Friday, October 31, 2008

FAQs About Instant Approval Credit Cards

Q: What does instant approval credit cards mean for applicants?

A: Instant approval refers to the process by which credit card companies take your application information and instantly make a credit decision using your information to pull a credit report online.

Q: How does this differ from Instant Decision?

A: Instant decision is a term that allows the banks to defer the approval/decline decision until they can do some back-end work if an application credit decision requires more scrutiny (i.e. they either don't have the ability or don't want a final, real time decision in some cases).

Q: I've also heard of the term "Instant Credit". Is this the same as instant approval?

A: Instant Credit involves not only instant approval but also provides the applicant with a temporary credit card number that provides the ability to make an online purchase immediately. This capability was initially developed about five years ago but most banks have stopped the practice due to losses from fraudulent uses of instant credit. Instant approval gives the banks a few days to verify the applicant information in order to make a better credit decision.

Q: Are instant approval applications as secure as filling out a paper application and sending it through the mail?

A: Yes. Our site offers links to only secure applications through the major banks and credit card companies that employ the latest internet security data encryption. If anything they are probably more secure than sending information through the mail.

Q: How long does it take to get a credit card once my application has received instant approval?

A: This varies by issuer but the typical time required is around 5 – 7 business days. The specific issuer will be able to provide more specific information through their customer service unit.

Thursday, October 30, 2008

Staying Out Of Trouble With Credit Cards

Isn’t it great having a credit card? It gives you so many advantages. You can purchase items online, make hotel and car reservations, and so many other convenient things. Despite these advantages, credit cards can create a lot of problems for some people. The way you use a credit card should be taken seriously. The following are a few tips and suggestions about credit cards that can help take some of the disadvantage out of the credit card experience:

  • Credit cards are like loans. You have to pay what you owe. So, don’t overcharge.
  • Track how much you spend on your credit card. Always know your exact balance before going out. Little $20 purchases here and there add up.
  • Keep your credit card receipts and compare them with your monthly bill. If there are any discrepancies, report them to your credit card company immediately.
  • Don’t give out your credit card to ANYONE, including friends and family.
  • Don’t owe more than you can repay. This can damage your credit and hurt your chances of getting a car loan, mortgage, insurance, or even a job.
  • Pay your bills on time. If not, you will incur finance charges and interest charges that may make it hard for you to pay back your loan.
  • If possible, pay your bill in full every month.
  • You are liable for $50 of unauthorized charges per card.
  • Don’t pay off one credit card with another. This will lead you down a spiral of mounting credit card debt that you may never get out of.

The way you use credit cards is in how you think about them. We want to offer some credit card tips that might help you change the way you look at credit cards:

  • Think of a credit card as a 30-day loan that you have to pay back.
  • Act as if you are paying with cash. Don’t spend more than what you would spend if you had cash in hand.
  • Go out without your credit cards. When you see something you like, go back home and get it. If you still think you need that item, then by all means buy it. But if by the time you get back home, you don’t think it’s important enough to go back for, let it go.
  • Pay with cash, and think of your credit cards as insurance. A credit card can bail you out of many situations when you're out of cash, but it can help reign in spending if you avoid using a credit card for everyday purchases.

These are just some credit card tips that will help you stay out of trouble with credit cards. In this world of buy now-pay later, it is important that you understand the heavy responsibility of credit cards. Behind the plastic is real money and real debt. So, you should take credit card usage seriously.

We hope these credit card tips have helped you to better understand credit cards. By following these tips and changing the way you look at credit cards, it will help you to stay clear of credit card debt.

Wednesday, October 29, 2008

Deciding Which Credit Card is Right for You

Not all credit cards are created equally. And so it makes it that much harder to decide which credit card. There are many factors you should take into consideration when deciding which credit card you want to get.

Some of those factors include:

  • Interest rate
  • Reward programs
  • Annual fees
  • Member benefits

Let’s look at these factors separately so you can see how to evaluate which card might be right for you.

Interest Rate
If you pay off your balance every month, most likely a low interest rate won’t matter to you. But most people are not so financially disciplined with their credit cards. Most people do carry a balance.

If you are late sometimes on your payment and carry a balance, then a credit card with a low interest rate is right for you. It could save you a lot of money. As you know, the difference between a 10% and 20% interest rate could be significant if you carry balances for a long period of time. All the major credit cards—Visa, MasterCard, Discover, and AMEX—have low interest versions of their credit card.

Reward Programs
Whether you have a Visa, MasterCard, Discover, or American Express credit card, all of them have reward programs. A popular reward program for most credit cards is a frequent flyer card like the Delta Skymiles Card and the Citibank AAdvantage Card. Both of these cards offer you one frequent flyer mile for each dollar spent. If you travel a lot, then this kind of reward might be exactly what you are looking for. Discover Cards are famous for offering a cash-back bonus on their cards. So, depending on your situation, this may be a card you might want to consider getting. Here is a list of just some popular reward programs that all the major credit card companies—Visa, MasterCard, American Express, and Discover—offer:

  • Frequent flyer program
  • Cash-back option
  • Discounts at retail stores or online chains, such as, Toys R Us, etc.

Annual Fees
Although rewards are great, none of these cards come without a price. Some have moderate, while others have expensive annual fees. Especially for people who pay off their balances every month, the annual fee is an important consideration. It might be prohibitive for some people, but not so for others. You should just consider if the rewards you are getting from the card outweigh the annual fee that you have to pay on your credit card. Moreover, there are many credit cards out there that have no annual fees. These might be worth considering if annual fees are your primary concern.

Membership Benefits
Benefits vary on cards. Some offer travel protection, while others offer roadside assistance. These benefits can be useful for your particular lifestyle. So, if you are selecting a credit card, it is important to weigh the pros and cons of its benefits. And it is another good idea to see if you can’t get the same benefits somewhere else for a cheaper price.

So, when selecting a credit card take all these things into consideration. Decide which card fits your lifestyle choices.

Tuesday, October 28, 2008

Tips for Credit Cards

There are many advantages to having a credit card such as being able to purchase items online and make hotel and car reservations. The way you handle your purchases should be taken seriously. Following are a few tips and suggestions about credit cards.

  • Credit cards are just like a loan-you have to pay what you owe - so try and not overcharge more than you can afford to pay.
  • Keep track of how much you spend on your credit card. Remember that incidental and impulse purchases add up fast.
  • Save your credit card receipts. Compare them with your monthly bill. Promptly report problems to the company that issued the card.
  • Never lend your credit cards to anyone.
  • Owing more than you can repay can damage your credit rating. That can make it hard to finance a car, rent an apartment, get insurance or even get a job.
  • Pay your credit card bill on time, and in full when possible. If you don't, you'll have to pay finance charges on the unpaid balance-and it takes forever to get caught up if you just pay the minimum.

Federal law limits your liability for unauthorized charges to $50 per card.

Monday, October 27, 2008

Choosing the Right Credit Card

Today, everyone has a credit card. From teenagers to corporate professionals to retirees, everyone is enjoying the ease and benefit of carrying credit cards. However, before applying for a credit card, there are several factors to consider when deciding what credit card is best for you.

Credit Cards – Many Shapes and Sizes
Believe it or not, there is a perfect credit card program out there for anyone. Which of these programs is right for you will depend on several factors, such as

  • Age
  • Credit ranking (rating)
  • Spending needs (how much money you need)
  • Payment structures (how you will pay it back)
  • Special interests
  • Number of current credit cards
  • Income (how much money you make)

Credit cards are also issued through numerous financial groups and organizations. For example, it’s not only banks such as Bank America or Citi® that offer credit cards to their members. Specialty financial organizations such as American Express Financial Group—who offers the American Express card—and Novus—who offers the Discover Card—do as well. The only difference is some organizations may be more competitive about interest rates and qualifications than others.

Which Card is Right for Me?
Before applying for a credit card ask yourself these questions:

  • Why do you want/need a credit card? – Maybe you need one credit card with a special interest rate to transfer balances from multiple accounts or perhaps you need a card specifically for business purposes. Being able to earn rewards, cash back or airline miles for your everyday purchases can also be a reason to get a credit card.
  • How much do you need to charge at one time? – If the credit card is for business purposes, maybe you need a card with very high or no spending limits. On the other hand, if this is your first card and you are trying to build credit or just want the card for emergencies, then a more modest spending limit may be the better route to go.
  • How do I want to pay back the charges? – Decide if you want to pay off the entire balance each month or just a portion over each month. Some cards offer advantages for both paying structures.
  • Do special offers interest me? – Many credit cards offer special rebates, support for a specific organization or other member benefits for using their credit cards. Decide if this is important to you when choosing your card.

Managing My Credit
Now that you know what type of credit card you want, it is time to manage your credit. A credit card is a responsibility, not a right. Understanding why you want a credit card, knowing how the credit card process works and picking a credit card that works best for you will help you avoid debt management pitfalls. Use your credit card to extend your buying power while keeping in mind that a credit card is not free money. To maintain a good credit rating, you will need to pay your credit card statements in a timely manner, according to your agreed-upon terms of use. Be responsible with your credit and enjoy the benefits credit card possession can bring. If you have questions or concerns about what is the right card for your specific credit or financial need, talk to a professional financial advisor. Take the extra step and be sure you understand everything you need to know before applying for a credit card.

How to Compare Credit Cards

Not all credit cards are equal so when you compare credit card offers it can be challenging. Additionally, what is best for one person may not be best for another.

When considering which credit card is best for you consider and look at several factors, such as: the introductory APR, the fixed interest rate, annual fees, rewards programs, member benefits, and other card member services.

If you are the type of person that pays their entire credit card balance each month on time then a low interest rate credit card is not as important as one with no annual fees or great credit card benefits.

However, most people are not that disciplined about paying off their credit cards in full and on time every month. If you are occasionally late and carry a balance on your credit cards then a low interest credit card might be right for you. The difference between a low 10% APR credit card interest rate and a higher 20% APR credit card interest rate is significant over time.

In addition to low interest rates and the annual fees you pay on a credit card, you should also consider other member benefits, such as rewards programs and cash back programs. Some credit cards offer programs that reward you for using their credit card for purchases. frequent flyer programs are an example.

Cash back credit cards actually give you cash back or credit toward additional purchases. You receive a small percentage of cash back for the purchases you make with that card. Credit cards that offer cash back programs are the Discover® More(SM) Card and the Citi® CashReturns(SM) Card.

Other things to consider when you compare credit cards are:

  • membership benefits such as travel insurance and baggage protection while traveling
  • type of credit needed for approval
  • online account access and bill payment services
  • unauthorized spending protection

When determining what the best credit card is for you should also consider the interest rate, membership fees and how potential rewards programs are structured.

Sunday, October 26, 2008

Types of Credit Cards

Looking to get a credit card? Before you fill out a credit card application, you need to decide what type of credit card will work best for your specific situation. The following is a brief description of the common types of credit cards available through banks or other financial institutions.

Standard Credit Cards

Credit Cards with Rewards Programs

Credit Cards for Bad Credit

Specialty Credit Cards

Standard Credit Cards
Standard credit cards are the most typical type of credit cards. These are unsecured credit cards that are readily available from most banks and financial groups. These types of cards vary in how the annual percentage rate (APR) is offered or calculated. Here are several examples:

Balance Transfer Credit Cards
Balance Transfer Credit Cards are designed to allow consumers to transfer a higher interest credit card balance onto a credit card with a lower interest rate, thus saving them money in interest charges. For example, if you transfer a balance to a credit card with a low introductory APR of 0%, the APR for this balance will typically stay at this 0% interest level for a specified period of time, thus potentially saving the consumer hundreds of dollars in interest charges. The terms of balance transfer credit cards can vary between offers, so be sure to thoroughly read the terms and conditions for each specific card.

Low Interest Credit Cards
Low Interest Credit Cards offer either a low introductory APR that changes to a higher rate after a certain period of time or a low fixed rate APR. For example, you may get an introductory APR credit card with an interest rate of 5% for the first six months and 10% thereafter. Then, for the first six months, any purchases or balances you carry will be only charged a 5% annual interest rate. However, any new purchases or balances that carry over after the six-month period will now be subject to a 10% APR.

Many people take advantage introductory APRs to make larger purchases, so that they can take several months to pay them off. Low APR Credit Cards can help save consumers a lot of money on interest charges. However, be sure to read all the terms and conditions of the reduced introductory rate, so that you will not be penalized by fees or accumulated interest.

Credit Cards with Rewards Programs
Credit Cards with Rewards Programs usually "reward" the card holder incentives, rebates and even cashback rewards for purchases they make on their credit card. You can get additional airline miles, cashback rewards or discounts on merchandise for each dollar charged on such a card. Rewards Cards usually require better than average credit for approval.

Airline Mile Credit Cards
Put simply, airline mile credit cards or frequent flyer credit cards give you airline miles credits (or frequent flyer miles) whenever you use your card. Typically, you as the cardholder accumulate "points" based on the dollar amount of your credit card purchases over a period of time. Based on a predetermined point level, you can then redeem those points for airline travel (much like frequent flyer miles).

Each airline mile credit card is a bit different; therefore, be sure to read the fine details in the card’s terms and conditions to find out how many airline miles you gain for every dollar spent in purchases. Also, watch out for how many airline miles you will need to accumulate before you qualify for a free airline ticket. Finally, find out whether or not airline miles expire if you do not use them within a specified amount of time. Because airline mile reward programs can be costly for credit card companies, many airline mile credit cards come with an annual fee. These cards are great for people who frequently travel or for those who want to use their cards to plan vacations, but the associated fee might make them impractical for other types of cardholders.

Cash Back Credit Cards
Cash back credit cards give you cash rewards for making purchases with the card. The more the card is used, the more cash rewards you usually get. Most cash back rates are around 1% of your total purchases, excluding interest and finance charges. However, some cards offer a higher cashback percentage with increased usage while still others offer a higher cash back percentage at select merchants or for particular types of purchases. Since cash back programs are costly to the credit card companies, some cash back credit cards also have an annual fee, which can vary from $50 to $100. This type of card is particularly good for people who are faithful about paying off their balances each month. If used appropriately a cash back credit card can earn the cardholder a significant amount of money over time.

Reward Credit Cards
Reward credit cards are similar to cash back cards in that you can accumulate points towards a reward structure, which is based on how much you use the card over a period of time. Credit cards offer different reward programs and promotional offers often change, so be sure to thoroughly look over the card’s terms and conditions of each specific card before applying.

Typical rewards include:

  • Gasoline rebates
  • Entertainment rewards
  • Store discounts for specialty store cards

Reward programs are costly to the credit card companies; therefore, many reward credit cards also require an annual fee, which could vary from $50 to $100. This card is particularly good for people who are faithful about paying off their balances each month. By minimizing their finance charges, such individuals will reap greater benefits from the associated rewards credit card.

Bad Credit and/or Credit Repair
Credit can easily go from good to bad with poor judgment, mismanagement of credit cards or simply a change in job or financial situation. This does not mean you cannot get a credit card. There are several options available for people who have had bad credit in the past and for those who are currently trying to repair their credit.

Depending on your specific situation, debt consolidation, use of introductory APRs on balance transfers or other options may be the best choice. However, if you still need credit or want to start repairing your credit by proof of action, there are several credit cards designed to help "rebuild" poor credit histories.

Secured Credit Cards
Secured credit cards require collateral for approval. With secured credit cards, a security deposit of a predetermined amount is needed in order to secure the credit card. Generally, the security deposit needs to be of equal or greater value to the credit amount. Collateral can come in the form of a car, a boat, jewelry, stocks or anything else of monetary value. Secured credit cards are for people with either no credit or poor credit who are trying to build or rebuild their credit history.

Often, cards that help to rebuild credit come with low credit lines ($250 or so) and additional fees may apply (application fees, etc.). Be sure to read over any terms and conditions for these add-on services before applying. Be certain of any fees you may incur before proceeding with the application process. If you use the card responsibly and pay all of your bills on time, however, you can ask for a credit increase down the road. The extra fees and low credit lines will be worth it if a secured credit card helps you get your overall credit back on track.

Prepaid Credit Cards
Prepaid cards are, in fact, not credit cards at all BUT rather are used just like credit cards, wherever credit cards are accepted. The advantages of prepaid cards is that there are no finance charges and they help you avoid debt, in that all purchases are paid for beforehand. With prepaid cards you determine the credit line. Generally speaking, a cardholder's credit line depends on how much money he/she transfers to the card. Therefore, there is little risk of running up credit card debt, while budgeting is made easier.

Although most prepaid cards do not charge finance fees, other fees may apply, including: monthly fees, startup or application fees, overlimit fees, ATM fees and more. Be sure to thoroughly look over the terms and conditions for each specific card before applying.

Specialty Credit Cards
Specialty credit cards are for individuals with unique and special needs for their credit use. Examples of these types of cardholders include business users and students. These credit card programs are designed specifically to meet the needs of these particular groups.

Business Credit Cards
Business credit cards are available for business owners and executives and have many of the same features as traditional credit cards: low introductory rates, cashback rewards, airline miles, etc. However, business credit card. can also have many additional benefits in comparison to traditional credit cards.

Some of these bonuses include:

  • Business expenses kept separate from personal expenses
  • Special business rewards and/or savings
  • Expense management reports
  • Additional cards for employees
  • Higher credit limits

Every credit card is a bit different and promotional offers often change, so be sure to thoroughly look over the terms and conditions for each specific card before applying.

Student Credit Cards
Students generally have little or no credit history. Because of this quandary, students may often find it difficult to get approved for a traditional credit card. Luckily, student credit cards do exist. This type of credit card is set up to help students build up the credit history that most of them don't already have.

Student credit cards are often scaled back in terms of rewards, features and other benefits, but they can still be a valuable commodity. If used wisely, a student can take the first step towards building a solid credit history with a student credit card.

Friday, October 24, 2008

Credit Cards 101 -- What are Credit Cards?

A credit card is a great financial tool. It can be more convenient to use and carry than cash and it offers you valuable consumer protections under federal law. However, it is also a big responsibility. If not used carefully, you may end up owing more than you can repay, damaging your credit rating and creating credit problems for yourself that can be difficult to fix.

Chances are your mailbox is full of credit card offers from issuers, each one trying to entice you into applying for their credit card. But, how do you know if the time is right for a credit card? Also, what should you know before you apply for one? The following information can help you determine whether you're ready for a credit card, what to look for when selecting a particular type of credit card and how to use your credit card responsibly.

How to Qualify for a Credit Card

If you're at least 18 years old and have a regular source of income, you are well on your way to qualifying for a credit card. However, even though you may receive many invitations and special offers from credit card companies in the mail, you still need to demonstrate that you are a good risk before such issuers will grant you credit. The proof lies in your credit record. If you've financed a car loan or other purchase, you probably have a record at a credit reporting bureau. This credit history shows how responsible you've been in paying your bills and helps the credit card issuer decide how much credit to extend.

Before you submit a credit application, get a copy of your credit report to make sure it's accurate. The three major national credit bureaus are:

Anyone who takes action against you in response to a report supplied by a credit reporting agency -- such as in denying your application for credit -- must give you the name, address and telephone number of the credit bureau that provided the report. Based on the information in your credit report, you can clean up errors and fix any past credit problems.

Establishing a Credit History

Suppose you’ve never financed a car loan, a computer or some other major purchase. How do you begin to establish credit? First, consider applying for a credit card that is issued by a local store and use it responsibly. Ask if they report to a credit bureau. If they do–and if you pay your bills on time–you'll establish a good credit history.

Second, consider a secured credit card. It requires that you open and maintain a bank account or other asset account at a financial institution as security for your line of credit. Your credit line will be a percentage of your deposit, typically from 50 to 100 percent. Bear in mind that application and processing fees are not uncommon for secured credit cards. In addition, secured credit cards usually carry higher interest rates than traditional unsecured credit cards. If these stipulations don’t appeal to you, another option is to look at prepaid credit cards or debit cards.

Third, consider asking someone with an established credit history–perhaps a relative–to co-sign the account if you don't qualify for credit on your own. The co-signer promises to pay your debts if you don't. You'll want to repay any debt promptly so you can build a credit history and apply for credit in the future on your own. An example of this type of credit is a student credit card designed specifically for college students. A parent or guardian will co-sign the student credit card, but the student will gain the benefit from having his/her credit activity appear on his/her own credit history report. Typically, student credit cards have lower credit limits.

A positive credit history is an asset, not only when you apply for a credit card, but also when applying for a job, insurance or financing for a car or a home mortgage.

If Your Credit Card Application Is Denied

If you are turned down for a card, ask why. It may be that you haven't been at your current address or job long enough, or perhaps your income doesn't meet the issuer's criteria. Different credit card companies have different standards. Contact the credit card issuer directly if you are unsure of their minimum credit requirements. However, if you are turned down by several companies, it may indicate that you are not ready for a credit card or that there is a problem in your credit history.

If you are denied credit because of information supplied by a credit bureau, federal law requires that creditor to give you the name, address and telephone number of the bureau(s) that supplied the information. If you contact that bureau within 60 days of receiving the denial, you are entitled to a free copy of your report. If your file contains accurate negative information, only time and good credit habits will restore your creditworthiness. If you find an error in your report, on the other hand, you are entitled to have it investigated by the credit bureau and corrected at no charge.

You should dispute any inaccuracy in your report with the credit bureau as well as with the company that furnished the incorrect information to the credit bureau.

Getting the Best Credit Card Deal

Fees, charges and benefits vary among credit card issuers. When choosing a credit card, shop around and compare these important features:

  • Annual Percentage Rate (APR)
    The APR is a measure of the cost of credit and is expressed as a yearly interest rate. Also, be sure to check out the "periodic rate," which is the rate the issuer applies to your outstanding balance in determining your finance charge for each billing period. For example, if there is an outstanding balance of $2,000, with 18.5% interest and a low minimum monthly payment, it would take over 11 years to pay off the debt, with an additional cost of $1,934 being racked up just for interest. That added interest almost doubles the total cost of your original purchase.
  • Grace Period
    A grace period is the time between the date of a purchase and the date when interest starts being charged on that purchase. If your card has a standard grace period, you have an opportunity to avoid finance charges by paying your current balance in full. Some issuers allow a grace period for new purchases, even if you do not pay your balance in full every month. If there is no grace period, the issuer imposes a finance charge from the date you use your card or from the date each transaction is posted to your account.
  • Annual Fees
    Many credit card issuers charge an annual fee for granting you credit, typically $15 to $55. Some issuers charge no annual fee.
  • Transaction Fees & Other Charges
    Some issuers charge a fee if you use their card to obtain a cash advance, if you fail to make a payment on time or if you exceed your credit limit. Some may charge a flat fee every month whether you use the card or not. In order to avoid surprises and excess costs, understand what all the additional fees are before applying for any credit card.
  • Customer Service
    Many issuers have 24-hour, toll-free telephone numbers where you can contact a person to discuss issues with your account.
  • Other Credit Card Benefits
    Issuers may offer additional benefits, some with an associated cost, such as insurance, credit card protection, discounts, rebates and special merchandise offers. Look closely at all costs, benefits and rewards to decide if these options would be beneficial to you. For example, if you pay your balance off promptly, a cash back reward credit card may be of interest to you.


Once you get a card, sign it immediately so no one else can use it. Note that the accompanying papers have important information, such as customer service telephone numbers, in case your card is lost or stolen. File this information in a safe place. Call the card issuer to activate the card. Many issuers require this step to minimize fraud and to provide you with additional information.

Keep your account information to yourself. Never give out your credit card number or expiration date over the phone unless you know who you're dealing with. A criminal can use this information to steal money from you or to even assume your credit identity.

Keep copies of sales slips and compare charges when your bill arrives. Double check the charges listed against your receipts. If you find a mistake or a charge that you did not authorize, promptly report any questionable charges in writing to your credit card company. Don't lend your card to anyone, even to a friend. Your credit privilege and history are too precious to risk.

You Are Responsible for Your Credit Card

While a credit card makes it easy to buy something now and pay for it later, you can lose track of how much you've spent by the time the bill arrives if you're not careful. And if you don't pay your bill in full, you'll probably have to pay finance charges on the unpaid balance. More importantly, if you continue to charge while carrying an outstanding balance, your debt can snowball, and before you know it, your minimum payment is only covering the interest. If you start having trouble repaying the debt, you could tarnish your credit report. This situation can have a sizable impact on your life. A negative report can make it more difficult to finance a car or home, to get insurance and to even obtain a job.

Federal Protections
Federal law offers the following protections when you use credit cards

  • Errors on Your Bill
    Notify the card issuer in writing within 60 days after the first bill containing the error was mailed to you. In your letter include your name, you account number, the type, date and amount of the error and the reason why you believe the bill contains an error. In return, the card issuer must investigate the problem and either correct the error or explain to you why the bill is correct. This must occur within two billing cycles and no later than 90 days after the issuer receives your billing error notice. You do not have to pay the amount in question during this investigative process.
  • Unauthorized Charges
    If your credit card is used without your authorization, you can be held liable for up to $50 per card. If you report the loss of a card before it is used, the card issuer cannot hold you responsible for any unauthorized charges. If a thief uses your card before you report it missing, the most you will owe for unauthorized charges is $50. To limit your liability, you should be prompt in reporting the loss or theft of your card.

Types of Credit Accounts
Credit grantors generally issue three types of accounts. The basic terms of these account agreements are:

  • Revolving Agreement
    A consumer pays in full each month or chooses to make a partial payment based on the outstanding balance. Department stores, gas and oil companies and banks typically issue credit cards based on a revolving credit plan.
  • Charge Agreement
    A consumer promises to pay the full balance each month, so the borrower does not have to pay interest charges. Charge cards, not credit cards, and charge accounts with local businesses often require repayment on this basis.
  • Installment Agreement
    A consumer signs a contract to repay a fixed amount of credit in equal payments over a specified period of time. Automobiles, furniture and major appliances often are financed this way. Personal loans usually are paid back in installments, too.

Credit cards are fantastic tools. The information provided herein is designed to furnish you with basic information about credit cards. For more information about which type of credit card is right for your specific needs, contact your accountant or financial adviser.

Credit Cards 101: What Is Credit?

Almost everyone in America, from teenagers to retirees, has credit cards. We see credit card ads everywhere we turn, from TV and radio to the sides of buses. Credit card offers are even mailed directly to our homes. But what are credit cards and why should you have one?

Put simply, a credit card, or credit, is an agreement between you and a financial group, such as a bank, that you will pay them back in the future so that you can buy something now. The financial group lends you the money you need and in return expects you to pay them back over a period of time. You will be required to pay the entire amount you spent plus a small additional fee, called an interest rate if you do not pay your balance in full and on time each month.

For example, you want to buy a new TV in time for a Super Bowl party at your house. The TV you want costs $500. However, you can’t afford to spend $500 on a new TV all at once. Credit allows you to buy that TV today, in time for your party, and then pay it off over time in whatever amounts you can afford. In the end, the TV will cost you more than $500 when you add in the finance charges.

Credit can provide many advantages for the everyday person:

  • Convenience
    In addition to enabling the purchase of items now, it also allows a person to carry less cash and to order out of catalogs. Additionally, it is the only way most online stores will accept payment.
  • Emergency Protection
    Situations arise when extra money is needed fast. Credit cards allow for emergency car repairs, health care or any number of contingencies when access to savings or checking accounts is not possible.
  • Budgeting
    Buying on credit allows for predictable payments of large-ticket items in installments you can afford. Credit Cards are also a good way of keeping a detailed record of your spending.
  • Security
    Once cash is lost, it is gone. There is no way to get that money back or to keep someone else from using it. If a credit card is lost or stolen you can cancel the credit card. Additionally, a new card can generally be sent to you within a matter of days.
  • Traveling
    No matter whether you’re traveling across town or across the country, it is usually easier with a credit card. Most hotels and rental car companies will not take a reservation without a credit card.

Credit cards are a great way to enhance our daily lives. When used responsibly, credit cards not only help us to buy things we need but also to pay for them on a budget and timeline we can afford. If you want to understand how credit and credit cards will affect your specific financial or credit needs, talk with a financial adviser before applying for any credit cards. This extra step will ensure you are making the best decisions for you.

Thursday, October 23, 2008

Foreign Transaction Fees for Credit Cards -- Who's Affected?

In recent years, many Visa and MasterCard issuers have begun to include foreign transaction fees for credit card purchases made beyond U.S. borders. Why on earth would the banks choose to do this? Is it just a way for credit card issuers to make more money? It's a natural reaction, but not correct, given the fact that most card fees generally are levied to offset higher costs experienced by banks and major issuers for various types of transactions.

The more specific answer concerning foreign transaction fees is that there is simply more inherent risk involved in credit card charges that are made overseas. Issues involving incorrect conversion of currency, merchant charge backs, and outright fraud are significantly more common. Therefore, the Visa and MasterCard associations, which are comprised of member banks, have taken the position of passing these costs on to all consumers with foreign transactions. The typical fee is a flat 3% fee based on the total transaction, including foreign sales and value added taxes.

Are the fees here to stay? Since we have seen no indications otherwise, it appears Officials say that the fees have been effective in offsetting their increased costs and are probably a permanent fixture of the Visa and MasterCard pricing policy. But there are alternatives for foreign travelers who currently carry a Visa or MasterCard credit card. One option is to use traveler's checks when visiting a foreign country. Another is to use a prepaid debit card, although there may be acceptance issues relative to credit cards. Travelers should consult the terms and conditions or card member agreement offer their prepaid debit cards to understand potential limitations.

Currently, Capital One does not levy foreign transaction fees. So, if you carry one of their credit cards, you are probably in the clear.

Since American Express built its brand and reputation on international acceptance, travelers shouldn't have any travel-related issues with either an American Express charge or credit card other than the small fees involved. But, as stated before, travelers checks can be a safe bet as well. American Express can also meet vacationer's needs in this area as well in the form with their traditional travelers checks, as well as their recently launched travelers check card (a stored value card version of paper travelers checks).

The bottom line is that for most people, foreign travel is going to be a bit more expensive. There are ways to avoid the majority of these fees, however, if you play your cards right.

American Express -- An American Success Story

The American Express company is now 155 years old and going strong. The global financial services powerhouse is one of this nation's most recognizable brands around the world, in the same league as Coca-Cola and Disney. And, it is the power of this brand that has sustained the company through some difficult times.

American Express started out in 1850 as a freight and valuables delivery service for the rapidly expanding nation. The fledgling U.S. Postal service was quite unreliable at the time and only allowed shipment of letter-sized envelopes. This provided a business opening for the company to ship larger parcels and valuable items such as jewelry, cash, stock certificates and other merchandise. American Express began to realize more profit from a sector of their customer base which included banks and other financial institutions. Banks placed a high value on American Express' secure and reliable delivery service for inter bank transfers and drafts made between eastern cities and the growing western territories. American Express then began focusing their efforts on this sector and used their connections to eventually enter the financial services arena.

In the late 1890's, American Express decided to compete with the very banks they serviced by issuing money orders. This line of business took off rapidly and allowed the company to expand into Europe, where the American Express brand name became associated with security, capital and dependability. Soon thereafter, the company had major offices in London, Paris, Antwerp, Zurich and Berlin.

A major world event, the beginning of World War I, forced American Express into the travel services businesses. Over 150,000 Americans were stranded in Europe in 1914 at the outbreak of the Great War. These citizens flocked to the offices of American Express seeking funds after other European banks refused to honor their American letters of credit. American Express honored these letters of credit in full, which allowed American citizens to fund their passage back home.

In 1922, American Express jumped headlong into the travel services business by providing luxury steamship travel around the world, along with most other related services for passengers. And the traveler's check business meshed well with this well-heeled crowd of luxury globe hoppers. The travelers check business fueled the growth of the company over the next several decades based on the upfront fees and wise investment of the float income involved.

In the 1950's, American Express issued their first credit card, which caught on quickly in the booming post-war economy. In 1966, the company issued their first Gold Card, in an effort to cater to the upper echelon of business travel. Further product differentiation was achieved in the 1990's with the first Platinum Card.

American Express continues to be a powerful global brand through the present day with an incredible array of consumer products ranging from the Blue Card to the ultra exclusive Black Card (which isn't even advertised to the public, but is only issued by invitation only to the wealthy and famous). If you would like to review the products offered by this brand icon, please visit our American Express section.

Wednesday, October 22, 2008

Credit Cards and Charitable Giving

In recent year's, the often maligned credit card has taken on yet another useful function, that of funding your favorite charities. While most people think about using a credit card for online shopping, buying groceries or filling up their cars with gasoline, the thought of giving with a credit card is somewhat new.

This topic came to the forefront in 2005 with the massive destruction of hurricane Katrina and the related outpouring of charitable giving major charities like the Red Cross and Salvation Army. In television, direct mail and online advertising, the word was quickly spread that not only could donors make a difference in relieving the suffering. And, with their donations to these national charities, donors could make this impact immediately by using a credit card.

Charitable giving with a credit card is not only limited to disaster situations, either. Large charities like the United Way have been able to dramatically expand their humanitarian reach by enabling supporters to make pledges through one-time or recurring monthly payments charged directly to a Visa, MasterCard, Discover or American Express credit card.

Other non-profit organizations, apart from true charities, can benefit from credit card payments. Beyond the basic immediate payment benefit are the positives of capturing donor information for future giving and tax deduction purposes. A good example is local public radio and television stations that offer supporters a way to break up larger annual gifts into manageable monthly increments using an automatically recurring credit card payment.

And, depending on the type of card used to make charitable donations, airline miles, cash back and other credit card-related rewards can potentially be earned on any amount pledged. This is because the charge made to the card is considered a standard merchant purchase transaction by the credit card issuer when calculating eligible purchases.

So, when the time comes to open up your heart and wallet for charitable giving, remember to consider making that gift with a credit card, especially if you have a credit card that offers some type of rewards. Who knows, maybe if you have been religiously using a rewards credit card throughout the year, the cash back earned could itself be enough for a generous donation to a deserving cause.

Pros and Cons of Going Cashless with a Credit Card

We've all heard the prognosticators say that a cashless society is right around the corner. And, they've been saying this since the 1970s, which more and more people opting to use a credit card or debit card for the majority of their monthly purchases. Perhaps the much vaunted cashless world is a virtual never-land where the Jetson-type cars and jet backpacks exist that we all grew up expecting to experience.

Regardless of the hype, it is quite possible to live a largely cashless existence in this country by relying on a credit card. This is particularly true if one lives in a major metropolitan area that provides major retailers and restaurants on every corner. It's almost hard to find a gas station anymore that doesn't have a pay-at-the-pump with a credit card option.

However, this does not mean that cash is dead, by any means. It's just a matter of choice and financial style that determines the degree to which a person relies on plastic, in the form of prepaid debit cards and credit cards, to get through their day to day lives.

There are distinct advantages and disadvantages to both paper and plastic forms of payment. Concerning cash, it can provide a healthy dose of anonymity when used as legal tender to pay for goods and services. And, privacy is a rapidly vanishing commodity in this country, so that advantage shouldn't be discounted. On the other hand, cash generally requires in-person payments to be made, which can be inconvenient compared to credit card and prepaid debit card transactions. The latter can be used remotely in a point of sale scenario where the customer swipes the card through a reader as well as for online purchases.

Another set of positive and negative aspects of cash exists that should be discussed. Cash has an immediate, visceral quality that can actually help control excess spending relative to making purchases with a credit card or debit card. You can try this experiment the next time you make an impulse purchase and, instead of pulling out the Visa or MasterCard, count out what you owe in cold hard cash. It provides a greater degree of clarity regarding the sacrifice you are making in exchange for the object of your desire. The downside of being a heavy cash user is the security issue. Losing cash or having it stolen is always a risk, and once it's gone, it's gone.

Concerning plastic, there are many reasons to consider moving to this progressive mode of financial management. These include convenience, security and automatic record-keeping of your purchases. But, as with many seemingly great things in life, there is a price to pay for this convenience. One is the fact that it's much easier to let spending get out of control when all you have to do is swipe a plastic card to make your purchase.

Another involves the expense of paying interest for months or years if you are unable to pay your balance in full each month.

So, which is better? Cash will probably never go away completely, much to the consternation of Visa, MasterCard, Discover Card and American Express. Even though the major card companies have been going after the micro-payments market in a big way, there will probably always be currency floating around the globe. But, it's good to be aware of the pros and cons of both cash and plastic and manage your finances accordingly.

Tuesday, October 21, 2008

What to Look for in Credit Card Specials

Credit card issuers often tout limited time offers on "special" rewards or low introductory APR credit card offers. And, these special offers often show up in your mailbox with tantalizing graphics, begging to be opened and examined. But, if you are like most Americans, you're somewhat jaded by all the credit card hype.

As with any type of marketing stimuli, a special credit card offer must keep upping the ante in order to register with the consumer's psyche. If you look back over the course of credit card marketing history you can observe this phenomenon at work.

The first credit card promotions involved no annual fee. At the time, in the 1980's, this was a fairly radical concept in credit card marketing since a $20 annual fee was standard operating procedure. Then, there were the APR price wars. When the average annual percentage rate for credit cards was 18%, some innovative marketers began offering appalling low rates that went all the way down to 9.9% for 6 months. And, while this sounds modest compared to today's special promotional rates, it was wildly effective for its time.

So, what qualifies as a credit card special in 2006? It depends on the way you use credit cards. Something truly special for a person in credit card debt up to their ears is very different than a special that is geared for a frequent flyer searching for an airline rewards credit card incentive. In general, however, a credit card special must have some feature or limited time promotion incentives that are either not available to everyone or not considered a permanent feature of that card. Examples might be a rate or bonus incentive that can only be accessed by providing a special code or by applying before a certain date.

Listed below are examples of credit card specials in some of card categories:

Low Interest: 0% for purchases and balance transfers for 12 full months

Cash Back: 5% cash back on grocery, drugstore and gasoline purchases

Rewards: $50 gift card earned upon first purchase

Is it worth chasing after credit card specials? That depends. Probably not, if you are not in need of a credit card and only apply to get the incentive. Getting a new credit card should be a thoughtful process, not undertaken lightly. That's because everything you do regarding credit affects your credit score, which is vital for long term financial well being.

But, if you are looking for a new credit card, you would be well advised to check out the best credit card specials currently available on our Credit Card Specials web page.

Four Ways Not to Get Out of Credit Card Debt

If you are up to your chin in credit card debt, you know that it's an unpleasant feeling. Getting out of this situation and becoming debt free is definitely advised and is a prudent course of action. However, as with any type of remedy, there are good ways and bad ways to go about the process. And, the bad ways are often dressed up as a quick fix and often can cause more problems than they fix.

Below are four common, but rather ill-advised ways often pitched to consumers (or represent things consumers resort to) in order to eliminate credit card debt and become debt free:

  1. Get a quick home equity loan and pay off everything! Ah, if it were only that simple. Yes, home equity loans can be relatively fast compared to a full-blown mortgage loan, but there is a price to pay. Especially, in terms of origination fees, points and other costs that usually aren't disclosed until you are well into the process. And, this isn't the real reason it's a bad idea to go this route to clear your credit card debt. The real reason is that it's a crazy idea to put your house on the line in order to deal with the symptoms of a problem when the real problem is one of lack of discipline. If you don't deal with the underlying problem of living within your means you will end up right back where you started, but this time you can add the second mortgage payment to the list of bills you have to pay.
  2. Rob your 401(K) or other retirement savings. This should obviously stand out as a particularly bad idea, since anytime you touch tax-advantaged retirement savings you get dinged twice. First, you will experience the pain of paying a 10% penalty for early withdrawal and then you will get taxed at your normal income tax rate for the amount withdrawn. For most people this will mean you only get to keep 65% of the money you withdraw to pay off credit card debt – not so good.
  3. Take a cash advance on another card to pay off (or worse yet, make the minimum payments on) other credit cards. The expression "Robbing Peter to pay Paul" comes to mind with this one. For starters, taking a cash advance on a credit card is a very expensive proposition. There is normally a tasty 3% fee charged for these type advances along with very high interest rates (normally starting at 19.99%) that begin ticking away from the moment you initiate the advance. And, all the costs pale in comparison to the sheer madness of digging one hole to fill in another. Just say no to cash advances, period.
  4. Get a pay-day advance against your next pay check. Finance companies love to prey on the desperate straights of the working man, but this doesn't keep it from being doubly treacherous as a method for paying off credit cards. Payday loans are often priced at between 25% and 35% APR, and carry a withering host of fees. So, can you say "bad idea"?

So, if there are so many bad routes to becoming free of credit card debt, what represents the golden path? Well, it doesn't involve a quick fix, but it can be quickly effective at changing your credit card debt situation.

The first step involves a change of attitude. You simply must stop using your existing credit cards until you can get things under control. Resolve to live on cash and checks and, more importantly, live within your means. Cutting up most of the credit cards that you used to dig your debt pit is probably advisable as well. Keep one around for emergencies, but safely tucked away in a drawer.

Once this financial bleeding has been staunched it's time to go to work on whittling down that debt. Finding a good 0% APR balance transfer credit card can be a good next step. It's important to think of this credit card as a debt consolidation loan and not even plan to put the plastic in your wallet or purse. It's simply a place to park your balances at no interest in order to begin cutting it down to size.

Then it is simply a matter of using your income to pay down this credit card debt bit by bit until it is all gone. There – that wasn't so hard, was it? Well, it does take time and effort, but all it requires is a good strategy and some time tested tactics to become debt free.

Monday, October 20, 2008

Life Takes Visa?

Modern life moves at a fast pace, that's for sure. And, this is especially true when it comes to handling everyday credit card payments for things like groceries, gasoline and drugstore purchases. With impatient people behind you and your own desire to pay and go ASAP, it seems imperative to pay as quickly and efficiently as possible. But, according to a national advertising campaign launched by Visa USA, life takes Visa. Not just any credit card will do, according to the promotion.

Does it really require Visa, as they would have you believe? Well, Visa has definitely created one of the world's most widely accepted payment networks with millions of participating merchants globally. They have also excelled at developing innovative features that make using a Visa card more efficient (like the contact-less Blink card technology) and more safe (like the Verified by Visa and Zero Liability programs to enhance cardholder security).

Visa is actually an association of member banks that issue the cards to consumers, rather than a direct issuer like Discover Card or American Express. Advertising campaigns like "Life Takes Visa", is done on behalf of its member banks in order to drive stronger brand loyalty and encourage more customers to choose Visa over its main rival MasterCard.

MasterCard does its fair share of this brand advertising with its ubiquitous "Priceless" series of television and print campaigns. The current version of this campaign even invites viewers to compete and submit their own version of the now famous sequence by filling in the blanks: (blank – blank dollars, blank – blank dollars, blank, blank, blank – priceless). Whether this type of customer engagement tactic will work for MasterCard remains to be seen, but at least they are getting even more mileage out of this long running brand campaign.

American Express probably created this genre of card branding with its original campaign themed "American Express, don't leave home without it". It was the success of this advertising that drove Visa to create its first counter-advertising thrust with "Visa – it's everywhere you want to be". This was followed by another ad offensive targeting American Express that implied that only Visa was accepted at many merchant locations and that "they don't accept American Express". Visa used this campaign deftly during major international sporting events like the Summer and Winter Olympic games, with whom Visa locked up exclusive sponsorship deals.

The card brand with perhaps the least amount spent on brand advertising is Discover Card. Discover Card is the youngest of the major card brands and has built its reputation on strong credit card rewards programs and a growing merchant network. As a direct credit card issuer, Discover Card has a few advantages over Visa and MasterCard, such as the ability to completely control its product line. Discover Card offers consumers the ability to choose from over 150 unique credit card designs allowing customers to choose a card that fits them.

So, whether or not life really requires Visa in particular is a matter of conjecture. However, today's financial world works more smoothly with a credit card of some sort. But Visa does have an incredible array of choices available with everything from 0% APR to 5% cash back rewards, so choosing the right card may be the biggest challenge.

Save a Tree, Apply Online

Last year, according to Synovate's Mail Monitor Service (the leading research company that tracks direct mail), there were over six billion credit card solicitations sent through the U.S. Postal system to consumers. That's billion with a "b", as in six thousand million solicitations. Just last year the total surpassed five billion pieces of mail for the first time in history, an amazing milestone in the marketing of credit cards.

Why are the credit card companies burying the American public in so many pieces of junk mail? Well, when it comes right down to it, direct mail has been proven to be one of the most effective ways to induce consumers to apply for a credit card. The banks and issuers have learned this over the years from trial and error. This, despite the fact that direct mail response rates have been falling over time, and are down to a record low level of less than one half of one percent. That means that for every 1,000 solicitations sent to American households, 995 go into the trash can. It's enough to make even an anti-environmentalist go out and hug a tree.

Direct mail provides credit card issuers with the ability to finely target their offers according to consumers' risk profiles, though. And, the banks, being publicly traded companies, must meet aggressive growth targets to keep their stock prices on track. So, regardless of how many forests are felled in their quest for increased market share, direct mail is probably going to continue as the primary mode of account acquisition for issuers.

However, there is a better way to apply for a credit card—online, through a secure website. operates the Internet's number one site to compare credit card offers and apply securely online for the offer that best suits your needs. And, comparing offers is really only something you can effectively do online, which doesn't always work to a particular issuer's advantage. Which is why any given individual card issuer probably would prefer that you only ponder their single offer while sitting at your kitchen table rather than seeing hundreds of competing offers in one convenient location.

Not to mention that applying online is faster and more secure than applying through the mail. Online credit card applications made through employ state of the art data encryption to ensure security of personal information. And, this data is transmitted at the speed of light, rather than the speed of the U.S. Postal Service. Moving secure data at 186,000 miles per second will always win over a promise of 3 – 5 business days.

If you've reached your limit with receiving unsolicited credit card offers and have a soft spot in your heart for the environment, there is a way to stop the flow of junk mail coming into your home. Consumers can go to the website of the Direct Marketing Association ( to add their name to the national "Do Not Solicit" list. National marketers are required to scrub the names of those on this list at least once per quarter, so while it is effective, it can take several months after signing up before the solicitations stop arriving.

Regardless of your stance on junk mail, searching and applying for a credit card online is the best way to acquire your next card. That way, you can be assured that you have made an informed decision, rather than reacting to a single offer that shows up uninvited into your mailbox.

Sunday, October 19, 2008

Test Your Credit Card IQ

Just about everyone over the age of 18 has a credit card in this country, but not everyone is aware of all the in's and out's of how to get the best deal or how things work. It's what you might call credit card IQ, the awareness of everything that's out in the marketplace and an understanding of the mechanics of how the credit process actually functions.

Most folks develop some degree of credit card smarts from the school of hard knocks, unfortunately. They have applied for, used and subsequently cut up bad credit card deals that involved ruinous interest rates, punitive late fees and skimpy rewards. It's a painful way many people learn, through trial and error, the ugly dark side of many credit card offers.

But, there is a better way to develop a solid credit card knowledge base. Now that the Internet is at everyone's finger tips, doing a bit of instant research only takes a few minutes. That's if you know where to look. And, if you want the real scoop on the subject, employs a staff of seasoned credit card experts that has already developed a huge educational reference library covering virtually every conceivable topic related to credit cards.

To gauge your own credit card IQ, try pondering some of the questions below:

  • What is your current APR?
  • For that matter, what does APR stand for?
  • What is a grace period, and how long does it typically last?
  • What are the major credit card types?
  • How do credit card rewards work?
  • What are some examples of credit card rewards?
  • How much does it cost the average merchant when you use a credit card to pay?
  • How many credit cards does the typical American carry?
  • What is the average credit card debt per U.S. household?

If you are able to answer most of these questions, you should consider yourself gifted in the card smarts department. If you could only answer a few, don't feel bad because most people can't. A little continuing education could move you to the top of the class. But, if you don't have a clue about any of them, you should try to bone up on your studies. That probably indicates you are paying too much in interest and not earning any rewards with your credit card.

By developing your knowledge of credit card terms, background and options, you can easily find the card offer that represents the best deal for your stage of life and financial lifestyle. That way, you can have your cake and eat it too.

What's Your Credit Card Lifestyle?

Everyone has a certain method or style of going through life, whether it's the cut of their clothes, the car they drive or how they decorate their house. The same goes with credit cards, it turns out. Virtually everyone has a fairly immutable style with which they handle their finances, including the way they deal with their credit card spending.

Psychologists report the people develop their sense of style from an early age and often emulate the ways of people or groups that they either admire or wish to be like. This can certainly be seen in the way that teenagers dress and speak. And, depending on how a person's parents and other loved ones deal with their financial resources, a life long pattern can often be ingrained.

For example, if your parents were the types to live for today and spend like there was no tomorrow, there is a pretty good chance you grew to adulthood with a similar credit card sensibility. However, if you grew up in a household that watched every penny and paid every bill scrupulously on time, you probably are not the type to revolve a balance from month to month.

While no particular style is good or bad, you shouldn't allow your spending habits to create a mountain of high interest credit card debt. If that occurs, it can be a prescription for financial disaster unless you can alter your credit card lifestyle. Credit cards can definitely provide immediate gratification, but unless you can pay off those resulting bills there can be terrible consequences.

Probably the most productive credit card style can be to leverage the power of cash back credit cards or other reward credit card programs, like those that involve gasoline rebates or frequent flyer airline miles. This allows cardholders to literally get paid to use a particular issuer's credit card. All it takes is the discipline to keep the card paid off each month, and then the rest is gravy. By concentrating spending that might otherwise end up going to cash or check, those who seek credit card rewards can literally make hundreds of dollars back each year. This value shows up in the form of cash, free airline tickets or merchandise.

Understanding your natural credit card style is crucial in determining how to find the best deal when it comes time to get a new credit card. For those who pay over time, rewards credit cards probably don't present the best option. And, for those who wouldn't dare pay a dime in finance charges, low interest credit cards aren't really important. Those individuals should investigate what type of reward presents the most gratification for their card loyalty. Some people like cash, others like free gasoline and others still want airline miles.

So, regardless of your credit card usage patterns, there is a card out there with your name on it. It's simply a matter of narrowing down the choices and comparing the best deals in your particular category.

Benefits of Using a Credit Card

Over 80% of U.S. households have at least one credit card. The reason is clear: credit cards offer enormous advantages over other methods of payment. Although the danger of overspending with a credit card and running up major interest charges exists, those cardholders who use their credit card wisely can experience major benefits. And that goes for even those credit cards that do not offer cash back, frequent flier miles, or other rewards programs.

One of the most obvious strengths of credit cards is their convenience. Having a major Visa, MasterCard, Discover Card or American Express credit card in your wallet means no more running to the bank for cash, counting out change, or hurriedly scribbling in a check book when you need to make a purchase. Credit cards even offer benefits over debit cards, the other piece of plastic many of us carry. While debit cards look like credit cards, they lack some of the benefits of being able to charge. Debit cards, many of which are linked to your checking account, sometimes have 24-hour charging limits, which could prevent you from buying that $900 computer you've had your eye on. Debit cards can even act like credit cards if you sign for a purchase instead of using your PIN number, with the bank usually covering the difference between the amount in your account and the cost of your purchase. However, when the bank acts essentially as a creditor in this manner, you can get slammed with sizable insufficient fund fees for covering your shortcomings. Alternatives to debit cards linked to checking accounts are called prepaid debit cards, which are preloaded with funds and are designed to avoid the pitfalls of spending more than you have.

Your credit card can help you budget expenses each month, provided you pay your bill in full every time. If you do, your bill then acts as a master receipt that displays an itemized listing of what you spent your hard-earned money on. Some credit cards, especially those from American Express, even categorize your purchases and send quarterly or annual summaries of your spending that provide percentage breakdowns of how much you spent on retail, dining, entertainment, etc. For those of you that have set up an online account with the credit card company, you can likely import the data into some form of personal finance tracking software.

The use of a credit card is directly connected to your credit score, the report card for borrowers. The responsible way you handle your credit card is recorded in your credit history for lenders to review. Your high score in that credit report shows how creditworthy you are deemed by other lenders and that you pay your bills on time and spend conservatively. Conversely, irresponsible use of a credit card will produce low credit scores which can result in either being denied for future credit or paying much higher interest rates.

While you usually get hit with charges for not paying your entire bill each month, sometimes the lender will give you a break in the form of the float. The float offered by most credit cards is the grace period you have to avoid interest on a purchase if there is no balance on your card at the time of purchase. That means you get a break from 20 to 30 days during which your lender will not charge interest on your purchase. The float is a great way to avoid paying interest on unexpected expenses or on items that you eventually decide to return.

You can sometimes get the lender to ease the pain associated with things like the annual percentage rate and annual fees. Credit card companies are often open to negotiation, on anything from waiving the annual fee to lowering your APR to excusing a late payment. You just need to ask. To attract a new customer it costs a lender between $50 and $150 for each account. Due to the competition in the industry, it makes sense for your credit card company to do what it can to keep you from leaving them for a competitor.

Credit card companies are major corporations with all the strength that entails. So when you use your credit card, you get to apply that strength in your own favor. Making a costly purchase with plastic gives you immediate purchase protection that you do not get when you pay with cash or some ATM cards. When used for purchases, some credit cards automatically extend your product warranty. If merchants don't deliver what you paid for, the credit card issuer can step in to help. The money you are using to pay for a credit card purchase comes from the issuer, after all.

Finally, making a purchase with your credit card gives you a degree of theft protection. While everyone hopes it will never happen, be sure to let your credit card issuer know if your card is stolen. Most credit card companies will work very hard to resolve theft issues, as fraud is one of the industry's biggest concerns. Generally you will only be responsible for paying back the first $50 of the thief's total spending, which could save you a lot of cash if the crook has expensive tastes. (You may not even have to pay that amount if you ask nicely.) And, if you report the theft immediately, most credit cards offer a zero liability policy, meaning you don't have to pay anything for unauthorized purchases made with your card. Meanwhile, if you have an online account, you will be able to notice fraudulent activity with your card before the next statement arrives in the mail.

Saturday, October 18, 2008

Credit Card Myths

OK, so maybe you don't believe the story about your friend's uncle's co-worker who got a Kentucky Fried Rat in his bucket of chicken. Or the tall tale about the baby alligators that got flushed down toilets across New York City years ago only to now roam fully grown in the city's sewers. But are you as sensible when it comes to credit cards? There are a number of myths floating around about credit cards and their use. Let's separate credit card fact from credit card fiction.

One of the leading stories is that credit cards are only available to those with great credit. This is entirely false. While there are credit cards that are only accessible to those who have a solid credit history, there are plenty of credit cards for those individuals who have either average credit, bad credit, or no credit history. If you happen to be one of these people, offers a number of options for you. Additionally, you may want to consider a prepaid debit card, which can be used anywhere that accepts credit cards. In fact, getting a credit card and then building a good relationship with your lender by consistently paying off your balance each month can actually help you to improve your credit score.

Another commonly held belief is that Visa credit cards have the best merchant acceptance of any credit card. This is also not true. MasterCard and Visa credit cards are on fairly equal ground when it comes to U.S. merchant acceptance. Discover credit cards have a formidable worldwide merchant network (although not quite as many domestically as Visa), while American Express credit cards are typically accepted more often in Europe and Asia.

Some people worry that should a criminal get hold of their credit card and begin to ring up charges, the cardholder will still be responsible for paying for the merchandise or services. The truth is that most credit card companies only make the cardholder pay for the first $50 charged in such a case. And, many credit card companies have a zero liability policy if you report the theft immediately, meaning you don't have to pay anything for unauthorized purchases made with your card if you are quick to notify the lender.

A separate but also commonly held belief is that getting a higher credit limit is always a good thing. You can call and ask your lender for a higher limit, and, in certain cases, a bank will raise your credit limit without even asking. However, potential lenders may look at having unused credit as a bad thing, because with a higher credit limit comes the possibility that you could end up deeper into debt. And, if you do get a higher credit limit, you will still want to be careful not to run a balance from month to month that is over 50% of your available limit. The ideal balance range is between 25% and 50%. Anything above that level could suggest you are a risk for repayment.

The old wives' tale that you should carry one of each of the four major card types can also be put to rest. With Visa, MasterCard, Discover, and American Express credit cards each having nearly global acceptance by merchants (see myth #2), if you hold one of these credit cards it should be possible to use your plastic almost anywhere you go.

Other so-called "experts" (even if they mean well) may try to tell you that you can close your credit card account by simply cutting up your credit card. But if you want to close your credit card account, reach for your phone, not your scissors. Look for your lender's phone number on the back of your credit card or on your credit card statement and give the credit card company a ring. Then speak with a customer service representative who can help you close the account in question.

A related myth states that closing a credit card account will remove it from your credit report. Sorry to tell you, but this is not the case. The credit reporting industry has a way of remembering your old credit card accounts, even if you do your best to forget them. Previously closed accounts will still be listed on your credit report, denoted as closed by the customer, but shouldn't be of concern.

While rumors and myths have a way of spreading, you can help put a stop to some of these commonly-help inaccuracies about credit cards. Be sure to share your newfound knowledge with the next person you encounter who is convinced one of these credit card myths is the real deal.

Friday, October 17, 2008

The American Express Card: Is it Right for You?

What do you think of when you think of American Express? Do you think of a credit card only for the wealthy? Or maybe a credit card out of reach for the common person? Actually, American Express offers credit cards for just about everybody.

There are two different types of American Express cards. There are American Express Charge Cards and American Express credit cards. The charge card gives you an unsecured line of credit that you must pay off in full every month and requires an annual membership fee of $50. An American Express Credit Card is just like any other credit card that lets you pay off your balance over time with an APR that is competitive to most lending institutions.

American Express credit cards offer its members many rewards. The American Express credit card that you will want will depend on what you are looking for.

American Express Credit Cards for Travelers

American Express credit cards offer a wide range f benefits for travelers. A main reason so many business owners and travelers get the America Express card is because it gives them automatic flight insurance and baggage protection. In addition, it offers things like roadside assistance if you are more than 100 miles from home, and other travel-related benefits.

These benefits come with many of the American Express charge cards. But if you want a credit card, the Delta Skymiles American Express Card might be something to look into. This card gives you one frequent flyer mile on Delta for every dollar spent. In addition, it gives you double points on all purchases at gas stations, grocery stores, post office, and other places. This card is right for those who want travel benefits without having to pay off their balance very month.

With American Express Feeling Blue is a Good Thing

For those out there who don’t want to pay annual fees and like cash back rewards, American Express has a card for you. It’s called Blue. Blue offers these features:

  • No annual fee
  • Cash back on most purchases
  • Online purchase protection

Blue is a very accessible American Express credit card. It shatters the illusion some people might have that American Express is only for the wealthy. This card is for people who like to get rewards but hate annual fees. And it is a credit card, so you can pay it off over time.

As you can see, American Express has many cards to choose from. These cards all have their own features. Some of them even offer a balance transfer option when you first apply. And with the American Express credit card, you can get additional cards on the same account—perfect for families.

It's easy to see why so many people enjoy the benefits an American Express Credit Card offers. It offers something for everyone’s taste. Whether you are looking for a good reward program credit card, a gold card, a smart credit card, or a charge card, American Express has many cards to choose from. The one you choose will be up to you.

How Many Credit Cards Do You Need?

Experts indicate that most Americans carry between five and ten credit cards in their wallets, with some plastic-loving souls holding as many as 50 credit cards at one time. (Although perhaps only George Constanza's massive wallet could contain all those cards simultaneously!) But what is the right number of credit cards for you? Should you have more (or fewer) credit cards than you do right now?

The answer is that there is no exact number of credit cards that you should have at a given time. According to Experian, one of the three major credit reporting agencies, there is no right number of credit cards for everyone. Instead, your ideal figure depends on the combination of how much you spend and how much debt you can pay off. You need to consider how many credit cards will best allow you to build a solid credit history.

In terms of the balance on the credit cards you hold, the ideal range is between 25% and 50% of the available credit on each credit card. Once you pass that level, potential creditors begin to view you as a risk for repayment, in the event you encounter a major financial obstacle, with your ability to repay falling as your debt rises. If you make a major purchase that surpasses 50% of your credit limit, it is a smart decision to split the purchase between two cards. Being able to do this is one of the benefits of having more than a single card. Lenders do not like to see that your credit card is almost maxed out, as that causes them to consider you a risk – someone who is using too much credit and has trouble paying off debt.

It may be easier for you to keep track of a smaller number of credit cards. This includes being aware of what your various interest rates and fees are, and any changes that may occur with them or how they are applied. Having more plastic means there are more bills to pay. If you hold just two or three credit cards, it could be easier to stay on top of your balances and spending. And avoiding late fees may be less of a concern when you can easily recall all your payment dates. If you move, changing addresses for many cards may be a hassle. If a card expires, you will need to keep track of when the new one arrives to avoid potential fraud. This becomes tougher when you hold many credit cards.

However, that does not mean the solution is to simply close old credit card accounts as you add new ones. Debt advisers likewise warn cardholders against closing too many credit cards at one time, as doing so will worsen your debt-to-credit ratio. If you have $10,000 of potential credit and a $5,000 balance, you are using 50% of your potential. If you then close a credit card with a $2,500 balance shortly thereafter, you will have $5,000 of debt and only $7,500 of potential, hiking your ratio to 67%.

Additionally, closing your oldest accounts may cause creditors to penalize you, as they are looking for a lengthy and successful credit history. The age of your account with a credit card lender is one of the factors influencing your credit score. When leaving old accounts open, you should try to use the credit card at least once every six months or so. If you do not, the danger is that the issuer will close the card as inactive, which will hurt your credit report.

On the flip side, opening multiple fairly new credit card accounts has its downsides. If you hold a large batch of credit cards, issuers will be aware that you have a lot of credit already available and may keep you at a relatively low credit line for each of their cards. Some experts believe that consumers should hold fewer cards with higher credit limits rather than more cards with lower limits, even if the total credit limit is the same in both cases. For example, holding two cards with $5,000 credit limits is better than 10 cards with $1,000 credit limits. The reason is that your credit history is impacted by the credit lines available to you and your history in making timely payments on outstanding balances. If you can more successfully keep up with payments on fewer cards that have higher limits, it will be better for your credit history.

When carrying multiple credit cards, it is a good idea to hold major Visa, MasterCard, American Express or Discover Card credit cards, as they are the most widely accepted. If you have trouble paying off your credit cards, it might be wise to find a credit card with a low interest rate to use in emergencies. Also, you may want some of your credit cards to be rewards credit cards that provide cash back, bonus points or airline miles. Using the right card at the right time will allow you to get something in return from your credit cards. As long as you pay this rewards credit card off every month, finding one with a low interest rate in less of a concern.

When holding a variety of credit cards, it is important to have credit cards that help you do what you want. Perhaps you need a small business credit card if you are an entrepreneur, as adding this type of card to your collection will enable you to accomplish goals you could not achieve with a regular consumer credit card alone.

Although there is no exact number of credit cards a consumer should carry, there are a number of factors that will help you decide the right number of credit cards for you. The main thing to remember is that you always want to be able to manage your account. Additionally, it is necessary that you know the interest rates for each credit card, your outstanding balances, and other card features. Your credit card debt is part of a larger picture that includes such things as your mortgage, car loans, and student loans in comparison to your income. Your goal, regardless of your card number, should be to keep your total debt to income ratio below 36% and not let your card credit line utilization exceed 50%, in total or on any one credit card.

Choose Chase

Chase wants you to know they are all about choice. The "Choose Chase" and "Your Choice. Your Chase" advertising taglines in Chase's TV commercials drive that idea home. And,'s variety of Chase products allow you to "Choose Chase" and apply online to get the credit card that best suites your individual needs.

The reality that it's "Your Choice. Your Chase" becomes apparent when you consider the many options Chase has for the potential cardholder. For those consumers seeking a solid credit card without all the bells and whistles, there is the Chase Platinum Credit Card, with no annual fee and an introductory 0% interest for up to 12 months.

But if it's a specialized credit card you seek, you'll also want to "Choose Chase." Perhaps when you "Choose Chase," you'll want a rewards credit card, such as the Chase Freedom Visa Card.

If you find yourself on the go, "Choose Chase" for rewards credit cards for gas rebates or airline frequent flyer miles. A driver's choice might be a gas rebate card, like the Chase PerfectCard. Maybe you fly often, making the Chase Travel Plus Platinum Visa Card, Continental Airlines World MasterCard, United Airlines Mileage Plus Signature Visa Card, or British Airways Visa Signature Card a great addition to your wallet.

Is there a store or website you often shop at? If you shop at one retailer frequently perhaps your ideal reward credit card could be the Disney Visa Credit Card, Toys R Us Visa Credit Card, Starbucks Duetto Visa, Rewards Visa Card, Borders 3.2.1 Visa Card, or Platinum Visa Card. Your choice all depends on what you like to buy and where you like to shop.