transactions, or receive money for free. Sending money carries a fifty cent charge, plus any texting fee charged by your mobile service provider.
On line account management and statements are free, as are your calls to customer service.
Mango is the perfect way to enjoy the convenience of using a credit card – without going into debt. And the Mastercard® limited liability provisions apply should your prepaid debit card be stolen – so carrying this card is safer than carrying cash.
No credit check is required to obtain the Mango™ Prepaid Mastercard® Debit Card. However, all applicants must comply with the provisions of the US PATRIOT Act.
If you like to do your shopping and bill paying on line, and enjoy using a credit card for everyday purchases, choose the prepaid debit card that you can use for free. Choose Mango™.
Meanwhile, keep working to raise your credit scores. The first step is to check your credit report for errors, so get your free credit report today.
