Credit Card Blog

How to Opt Out of Mail, Email and Telemarketing Solicitations

2009-03-18T23:44:00.002-04:00

Many people are frustrated by the amount of junk mail they receive each year (the national average is over 50 pieces of mail from credit card companies alone). And, telemarketing soliciting credit card offers can be especially intrusive and annoying. But there are ways to get off of these marketing lists on a permanent basis. Listed below are links and information on some of the more popular and effective ways consumers can access to unsubscribe or "opt out" from unwanted telemarketing calls and mailings and protect their privacy.

Telemarketing calls

Register your home and cell phone numbers with the National Do Not Call Registry to cut down on telemarketing calls. This is for consumers only, not businesses. It's not completely foolproof, however. There are still some organizations that are allowed to call registered numbers, and most local marketers are not restricted either. Everything you need to know is explained on the Web site.

The registration and verification process is easy. The online registration process requires an active e-mail address. If you register online, the Federal Trade Commission will send you an e-mail message with a link in it. Click on the link in the e-mail within 72 hours to finalize your registration. If you do not have an e-mail address, you can register by phone (888-382-1222).

Credit Card and other types of direct mail offers

Stop the credit bureaus -- Experian, TransUnion and Equifax -- from selling your name to mailing lists. This will cut down on the number of pre-approved credit offers that you receive. Contact them directly online or toll-free at the addresses listed below:

Equifax, P.O. Box 740241, Atlanta, GA 30374-0241; (800) 685-1111

Experian , P.O. Box 2002, Allen, TX 75013; (888) EXPERIAN (397-3742)

Trans Union, P.O. Box 1000, Chester, PA 19022; (800) 916-8800

To opt-out online go to www.optoutprescreen.com or call 888-5OPTOUT (888-567-8688).

Other types of junk mail

The Direct Marketing Association is a "trade association of businesses that advertise their products and services directly to consumers by mail, telephone, magazine, Internet, radio or television," according to its website (www.thedma.org/consumers). The DMA maintains a database of consumers who want to curtail unsolicited mail. The catch is that only DMA members must abide by the pledge to take your name off their lists. Take note that while you can opt out by mail for free, opting out online will cost you $5.

E-mail Junkmail

Read advice from the Federal Trade Commission (www.ftc.gov/ftc/consumer.htm) for reducing the spam that clogs your e-mail account. There are links that let you report spam if your request isn't honored, and there are tips to avoid becoming a victim of e-mail scams.

Restricting financial institutions from sharing your personal information

The Gramm-Leach-Bliley Act lets you tell your financial institution not to share your personal information with third parties. It's a relatively toothless law. The bank can still share plenty of your information with its affiliates that, these days, can be dozens of companies. And it can even share information with third parties if there's a marketing agreement between the two companies. Nevertheless, it's a good idea to take the time to opt-out if you are not interested in receiving solicitations for these ancillary services.

Unfortunately, there's no quick way to opt-out with all of the financial institutions with whom you do business. You must sign up with each one individually. The law states that you must be given opt-out information when you open an account, and you must receive notice annually of your right to opt out. But you can opt out any time by visiting the bank's internet website and clicking on their privacy policy link. Many banks and credit card companies will also let you opt-out by phone, or you can contact them and request an opt-out form be mailed to you.

Cardmember Benefits -- Visa Warranty Manager

2009-03-18T23:43:00.000-04:00

Many of the major brands of credit card, like Visa, provide cardmembers with ancillary benefits. One often misunderstood benefit deals with extended warranty protection. But what does this service truly involve and how is it activated?

In the case of Visa, their Warranty Manager protection service is an automatic feature of the credit card, regardless of which bank issues the plastic. Details of the program are typically covered in the cardmember agreement, which is required to be sent to all approved applicants along when a new credit card is mailed. Basically, the service automatically doubles a manufacturers product warranty.

To take advantage of this service a consumer and receive the warranty extension, a Visa credit card cardmember only needs to use their Visa card to purchase an item that has its own warranty coverage. Then, the consumer needs to send in the warranty registration card that accompanies most items to activate the standard warranty. Once the item is out of warranty, typically beyond one year from the date of purchase, the Visa warranty kicks in for an identical period of coverage. If the item purchased breaks or is deemed defective during that extended period, Visa will credit the purchase price back to the consumers credit card.

What types of products are covered? Normally, those types of products that carry a standard manufacturers warranty, which include most electronics and small appliances. Also included, however, are larger appliances such as washer/dryers, plasma TVs and home theater systems. As long as you have a large enough credit limit to cover the purchase on a Visa credit card, and you take the time to register the product with the manufacturer, you should be eligible to receive the warranty extension.

These types of cardmember benefits are in fact insurance policies. The major credit card associations like Visa and MasterCard fund these policies as standard benefits of carrying their brand of payment card. The cost of the programs are then born by the issuers, who must pay fees back to the card associations in order to issue their brand of credit card to the public. But are they a good deal for the consumer? Absolutely. They clearly add value to the process of using a credit card for purchases and give the consumer added protection and flexibility should they not be satisfied with their merchandise.

Online Account Management

2009-03-18T23:41:00.001-04:00

So, you have a new credit card or maybe an old favorite that you have managed the old fashioned way (by reviewing paper billing statements sending payments back through the mail). The internet continues to make our lives easier in so many ways and it only makes sense to leverage technology to it's fullest to make your financial life as easy as possible.

How does one get started in order to manage your credit card account online and pay bills with the push of a button? The first place to start is to determine your bank or credit card issuer's website address. Normally it is not to obscure - simply look it up through a search engine like Yahoo! or Google by typing in your bank name to find the exact address. The web address is also often listed on the back of your credit card. You can call the toll-free customer service number listed on the back of the card as well to access additional help, if needed.

Once you've obtained the website address it's simply a matter of establishing online access to view your information through the credit card issuing bank's website. This requires choosing a user ID and password. Once this is done the bank will usually send the account holder a confirmation email and often a temporary ID is mailed to the permanent address of the account holder. The temporary ID is often mailed because it adds an important layer of security to ensure it is actually the cardholder or bank customer that is requesting online access to the account. Since this process can take over one week to complete, it's important not to wait just prior to a bill coming due before assuming it can be paid online.

Once access is established, financial life gets much simpler. Customers can view available credit lines, recent charges as well as make payment on current credit card balances due. Another great thing about using online account management for credit cards is the ability to pay many third party bills automatically. These types of recurring payments are growing in acceptance by many types of service providers that once only accepted checks for payments. Utility providers such as cable TV, gas and electric, city services and wireless phone and internet now accept online payments by credit card. Even things like mortgage and rent can often be charged by credit card.

If you have a rewards credit card, paying monthly, non-discretionary bills can really help ad up points, cash back or miles that otherwise would take much longer to accumulate. Smart consumers look for every way possible to move everyday spending from cash or check to a rewards credit card. If you are not able to pay your balance off in full each month it's probably not a good idea to make non-discretionary core payments like mortgage, rent or utilities on a credit card, however. Credit card purchases can get out of hand really quickly if you add discretionary and non-discretionary items together. It's best to live within your means - and some types of cards can help get you back on the road to financial health (like those that offer 0% interest for a year while you pay off the principal).

Online account management is a wonderful convenience of the age in which we live. If you haven't made this transition in your financial life, it might finally be time.

Skimming -- What it is and How to Avoid Being a Victim

2009-03-16T22:43:00.001-04:00

Skimming is not exactly a new phenomenon, but it continues to make the news in many regions around the country. What it involves is a small bit of elicit technology and some criminal intent on the part retail employees that enables the theft of credit card information. Skimming most frequently occurs at retail outlets that often process credit card payments - particularly bars, restaurants and gas stations. The crime involves a corrupt employee who skims customer credit cards with a small, hand-held electronic device that can read the data on the magnetic strip. The employee usually sells the information through a contact or on the internet, at which point counterfeit cards can then be made. Criminals can then go shopping with a copy of the credit card or debit card with the cardholder unaware of the fraud until a statement arrives showing purchases they did not make or authorize.

How to prevent yourself from becoming a victim?

Closely guard your credit cards - treat them in the same way that you would treat your cash. Try not to let your credit card or debit card out of your sight when making a transaction. Monitor credit card receipts and check them against your statements carefully. If you notice an unfamiliar transaction, contact your bank or credit card issuer immediately. The customer service number is printed on the reverse side of most credit cards and debit cards.

* To further protect yourself from potential unauthorized charges or identity fraud, you can request that credit bureaus monitor your accounts for unusual spending patterns and require them to notify you before new credit can be granted in your name. These services come at a price, normally under $100 per year depending on the credit agency. But, that is definitely cheaper than the ultimate cost of identity theft that can be caused by skimming and might be a good investment if you eat out in restaurants on a regular basis.

What to do if you're a victim of credit card fraud?

As stated above – contact your bank or credit card issuer immediately. If you don't make a report in a reasonable time frame you may be liable for some or all of the unauthorized charges. Another step is to contact one of the three major credit bureaus to request a security freeze to be applied which only allows new credit to be authorized with your express consent.

If your credit card is used fraudulently and you still have the credit card in your possession, you will not be liable to pay for any part of the losses. You would probably still have your card in your possession if you are a victim of card-not-present fraud or if your credit card has been skimmed and a fake version produced. If someone else uses your credit card before you tell your card issuer that it has been lost or stolen, the most you will have to pay, generally, is $50. Fraudulent charges are easier to correct with a credit card (as compared to a debit card) since the money has not been taken out of your personal checking or savings account yet.

Credit Card Phishing -- What it Means and How to Prevent It

2009-03-16T22:42:00.000-04:00

Phishing (the attempt to obtain an individual's credit card and other personal information for fraudulent use) has become a part of the American lexicon in recent years, and it doesn't involve a lazy afternoon sitting on the dock with a cold beverage. This type of phishing is an insidious form of fraud primarily being perpetrated by thieves who pretend to represent legitimate companies through email and telemarketing in order to get information about individuals' credit cards.

While the advent of the Internet has created an incredible advancement in convenience, including the use of credit cards for online payments, it has also proved to be a boon for those who wish to commit fraud. The theft of information over the Internet has been somewhat tempered by online security measures and consumers can generally feel secure when shopping on websites that display a lock icon and an "https" heading in the Internet browser. These are indications that an online retailer offers a highly secure website employing the latest in secure socket layer technology, which fully encrypts personal and credit card account data.

The situations that consumers need to guard against almost always involve an individual voluntarily handing over sensitive personal information. When would anyone willingly do this, you ask? It happens everyday according to Internet security professionals. What happens is a person will receive an official looking email from a trusted source, such as their bank, Paypal or eBay. In other words, a source with which the consumer has had past dealings and with whom they already have an online account established. The fraudulent email will come with all the right wording and company logos and will typically profess to be doing a security check, requiring the customer to verify personal information.

Since the advent of these so called phishing scams, most financial companies and online retailers have advised customers to never provide personal information through an unsolicited email. Reputable companies will never ask for such information and consumers should be highly suspicious of any such requests on their behalf. Most banks and retailers ask that suspicious emails involving credit card accounts be reported to them in order for their internal security teams to stay abreast of the latest phishing techniques.

So how do you keep your personal information personal? Don't respond to any requests that you haven't initiated when it comes to providing sensitive data, such as date of birth, social security number, mother's maiden name or the 3-digit security code on the back of your card. Even if someone calls you up and says they are with your credit card company investigating a potential identity theft. This new scam being perpetrated involves stolen credit card numbers that are used to contact the real cardholders in order to obtain the security code on the back of the credit card. Once this code is obtained thieves can use a victim's credit card to shop online almost anywhere, completely anonymously.

Privacy Options -- How to Opt Out

2009-03-06T23:38:00.003-05:00

Credit cards, ATM cards, and debit cards provide a high level of convenience for people, but if they are lost or stolen, the effects can be drastic. If you experience a loss or theft of credit cards, ATM cards, or debit cards, immediately report them to the credit card issuing companies. In addition, follow up your calls with letters detailing We get a lot of junk in the mail. Most of it probably ends up in the garbage. One thing you may be getting that you think is junk mail from your credit card company can actually be a credit card privacy notice that includes details of your privacy options. This is NOT junk mail. Most likely the details found in these notices will tell you how to opt out of future mailings and information sharing.

These notices explain many things. They explain:

What personal finance information the company collects
Whether they intend to share that information
What you can do to limit that sharing
How the company protects your personal financial information

Many companies MUST send out these notices. They include:

Banks
Credit Card Issuers
Insurance companies
Brokerage firms
Retail stores that issue their own credit cards
Mortgage brokers
Check cashers
Financial advisors

Why do they share my information?

There are many reasons companies might share your information—and not all of them are bad. They may want to offer you new services or introduce new products. And there is money to be made by sharing your information as well. But if you want to learn about their products, then you may want them to share your information. But if you don’t want a lot of junk mail from marketers, then you may want to limit the amount of information that is shared about you.

How can I limit the sharing of my information?

There are ways you can limit the information that is shared. To do that, you MUST read the privacy notices. They will tell you how the company will handle the sharing of your information.

There is certain information that you have the right to stop, or “opt-out” of. This includes information sent to:

Affiliates: part of the same corporate group as your financial company
Non-affiliates: not part of the same corporate group

But there is some information that companies don’t have give you the right to opt out of. Your financial company can give non-affiliates information such as:

Your payment history on loans and credit cards. This type of information goes to credit bureaus that monitor your credit report
Information demanded by a court order
Records of your payments to data processing firms

What does opting out do?

Opting out limits the extent to which a company can share your information. As stated before, it cannot completely stop them, but it will limit what they can send to non-affiliates. Usually you can opt-out within 30 days after you receive your privacy notice. If you don’t opt out within that time, they will share your information. But you can still opt out later. Just contact your financial company and ask them what you have to do.

So now what do I do?

There are certain steps you should follow when you receive privacy notices:

Read the notice
Ask your financial company any questions you might have
Decide whether to opt out or not
If you choose to opt out, follow the instructions provided with the notice

What if I need more help?

There are many places you can turn to if you are concerned about a company’s privacy policies. The best thing is to contact that company directly, but if that still doesn’t’ help you, then you can contact the federal or state agency that oversees that company’s industry. Here is a brief list of those agencies and their contact information for your reference:

Board of Governors of the Federal Reserve System
Regulates state-chartered banks that are members of the Federal Reserve System

Division of Consumer and Community Affairs, Stop 801
20th and C Streets, NW
Washington, DC 20551202-452-3693
http://www.federalreserve.gov/

Commodity Futures Trading Commission
Regulates commodity brokers, commodity trading advisors, commodity pools, and introducing brokers

Privacy Officer, Office of Chief Counsel
Division of Trading and Markets
Three Lafayette Center
1155 21st Street, NW
Washington, DC 20581
202-418-5430
http://www.cftc.gov/

Federal Deposit Insurance Corporation
Regulates state-chartered banks that are not members of the Federal Reserve System

Division of Compliance and Consumer Affairs
550 17th Street, NW
Washington, DC 20429
877-ASK-FDIC or 877-275-3342 toll-free
http://www.fdic.gov/

Federal Trade Commission
Regulates any financial company not covered by the other federal regulators such as mortgage brokers, tax and investment services, finance companies, credit bureaus, non-bank lenders, auto dealers, leasing companies, appraisers, real estate settlement services, credit counseling services, and collection agency services

Consumer Response Center
600 Pennsylvania Avenue, NW
Washington, DC 20580
877-FTC-HELP or 877-382-4357 toll-free
www.ftc.gov (see also)
www.consumer.gov/idtheft/

National Credit Union Administration
Regulates federally chartered credit unions

Office of Public and Congressional Affairs
1775 Duke Street
Alexandria, VA 22314-3428
703-518-6330
http://www.ncua.gov/

Office of the Comptroller of the Currency
Regulates national banks. These typically include banks with "national" or "N.A." in their names.

Customer Assistance Group
1301 McKinney Street
Suite 3710
Houston, TX 77010
800-613-6743 toll-free
http://www.occ.treas.gov/

Office of Thrift Supervision
Regulates federal savings and loan associations and federal savings banks

Consumer Programs
1700 G Street, NW
Washington, DC 20552
800-842-6929 toll-free
http://www.ots.treas.gov/

Securities and Exchange Commission
Regulates brokerage firms, mutual fund companies, and investment advisors

Office of Investor Education and Assistance
450 5th Street, NW
Washington, DC 20549-0213
202-942-9634 fax
www.sec.gov/complaint.shtml

What to Do When Credit Cards Are Lost or Stolen

2009-03-06T23:35:00.001-05:00

Fortunately, a cardholder’s maximum liability for unauthorized use of a credit card is $50. If you report the loss before your credit cards are used, you have no responsibility for any unauthorized charges. Liability for unauthorized use of ATM or debit cards depends on how quickly the cardholder reports the loss. Losses can be heavy for ATM or debit cardholders if they are not reported in a timely manner.

Individuals who have reported credit cards lost or stolen should carefully review billing statements and report unauthorized charges to the card issuer along with all pertinent card information. Unauthorized transactions for ATM or debit cards will appear on bank statements, and should be reported to the bank that issued the card.

Prevent credit card fraud by always keeping the cards in a safe place, using an obscure Personal Identification Number (PIN) for ATM and debit cards, and memorizing your PIN. Never use your birth date, phone number, or social security number or any other easily determined number or word as your PIN.

The best way to keep your credit cards, ATM cards, and debit cards safe.

There are a few steps that you can take to prevent unauthorized use of the cards:

Only disclose your credit card or ATM card account number over the telephone if it is to a reputable company.
Never put your credit card account number on the outside of an envelope or on a postcard.
Draw a line through blank spaces on charge or debit slips above the total so the amount cannot be changed.
Destroy card carbons and save receipts to check against monthly statements.
Cut up old cards - cutting through the account number - before disposing of them.
Open monthly statements promptly and compare them with receipts.
Keep records of your cards’ account numbers, expiration dates, and the telephone numbers of each card issuer in a safe place.
Carry only the cards you expect to use.
Never carry your ATM or debit card PIN in your wallet or purse.
Do not write your PIN on the card or anyplace where it might be seen.
Check account activity frequently especially if you bank online.

A number of federal agencies enforce the laws that govern credit card and ATM or debit card transactions. Questions concerning a particular card issuer should be directed to the enforcement agency responsible for that issuer.

Limiting Your Financial Loss

2009-03-06T23:31:00.002-05:00

When a credit card goes missing, the first thing you think of is: How can I limit my financial losses? Luckily, there are several ways you can protect yourself, your financial history and your credit from damage and protection under the law to help with any financial loss.

Steps You Can Take:

Report Loss/Theft of Credit Card - Report the loss or theft of your credit cards and your ATM or debit cards to the card issuers as quickly as possible. Many companies have toll-free numbers and 24-hour service to deal with such emergencies. It's a good idea to follow up your phone calls with a letter. Include your account number, when you noticed your credit card was missing and the date on which you first reported the loss.
Review Billing Statements - After the loss, review your billing statements carefully. If they show any unauthorized charges, it's best to send a letter to the credit card issuer describing each questionable charge. Again, tell the credit card issuer the date your card was lost or stolen, or when you first noticed unauthorized charges, and when you first reported the problem to them. Be sure to send the letter to the address provided for billing errors. Do not send it with a payment or to the address where you normally send your payments, unless you are directed to do so.
Check Homeowner’s Insurance Policy - Check your homeowner's insurance policy to see if it covers your liability for card thefts. If not, some insurance companies will allow you to change your policy to include this protection.

Federal Protection Facts:

Fair Credit Billing Act (FCBA) Your maximum liability under federal law for unauthorized use of your credit card is $50. If you report the loss before your credit cards are used, the FCBA says the card issuer cannot hold you responsible for any unauthorized charges. If a thief uses your cards before you report them missing, the most you will owe for unauthorized charges is $50 per card. Also, if the loss involves your credit card number, but not the card itself, you have no liability for unauthorized use.

Electronic Funds Transfer Act (EFTA)

Your liability under federal law for unauthorized use of your ATM or debit card depends on how quickly you report the loss. If you report an ATM or debit card missing prior to its fraudulent usage, the EFTA says the card issuer cannot hold you responsible for any unauthorized transfers. If unauthorized use occurs before you report it, your liability under federal law depends on how quickly you report the loss.

For example, if you report the loss within two business days after realizing your card is missing, you will not be responsible for more than $50 worth of unauthorized use. However, if you don't report the loss within two business days after discovering the card missing, you could lose up to $500 of unauthorized transfer. You may also risk unlimited loss if you fail to report an unauthorized transfer within 60 days after your bank mails a statement containing unauthorized use to you. That means you could lose all the money in your bank account as well as the unused portion of your line of credit established for overdrafts. However, for unauthorized transfers involving only your debit card number (not the actual loss of the card), you are liable only for transfers that occur more than 60 days following the mailing of your unauthorized use-containing bank statement and before you report the loss.

If unauthorized transfers show up on your bank statement, report them to the card issuer as quickly as possible. Once you've reported the loss of your ATM or debit card, you cannot be held liable for additional unauthorized transfers that occur after that time.

Before you have that moment of panic, take the steps to protect your credit and your credit cards. Remember, your credit is extremely important and you don’t want someone else causing you trouble.

Do's and Don'ts When Closing Old Accounts

2009-02-27T14:57:00.002-05:00

It is always important to not have more credit card accounts than you can handle. When you do open a new account because of a better interest rate, a promotional offer or for whatever reason, you should always close any current credit card accounts you no longer plan on using. There are many reasons why you should do this:

Helps you keep track of your credit cards
Keeps your credit report cleaner
Qualifies you for loans by lowering the amount of revolving debt
Helps you avoid unnecessary fees
Prevents you from being a victim of identity theft
To help you understand what you should and should not do when closing old credit card accounts, here are a few tips to keep in mind.

What you should DO when closing credit card accounts…

Close unused and idle credit card accounts. – Doing so prevents your from being a victim of identity theft and from being charged annual fees for unused cards.
Cancel credit card accounts with current balances that you want to pay off and no longer use. – If don’t want to use a credit card anymore, you can close the account and then concentrate on paying off the balance. This strategy keeps you from spending more on that account and lowers your amount of available debt when applying for a loan.
Ensure you still have several credit card accounts open. – Keeping several credit card accounts open will keep your credit score and debt balances healthy. Creditors view signs of activity and responsible credit use positively. However, you must use these credit card accounts responsibly or you could find yourself suffering from a poor credit rating.
Have one card designated for regular use and pay it off each month. – This one card can be reserved for everyday spending while your other credit cards can be used for emergency or specific purposes, such as vacations, business trips, etc. By paying off this one card each month, you won’t need to worry about carrying a balance when using the other cards for higher priced items.
Check your credit report. – After closing an account, check your credit report to ensure that the accounts have been marked as closed and to determine whether there are any errors. Look for late payments, high balances and signs of identity theft.
Destroy canceled credit cards. – It is important to cut up closed credit card accounts by cutting through the account number. This prevents someone else from stealing your credit card and reopening the account.

What you should NOT DO when closing credit card accounts…

Don’t close your oldest credit card account. - This could cause your credit history to appear shorter and could harm your credit score. Better to keep the account open and not use it or just use it infrequently. If you want to close it because of a higher interest rate, contact the credit card company to see about lowering the APR.
Don’t expect credit card accounts to close automatically. – The only way an account is closed is if you contact the credit card company in writing asking to close the account. Contact their customer service department if you need their mailing address. Typically, they will confirm that the account is closed within 10-15 days.
Don’t be pressured into canceling several accounts at once. – It is better to gradually pay down and then close the accounts if you are unsure about the impact doing so will have on your credit score or you are uncertain as to the amount of debt you need to carry. You may need those credit cards again in the future.
Avoid over-consolidating balances onto one card. - If your credit balances rise to above 50% of your available limits, you may see a drop in your credit score.
Having a credit card is a privilege and a benefit that many people enjoy. Be smart when closing old accounts to ensure you get the best possible APRs and benefits from your credit cards.

Protecting Your Credit Cards

2009-02-27T14:54:00.002-05:00

When most people think of protecting their credit cards, they are thinking about protecting their credit or credit ranking, not the actual credit card. As a responsible credit card user, you want to ensure you will get the best rates and benefits associated with a strong credit rating. However, it is not enough to safeguard your credit card’s usage. You must also ensure that your credit card and credit card number do not fall into the hands of those who do not care about your financial responsibilities. Do not allow your credit card information to unwittingly reach the eyes of those who see your personal credit card as free money.

To ensure that your credit card remains safe from unauthorized charges, here are a few ways you can protect your credit:

Don’t give your credit card account number out over the phone without knowing why. – Know who is asking for your number on the phone before giving out the number. Make sure that person is employed by a reputable catalogue company, organization or business.
Don’t use your credit card on an unsecured Website. – Online purchases are fast and easy. However, unless the Website is secure, your credit card number is at risk for being stolen. Use only Websites that explicitly state they are secure and reputable businesses and for which such claims can be verified.
Don’t put your credit card account number on the outside of an envelope or on a postcard. – Anyone could see this information. If necessary, include any credit card or account numbers on information inside the envelope only and make sure such details can’t be seen through the envelope.
Don't sign a blank charge slip. – Always know how much the charge will be and verify the amount from the receipt given to you.
Get and destroy charge carbons from stores. – When you receive your charge receipt, you should also get the charge carbons from the store. Note: some store use carbonless charge slips nowadays to ensure your credit safety. If the cashier does not give you the carbon, ask for it immediately and then tear it up into small pieces before throwing it away.
Check your monthly statement. – Don’t automatically pay your credit card bill each month or let it sit on your desk. Open your statement immediately and look closely at each listed charge to verify the amount and whether you actually made such a purchase. If something is wrong, contact your credit card company immediately. This way, you will be able to determine if there was an error or whether any other recent unauthorized charges have been made to your card.
Cut up old credit cards through the account number. – When you get a new card or close an account, cut up the old card through the account number so it can’t be identified.
Protect your credit card and pin numbers at ATMs or when using the telephone. – If you use your credit card for cash advances or for long distance charges on a payphone, be sure to stay aware of the people around you. Some credit card thieves memorize credit card and pin numbers from the buttons you push on the phone. Use your body to block anyone’s line of vision.
Carry as few credit cards as possible. – People with multiple credit cards should only carry a few that they anticipate using. For example, if you carry an emergency card and a gas card, you don’t also need to carry another general credit card like a Visa or a store credit card, unless you plan to go to that store. By being selective in the card you carry, if you happen to lose your wallet or purse, only a few cards are at risk of being misused, rather than all of them. If you do lose a credit card, report it immediately.

Though most credit card companies and banks offer unauthorized protection, ultimately, you are responsible for how your credit card is used. Your credit rating is important, so protect your credit the way you would protect a wallet full of cash. For more information on how to protect your credit cards or on how to resolve problems from unauthorized charges, contact your credit card issuer or your financial advisor.

Reviewing Your Credit Report Yearly

2009-02-27T14:48:00.004-05:00

It is critical that you periodically review your credit report for inaccuracies or omissions, especially if you're considering making a major purchase, such as buying a home. Checking in advance on the accuracy of credit card and other financial information in your credit file could speed the credit-granting process.

If you've been denied credit, insurance, or employment because of information supplied by a CRA, the FCRA says the company you applied to must give you the CRA's name, address, and telephone number. If you contact the agency for a copy of your report within 60 days of receiving a denial notice, the report is free. In addition, you're entitled to one free copy of your report a year if you certify in writing that (1) you're unemployed and plan to look for a job within 60 days, (2) you're on welfare, or (3) your report is inaccurate because of fraud. Otherwise, a CRA may charge you up to $9.00 for a copy of your report.

You can request a copy of your credit report by simply calling a credit bureau. The three national credit bureaus are:

Equifax
P.O. Box 740241, Atlanta, GA 30374-0241; (800) 685-1111
Experian (formerly TRW)
P.O. Box 2002, Allen, TX 75013; (888) EXPERIAN (397-3742)
TransUnion
P.O. Box 1000, Chester, PA 19022; (800) 916-8800

Under the FCRA, both the CRA and the organization that provided the information, such as a bank or credit card company, have responsibilities for correcting inaccurate or incomplete information in your report. To protect all your rights under the law, contact both the CRA and the information provider.

First, tell the CRA in writing what information you believe is inaccurate. Include copies (NOT originals) of documents that support your position and all pertinent information. Enclose a copy of your report with the items in question circled. Send your letter by certified mail, return receipt requested, so you can document what the CRA received. Keep copies of your dispute letter.

CRAs must reinvestigate the items in question unless they consider your dispute frivolous. Disputed information that cannot be verified must be deleted from your file. If your report contains erroneous information, the CRA must correct it. If an item is incomplete, the CRA must complete it. If your file shows an account that belongs to another person, the CRA must delete it. When the reinvestigation is complete, the CRA must give you the written results and a free copy of your report if the dispute results in a change.

Upon request, the CRA must send notices of corrections to anyone who received your report in the past six months. Job applicants can have a corrected copy of their report sent to anyone who received a copy during the past two years for employment purposes.

Second, tell the creditor or other information provider in writing that you dispute an item. When negative information in your report is accurate, only the passage of time can assure its removal. Accurate negative information will stay on your report for seven years, but there are exceptions:

Information about criminal convictions may be reported without any time limitation.
Bankruptcy information may be reported for 10 years.
Credit information reported in response to an application for a job with a salary of more than $75,000 has no time limit.
Credit information reported because of an application for more than $150,000 worth of credit or life insurance has no time limit.
Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer.
Criminal convictions can be reported without any time limit.

Your credit file may not reflect all your credit accounts. Although most national department store and all-purpose bank credit card accounts will be included in your file, not all creditors supply information to CRAs. If you've been told you were denied credit because of an "insufficient credit file" or "no credit file" and you have accounts with creditors that don't appear in your credit file, ask the CRA to add this information to future reports. You should, note that if these creditors do not report to the CRA on a regular basis, these added items will not be updated in your file.

Below is a sample letter that could be used to dispute an inaccurate credit report.

---------------------------------------------------------------

Date

Your Name
Your Address
Your City, State, Zip Code

Complaint Department
Name of Credit Reporting Agency
Address
City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute are also encircled on the attached copy of the report I received.

(Identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.)

This item is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely,

Your name

Enclosures: (List what you are enclosing)

---------------------------------------------------------------

Taking care of credit history will help you protect not only your future buying power, but will ensure you are not a victim of credit fraud or identity left. If you have questions about how this can affect your specific financial situation, contact your accountant of financial advisor.

What is a Credit Score and How Does it Affect Me?

2009-02-27T14:44:00.002-05:00

What is a Credit Score?

You’ve heard of a credit report, but you don’t understand what a credit score is. Furthermore, you’re unsure as to how this affects you when applying for a new credit card. A credit score is a sum that is determined by lenders using a mathematical formula and is derived from information taken from your credit report. This sum is an indicator of how likely you are to repay your loans. In other words, this is how lenders determine if you are a risk for lending money to or if are going to be an ideal creditor who will pay your bills on time and in full.

Lenders have been using credit scores as part of the lending decision for over 20 years. There are several factors the can influence your credit score:

How you paid previous debts
How much you still owe to other creditors
How long you have had credit (length of credit history)
Number of bankruptcies, charge-offs, and collections
Current available credit

When all this information is factored together, the lenders determine your overall credit score.

How does my credit score affect me?

A credit score is just a number; however, it is a very important number. It is a vital indicator of your financial health, in the same way that your cholesterol number is just a number until you realize the significance that number has on your overall health. To avoid a financial heart attack, it is important to become familiar with your credit report and to rectify any mistakes or errors that could negatively impact your credit score.

Lenders use credit scores to:

Determine creditworthiness (whether or not they will give you the loan)
What Annual Interest Rate (APR) to charge on credit cards

A good credit score can help you get prime rates that will save you money over the long run. A not so good credit score, on the other hand, could cause you to receive an APR that is a couple of points above the prime rate, which will cost you a lot more money over the long haul.

What is a "good" credit score?

Generally, the higher the score, the better. Each lender determines what their “good” credit score range is and what constitutes a risk. Therefore, it is best to discuss with the lender what their criteria for credit scoring is and how this could affect your application.

If you have additional questions about credit scores and how they relate to your personal financial situation, contact a financial advisor or a loan professional.

Credit Reporting Q&A

2009-02-14T18:08:00.003-05:00

If you've ever applied for a credit card, charge account, a personal loan, insurance, or a job, there's a file about you. What’s in this file? This file is called a credit report, and it has information about where you work and live, how you pay your bills (especially revolving credit cards), and whether you've been sued, arrested, or filed for bankruptcy.

There are companies called credit reporting agencies (CRAs) that compile this information and sell it. What they do is give companies information about you to gauge your creditworthiness. They give this information about you to creditors, employers, insurers, and other businesses. You probably know the CRAs known as credit bureaus. The three most common ones are Equifax, Trans Union, and Experian.

The Fair Credit Reporting Act (FCRA) is designed to promote accuracy and ensure the privacy of the information used in consumer reports. It is enforced by the Federal Trade Commission.

Below are some commonly asked questions and answers about consumer reports and CRAs:

Q. How do I find the CRA that has my report?
A. Look in the yellow pages under "credit" or "credit rating and reporting." The three major national credit bureaus are:

Equifax
800-685-1111
www.equifax.com

Experian
888-EXPERIAN (888-397-3742)
www.experian.com

Trans Union
800-916-8800
www.transunion.com

If you are ever denied credit, the one who denied you has to tell you which agency they got your information from. You are then able to receive a free copy from that bureau.

Q. Do I have a right to know what's in my report?
A. Yes. But you have to ask for it. They will tell you everything that is in your report.

Q. Is there a charge for my report?
A. Sometimes. If you just want to look at your credit report, then you have to pay for it. But if you are denied for credit, insurance or employment, and you request your report within 60 days, it is free. Fees vary from agency to agency.

Q. What can I do about inaccurate or incomplete information?
A. Under the Fair Credit Reporting Act, there is a process you must follow when disputing information.

Tell the CRA in writing that you dispute the information. Provide any supporting documentation that you might have.
The agency will investigate. It usually takes 30 days for this.
Then the CRA will give you written notice of the results and a free credit report.
If the information was inaccurate, it will be taken off your credit report.

Q. But what if the CRA says the incorrect information is accurate?
A. A reinvestigation is not always going to solve your credit issue. If the creditor says the information is correct, most likely the CRA will believe them. The best you can do is:

Ask the CRA to file a statement that you dispute the charge
Contact your creditor directly and resolve the issue with them first, and then ask the CRA for another investigation.

Under the Fair Credit Reporting Act if you tell the information provider that you dispute an item, a notice of your dispute must be included anytime the information provider reports the item to a CRA.

Q. Can my employer get my report?
A. Only if you approve.

Q. Can creditors, employers, or insurers get a report that contains medical information about me?
A. Not without your approval.

Q. How long can a CRA report negative information?
A. 7 years, with the following exceptions:

Criminal convictions have no time limit
Bankruptcy is for 10 years
No time limit on a job application for a $75,000 or more job
No time limit on insurance application of more than $150,000
Unpaid judgments are either for 7 years or when the statute of limitations runs out, whichever is longer.

Q. Can anyone get a copy of my report?
A. No. Only those that the FCRA deems has a legitimate need can get it. For example, an insurance company when you apply for insurance can get it, but not a chicken restaurant when you buy a meal deal with 10 pieces or more.

Q. Can I stop a CRA from including me on lists for unsolicited credit and insurance offers?
A. Yes. Creditors and insurers may use information from your credit report to send you unsolicited offers. But these offers have to have a toll-free number that you can call to get your name removed from their lists.

Q. Do I have the right to sue for damages?
A. You bet you can. You may sue a CRA in state or federal court for most violations of the FCRA. If you win, the defendant will have to pay damages and reimburse you for attorney fees. But it must be for a violation of the Fair Credit Reporting Act, not because of inaccurate information.

Q. Are there other laws I should know about?
A. Yes. If your credit application was denied, the Equal Credit Opportunity Act requires creditors to specify why. But you have to ask. . For example, if you were denied because you have a short credit history, then they have to tell you that. “Just because” won’t cut it.

Q. Where should I report violations of the law?
A. Since the Fair Credit Reporting Act is enforced by the FTC, you can send them information about your experiences and concerns as it related to the Fair Credit Reporting Act. Send your questions or complaints to: Consumer Response Center - FCRA, Federal Trade Commission, Washington, DC 20580.

What is a Credit Report?

2009-02-13T23:13:00.002-05:00

You’ve heard other people talk about it, and you know it is important. But, what is a credit report? Put simply, your credit report is what lenders look at when deciding whether or not to approve you for a new credit card or other loan application. A good credit report can get you better credit card APRs or car loan rates. On the other hand, a bad credit report can also cause you a lot of problems.

There are three major credit agencies: Equifax, Experian, and TransUnion. These agencies, or "credit bureaus," collect and report information about your financial habits and put this information into a credit report. Your credit report typically includes:

Your name
Your Social Security number
Your current and previous addresses
Information about your current and past loans
Your public record information (bankruptcies, court judgments, liens)
A list of companies that have reviewed your credit

Your credit report demonstrates to potential lenders how you handle debt and helps them to determine whether or not you are a good candidate to lend money to. That is why it is important to look at your credit report once a year. This way, if there are any mistakes or problems, you can resolve them with the credit bureau before applying for a new loan.

You can visit any of the three aforementioned credit agencies’ Websites to purchase a copy of your credit report.

Credit and Consumer Rights

2009-02-12T14:24:00.004-05:00

Know Your Consumer Rights

A good credit rating is very important. Businesses inspect your credit history when they evaluate your applications for a credit card, insurance, employment, and even leases. Based on your credit payment history, businesses can choose to grant or deny you credit provided you receive fair and equal treatment. Sometimes, things happen that can cause credit problems: a temporary loss of income, an illness, even a computer error. Solving credit problems may take time and patience, but it doesn’t have to be an ordeal if you know your consumer rights.

The Federal Trade Commission (FTC) enforces credit laws that protect your right to obtain, use, and maintain credit. These laws do not guarantee that everyone will receive credit. Instead, the credit laws protect your rights by requiring businesses to give all consumers a fair and equal opportunity to receive credit and to resolve disputes over credit errors. This brochure explains your rights under these laws and offers practical tips to help you solve credit problems.

Your Credit Report

Your credit card and other debt payment history is recorded in a file or report. These files or reports are maintained and sold by "consumer reporting agencies" (CRAs). One type of CRA is commonly known as a credit bureau. You have a credit record on file at a credit bureau if you have ever applied for a credit or charge account, a personal loan, insurance, or a job. Your credit record contains information about your income, debts, and credit payment history. It also indicates whether you have been sued, arrested, or have filed for bankruptcy.

The Fair Credit Reporting Act (FCRA) is designed to help ensure that CRAs furnish correct and complete information to businesses to use when evaluating your application.

Your rights under the Fair Credit Reporting Act:

You have the right to receive a copy of your credit report. The copy of your report must contain all of the information in your file at the time of your request.
You have the right to know the name of anyone who received your credit report in the last year for most purposes or in the last two years for employment purposes.
Any company that denies your application must supply the name and address of the CRA they contacted, provided the denial was based on information given by the CRA.
You have the right to a free copy of your credit report when your application is denied because of information supplied by the CRA. Your request must be made within 60 days of receiving your denial notice.
If you contest the completeness or accuracy of information in your report, you should file a dispute with the CRA and with the company that furnished the information to the CRA. Both the CRA and the furnisher of information are legally obligated to reinvestigate your dispute.
You have a right to add a summary explanation to your credit report if your dispute is not resolved to your satisfaction.

Your Credit Application

When creditors evaluate a credit application, they cannot lawfully engage in discriminatory practices.

The Equal Credit Opportunity Act - (ECOA) prohibits credit discrimination on the basis of sex, race, marital status, religion, national origin, age, or receipt of public assistance. Creditors may ask for this information (except religion) in certain situations, but may not use it to discriminate when deciding whether to grant you credit.
The ECOA - protects consumers who deal with companies that regularly extend credit, including banks, small loan and finance companies, retail and department stores, credit card companies, and credit unions. Everyone who participates in the decision to grant credit, including real estate brokers who arrange financing, must follow this law. Businesses applying for credit also are protected by this law.

Your rights under the Equal Credit Opportunity Act:

You cannot be denied credit based on your race, sex, marital status, religion, age, national origin, or receipt of public assistance.
You have the right to have reliable public assistance considered in the same manner as other income.
If you are denied credit, you have a legal right to know why.

Your Credit Billing and Electronic Fund Transfer Statements

It is important to check credit billing and electronic fund transfer account statements regularly. These documents may contain mistakes that could damage your credit status or reflect improper charges or transfers. If you find an error or discrepancy, notify the company and contest the error immediately.

The Fair Credit Billing Act (FCBA) and Electronic Fund Transfer Act (EFTA) establish procedures for resolving mistakes on credit billing and electronic fund transfer account statements, including:

charges or electronic fund transfers that you — or anyone you have authorized to use your account — have not made; charges or electronic fund transfers that are incorrectly identified or show the wrong amount or date;
computation or similar errors;
failure to reflect payments, credits, or electronic fund transfers properly;
not mailing or delivering credit billing statements to your current address, as long as that address was received by the creditor in writing at least 20 days before the billing period ended; charges or electronic fund transfers for which you request an explanation or documentation, due to a possible error.

The FCBA generally applies only to "open end" credit accounts — credit cards, revolving charge accounts (such as department store accounts), and overdraft checking accounts. It does not apply to loans or credit sales that are paid according to a fixed schedule until the entire amount is paid back, such as an automobile loan. The EFTA applies to electronic fund transfers, such as those involving automatic teller machines (ATMs), point-of-sale debit transactions, and other electronic banking transactions.

Your Debts and Debt Collectors

You are responsible for your debts. If you fall behind in paying your creditors or an error is made on your account, you may be contacted by a "debt collector." A debt collector is any person, other than the creditor, who regularly collects debts owed to others. This includes lawyers who collect debts on a regular basis. You have the right to be treated fairly by debt collectors.

The Fair Debt Collection Practices Act (FDCPA) applies to personal, family, and household debts. This includes money owed for the purchase of a car, for medical care, or for charge accounts. The FDCPA prohibits debt collectors from engaging in unfair, deceptive, or abusive practices while collecting these debts.

Your rights under the Fair Debt Collection Practices Act:

Debt collectors may contact you only between 8 a.m. and 9 p.m.
Debt collectors may not contact you at work if they know your employer disapproves.
Debt collectors may not harass, oppress, or abuse you.
Debt collectors may not lie when collecting debts, such as falsely implying that you have committed a crime.
Debt collectors must identify themselves to you on the phone.
Debt collectors must stop contacting you if you ask them to in writing.

Solving Your Credit Problems

Your credit report influences your purchasing power, as well as your chances to get a job, rent or buy an apartment or a house, and buy insurance. A history of timely credit payments helps you get additional credit. Accurate negative information can stay on your report for seven years. A bankruptcy can stay on your report for 10 years. If you are having problems paying your bills, contact your creditors at once. Try to work out a modified payment plan with them that reduces your payments to a more manageable level. Don't wait until your account has been turned over to a debt collector.

Here are some additional tips for solving credit problems:

If you want to contest a credit report, bill or credit denial, contact the appropriate company in writing and send it "return receipt requested."
When you contest a billing error, include your name, account number, the dollar amount in question, and the reason you believe the bill is wrong.
If in doubt, request written verification of a debt.
Keep all your original documents, especially receipts, sales slips, and billing statements. You will need them if you dispute a credit bill or report. Send copies only. It may take more than one letter to correct problems.
Be skeptical of businesses that offer instant solutions to credit problems.
Be persistent. Resolving credit problems can take time and effort.
There is nothing that a credit repair company can do for you — for a fee — that you cannot do for yourself for little or no cost.

If you can't resolve your credit problems yourself or if you need help, you may want to contact a credit counseling service. Nonprofit organizations in every state counsel consumers in debt. Counselors try to arrange repayment plans that are acceptable to you and your creditors. They also can help you set up a realistic budget. These services usually are offered at little or no cost.

One of the reputable agencies that can help you is the Consumer Credit Counseling Service (CCCS), a non-profit organization that offers free or low-cost financial counseling to families that need to solve financial problems. CCCS can help you analyze your situation and works with you to develop solutions. Currently, there are more than 1,200 CCCS offices in the United States. Call 800-388-2227 for the phone number of the office nearest you, or visit the CCCS website at http://www.cccsatl.org/.

National Foundation for Consumer Credit (NFCC), a not-for-profit organization with 1,450 offices in all fifty U.S. states, Puerto Rico, and Canada. An NFCC member is identified by the "member NFCC" seal. At little or no cost to you, CCCS counselors will work with your creditors to establish a repayment plan that will satisfy both you and your creditors. CCCS can also help you set up a realistic budget and plan for the future. Universities, military bases, credit unions, and housing authorities also may offer low- or no-cost credit counseling programs. Check the white pages of your telephone directory for a service near you.

Store Credit Cards -- Enticing, But Not Always the Best Choice

2009-02-11T17:27:00.000-05:00

We've all done it. While standing at a major retailer's register with an armload of purchases you are pitched an irresistible deal – sign up for the store's credit card and you can get an instant 10% discount on your purchase. And, if you are spending a sizable amount of money at someplace like the GAP, the idea of getting $20 or $30 off your purchase is pretty hard to resist.

But it probably is not such a good idea on many levels. First off, ask yourself, "Do I really need another credit card?" If the answer is no or even maybe, then it's probably best to politely decline the offer. Merely having too many of these credit inquiries on your credit report can wreak havoc with your credit score. Some experts have opined that each store card a person opens lowers the customer's credit score by 20 points, and the credit inquiries alone can shave off 5 points. Whether it's that damaging is a matter of conjecture, but it definitely is harmful to some degree if done too often.

Going beyond mere credit inquiries is the effect of having multiple, approved store credit cards in your wallet. The net effect can be quite detrimental. These types of store credit cards provide a way to run amok with purchasing power in very tempting environments whose sole purpose is to get you to spend, spend, spend. And, once you've racked up some serious balances, you will realize these credit cards carry some serious interest rates – typically 50% higher than general use credit cards like Visa and MasterCard.

Unlike general use credit cards, store credit cards can only be used with the retailer that issues the card and therefore have much less utility than cards issued by Visa, MasterCard, Discover or American Express.

Even if you never plan to use a store credit card and simply desire to earn the upfront 10% discount, it's probably a bad idea. By having additional lines of credit open on your credit report you will look inherently more risky to lenders. This type of "risk potential" can trigger all kinds of unpleasant consequences, like universal default pricing on your other credit card accounts. But how can that happen, even without carrying a balance or being late with a payment, you ask? Well, most cardholder agreements provide the bank issuers with the ability to impose penalty default pricing for almost any reason – even the hint of increased credit risk.

Bottom line, store credit cards may look like great deals on the surface. But, rest assured, they are mostly a great deal for the retailer rather than the consumer. Store credit cards drive increased sales, loyalty and profits for retailers, who have realized there is as much money to be made in selling credit as there is in selling their main retail items.

So, before signing up for that new store card at the checkout counter, consider your financial needs. If you truly need additional credit, you should shop around for a low interest rate credit card – even one that offers 0% introductory APR. And if it's rewards that you seek, consider one of the many compelling offers available from Chase, Citi, American Express or Discover Card. All of these issuers provide credit cards that allow consumers to earn a full 5% cash back on everyday items at grocery stores, drugstores and gasoline stations and 1% on all other purchases. And, these cards can be used at millions of location worldwide. When you stop and think, it's not difficult to see how general purpose credit cards offer greater value and utility than their private-label store card brethren.

Universal Default -- What it is and How to Avoid it

2009-02-10T12:24:00.001-05:00

Universal default is a relatively new provision that has been added to the credit card member terms and conditions by credit card companies. Universal default basically allows creditors to review a customer's credit report on a regular basis, and if there is any change that has negatively impacted their credit score a new, higher interest rate can be applied.

The customer behaviors that can potentially trigger universal default pricing by a credit card issuer include the following:

Being late (even once) on a credit card, mortgage, utility or car payment
Going over the credit limit on any credit card
Carrying too much debt overall
Using over 50% of the credit line for an individual credit card
Having too much available credit and open trade lines
Making too many credit inquiries
Getting a new mortgage or car loan

Universal default is not meant to hurt consumers. Rather, it is intended to protect credit card companies from potential losses by charging higher interest to those customers with degrading risk profiles. It is somewhat analogous to a health insurance company charging higher insurance premiums to someone who smokes, even though they haven't filed a claim.

The best way to deal with this new provision is to simply not have it apply to you. The best rule of thumb is to always, always pay your bills on time. That includes your utility and magazine subscription bills. Almost any company that bills for services can report your payment behavior to credit bureaus, who in turn sell this information to lenders. Even if you haven't become a true credit risk, irresponsible behavior can create the perception of increased risk propensity.

Probably the safest course to take is to stay out of debt. By employing fiscal discipline, you can simply not care about silly things like interest rates. If you are not able to do this because of outstanding balances that are priced at high APRs, you may want to consider a balance transfer to a 0% APR credit card. That way, you can start aggressively paying down the balance and become debt free much faster, without having interest charges drag down your finances.

Approximately 45% of credit card issuers have universal default provisions contained within their cardmember agreements. It is important for consumers to understand these types of potential costs by reviewing the terms and conditions beyond the introductory APR prior to applying for a card. And while these policies probably won't go away, it's important to realize that banks are just businesses that are taking steps to protect their bottom line and shareholders. Rather than having these types of charges apply to you, simply exercise a little caution and discipline to enjoy the benefits of credit cards without the pitfalls.

Old Credit Card Debt Can Come Back to Haunt You

2009-02-09T14:57:00.000-05:00

Credit card debt can sometimes be like a bad penny that keeps turning up. Obviously, the only wise course of action is to pay bills promptly and never get oneself overextended. But for those who have found themselves drowning in credit card debt with no way out, this hasn't always been an option.

In cases where people have been unable to repay a credit card balance, the lending bank normally is forced to "charge off" the amount owed. The banks will usually do this after a period of time, such as after 3 – 4 months of delinquency. But this doesn't mean that the debt has been erased, by any means. It is more of an interim accounting measure on the part of the bank to reclassify the funds that appear doubtful in terms of repayment.

Credit card issuers will normally try to collect delinquent credit card balances long after the money owed has been reclassified on their books as "charged off". If these collection efforts prove to be fruitless they will sometimes settle with the card holder for some amount less than is owed. But more often they will sell delinquent balances to third party collection companies for pennies on the dollar. Banks consider this type of arrangement better than nothing in terms of repayment. And, it is these third party collectors that consumers must be wary of because they often are much more aggressive in terms of collecting payment from borrowers.

Declaring bankruptcy can normally protect a person from original creditors, but this isn't always the case if the delinquent receivables have been sold to another creditor, such as a collection agency. Consumers are finding out the hard way that past financial difficulty or indiscretion is not actually forgiven or evaded, but is now coming back to insist on resolution. These situations will only become more common as recently enacted bankruptcy reform will make it more difficult to consumers to avoid eventual debt repayment.

In favor of consumers who have declared bankruptcy is a statute of limitations after which a debt can not be legally collected, which is seven years from the date of charge-off. If collection agencies come after someone beyond this period then consumers can take legal action to have the collections stopped.

Another tactic employed by aggressive collection agencies involves the threat of reporting the card holder to the credit reporting agencies unless the amount owed is repaid. For those who have come out of bankruptcy and have rebuilt their credit, this can be a very effective ploy. But, if more than seven years have transpired since the original due date this tactic can be countered with legal action, since the statute of limitations also applies to credit bureau reporting.

So, what should a person do if confronted with aggressive collection efforts for a debt that should have been erased years ago? First, determine if the debt is legitimate. Sometimes collection agencies have inaccurate information and use intimidation to drive their revenue despite the consumer not recognizing the origin of the amount to be repaid.

Second, if the amount is actually owed, find out how long it has been since the delinquency clock started. If beyond seven years, it is up to the consumer whether to settle up with the collection agency, since by law the clock has run out on any legal obligations.

The bottom line with credit card debt is to avoid it if possible. But, if a person finds themselves consumed by card debt (even very old credit card debt), they should use every method possible to dig themselves out of the hole. Methods include stopping new credit card spending, developing a strict budget and transferring balances to a 0% APR credit card (if the person's credit situation will allow them to qualify) or a low interest balance transfer credit card. No hole is too deep to get out of, so with a strong dose of self discipline and a plan of attack, a new financial future can be on the horizon.

What Makes Up Your Credit Score?

2009-02-08T22:13:00.001-05:00

If you have ever wandered how the credit bureaus come up with your credit score you are not alone. It is one of the more arcane things in shadows of the financial world. You may have heard about how certain actions or behaviors, like being late with a credit card payment or having too many cards in your wallet, can negatively affect scores. But, that's only a small piece of the puzzle.

There is, in fact, a very definitive algorithm that goes into making up a credit score or “Fico” score. Even the term Fico is enigmatic, for that matter. But it actually is just an acronym that stands for “Fair Isaac Company”, the company that originally developed the credit scoring methodology.

While the exact recipe of the credit score is a tightly guarded trade secret, there are some general guidelines that comprise the final numbers. Listed below are the financial behaviors and related factors along with the percentage weighting that each contributes to an overall credit score:

35% - An individual's history of making credit payments on time
30% - The total amount of debt being carried along with available credit
15% - The age of an individual's open credit lines (more history is better)
10% - The frequency with which someone applies for new credit
10% - Wild card factors such as the types of credit lines

In general, most of the factors that influence credit scores are within the power of consumers to change for the better. All it takes is a consistent dose of financial self-discipline to always make payments on time, not carry too much debt on any one credit card, don't close older accounts unless absolutely necessary and use discretion when applying for new credit.

If you are curious about your current credit score, you can obtain a free copy once per calendar year. Simply click here for articles about obtaining your credit report or click here to order your free annual credit report.

Credit Scores For Dummies

2009-02-07T16:32:00.001-05:00

If you are somewhat or completely confused by credit scores (often called FICO Scores), you are not alone. In fact, you are probably part of the majority that finds themselves befuddled by how credit bureaus compile, calculate and use these scores to determine your creditworthiness - often with the input of credit card companies and other creditors.

A credit score is simply a numeric value that has been assigned to your historical credit habits. The original company that pioneered the creation of this score is called Fair Isaac and Company, which forms the acronym "FICO".

The combination of credit bureaus, credit card issuers and massive databases that warehouse consumer data means that virtually every American now has a FICO score. And, this score is vital to determining whether a person can access low-cost credit, something more expensive or even not being able to get new credit at all.

In general, the higher the score, the lower the interest rate a person will have to pay on a new credit card or consumer loan. Conversely, a lower score will translate to higher interest and less desirable terms.

FICO credit scores can range anywhere from a low of 300 all the way up to 850. Lenders generally segment scores into six ranges for the purpose of determining to whom they will make credit offers and at what terms. Anyone below the sixth tier can usually only obtain credit from a sub-prime credit card lender at very high interest rates. Listed below are the six average credit score ranges used by many of the nation's largest credit card, mortgage and auto lenders:

720 – 850
700 – 719
675 – 699
620 – 674
560 – 619
500 - 559

Individual banks solely determine the credit terms that they offer to each FICO score tier, but in general the best offers go to the top tier. Many of the top credit card issuers specialize in super-prime lending, meaning they target consumers with these tier 1 credit scores. However, competition among the largest issuers could allow those in lower tiers to be considered for leading offers, like those that feature 0% APR introductory rates.

Think Twice Before Canceling an Old Credit Card

2009-02-06T14:54:00.000-05:00

With all the negative press about credit cards and credit card debt, it's really tempting for most people to go through their wallet and start weeding out unused or high interest credit cards. But, before you get out the scissors and pick up the phone to call that customer service number, consider a few things first.

First and foremost, is the fact that canceling a credit card that you have had for many years could actually hurt your credit score. That's right, it could actually shave precious points off that magical number that lenders use as a beacon when deciding whether to grant new credit and at what rate. Credit experts agree that canceling a "vintage" credit card that has provided an historical view of your spending and debt repayment behavior could be detrimental to a person's credit score.

Another factor to consider is why you chose that particular credit card as the one to cancel. Is it because of the interest rate? If so, you could call the issuer to request a more reasonable APR and threaten to cancel if they don't grant your request. Or, perhaps it's something more frivolous, like you don't like the way the card looks. If this is the case, many issuers can let you choose from among a number of new and exciting credit card designs that might entice you to pull it out of your wallet or purse more often.

But more than likely, if you are like most people, the reason you choose to cancel a credit card is that you have simply stopped using it and it's collecting dust in some drawer. Even when this is the case, you should stop and think before pulling the trigger on canceling. It is far better to try and get that oldest credit card functioning at an acceptable level, either through renegotiating the rate, adding rewards or changing the design.

If none of these quick-fixes work in making that old plastic welcome again in your purse or wallet, strongly consider throwing it back in that drawer to use as an emergency backup card. While it's bad to have too many credit cards in terms of credit scores, not having enough credit can really put you in a squeeze in an emergency.

Now, all this isn't to say that you shouldn't consider getting a new credit card from time to time. It's important in today's competitive credit card marketplace to take advantage of some the great 0% APR, cash back and reward credit card offers that are available. But in order to keep you credit rating as high as possible, you should be very reluctant to vote your oldest credit card off the island to make room for that shiny new model.

Pulaski Bank Can Fix Your High Credit Card Rates

2009-02-05T14:18:00.000-05:00

It can be mighty tempting to pounce on every 0% APR credit card offer that comes in the mail each week. But for those consumers who have grown tired of temporary credit card teaser rates, there is an excellent alternative in the Pulaski Bank Visa or MasterCard credit card.

Pulaski Bank, a relatively small bank headquartered in Arkansas, has successfully differentiated itself by offering the lowest fixed rate credit cards in the nation. Their business strategy isn't entirely altruistic, however. Rather, it is largely mandated by Arkansas state usury laws which prohibit banks headquartered in that state from charging over 10% interest. So, with that limitation in place, Pulaski Bank decided to take lemons and make lemonade. As a result, they have largely captured this particular slice of the credit card market.

The only caveat for consumers with this type of credit card product is that Pulaski Bank requires exceptionally good credit to qualify as a cardmember. This requirement is in place to protect their bottom line because they are operating on fairly thin margins with such low rates (currently 7.99% fixed APR). If Pulaski Bank did not maintain tight control on their credit underwriting, the losses would sink their bottom line.

But, if you are someone who has a squeaky clean credit record and a credit score of which you're unabashedly proud, this could be the ideal card for you. Of course, that is only if you need to occasionally "borrow" money at a low fixed rate. If you are someone who pays off your credit card religiously, then there are probably other options that would allow you to earn cash back rewards or airline frequent flyer miles to boot.

Fixed rates were a staple of the credit card industry in days past, typically 18% when Visa and MasterCard first started becoming widely used by Americans. But then, the concept of variable rates caught on with issuers and consumers alike. And this actually became a marketing bonanza for issuers, since they could then advertise "Prime" plus some small index, and only defining what the prime rate was in the fine print.

So, simply the fact that Pulaski Bank offers such an anachronistic product is boon for consumers, if for no other reason that they are up front with their pricing. Deciding whether it is the best option for you is just a matter of whether you have an appetite for the rate chasing game or like a sure thing.

Consumer Debt Trends

2009-02-05T14:16:00.000-05:00

Consumer debt in this country has been on the rise since the 1980's. And, it's no coincidence that this was the beginning of the rapid expansion of credit card use in America. Banks and credit card companies figured out ways to harness the marketing power of direct mail and other forms of mass media to begin promoting their low rate credit cards and create demand.

This era also saw the beginning of the shift of consumer spending from cash and check to credit cards. Just within the last year, according to the Federal Reserve, use of plastic for payments surpassed that of cash and check.

Debit card usage, both bank-issued debit cards and prepaid debit cards, has exploded in recent years. This growth has even eclipsed the growth rates of credit cards. This phenomenon is being driven by two factors. One is the convenience offered by debit cards over writing checks or using cash from an ATM. The other is a backlash to the fear of getting into too much credit card debt.

And, this fear is probably well justified, since a majority of Americans carry substantial credit card debt from month to month. In fact, the average American household has over $9,000 in credit card debt. In order to reduce credit card debt or to become debt free, Americans need to fundamentally change the way they view and use credit cards.

As with debit cards, most people think they are spending their own money when they pull out a credit card for a purchase. But, in reality, they are borrowing money for a short term in order to make that purchase. They should almost think of the process in terms of turning to the person behind them in line and asking to borrow the money.

Using any form of payment other than cash creates a type of psychological barrier to the actual sacrifice needed to make a purchase. This is why many financial experts recommend that people in extreme credit card debt stop using plastic altogether, or at least until they can eliminate credit card debt and become debt free.

Listed below is a graph which illustrates the overall trend in U.S. consumer debt as a percentage of disposable income over the past five years. While consumer debt has increased dramatically over the past decade, the level of debt service has decreased. This indicates that, on average, Americans are paying down less of their credit card debt since 2002 than in previous years.

Consumer debt is only projected to continue rising, unfortunately. This trend is being reflected in the U.S. savings rates, which have become negative for the first time in our nation's history.

To become debt free consumers should stop adding to credit card debt and seek to lower the cost of borrowed funds. A balance transfer to a 0% APR credit card can be a good start, but only if the free interest period is utilized to pay down the outstanding principal.

Online Bill Pay -- Where to Start

2009-02-04T13:29:00.001-05:00

One of the truly great things about having a credit card is the convenience that it affords. With a credit card, you can almost completely avoid carrying cash or checks. And, now with the advent of online bill pay offered by most banks, a credit card can even be used to pay routine monthly bills.

Some of the larger banks that offer online bill pay include Chase, Citibank , Bank of America and HSBC. Generally, a checking account must be maintained with the financial institution to set up online bill pay.

But, many allow you to add a credit card as an additional funding source that can be used to pay when you don't have the immediate funds to cover your bills (or if you wish to take advantage of the 25-day free loan offered by the credit card companies). Others may wish to use a credit card for recurring payments to earn rewards, cash back, airline miles or other freebies offered through their particular card.

Regardless of your motivation to explore online bill pay, the place to start is with your bank. The first step will be to set up an online user ID and password with the bank's website. Then it's just a matter of choosing the online bill pay option and entering your checking or credit card account information. Most banks have a standardized list of merchants that accept electronic bill payments, along with options for sending one-off or recurring payments to specific billers.

The Visa and MasterCard credit card associations have been very aggressive in signing up new merchants to accept online credit card payments in recent years. This includes types of companies that traditionally only accepted payment in the form of a check in the past. Monthly billers like mortgage companies, large apartment complex owners, power and electric utilities and cable television companies are joining the ranks of online bill pay acceptance in droves.

And, with the addition of these types of merchants into the online bill pay world, tremendous rewards can be earned by credit card holders. This is because now large, recurring monthly payments can be leveraged to rack up free cash back or airline mileage rewards. People are realizing that it would be like leaving money on the table to not take advantage of free rewards.

Another advantage of online bill payment is that it guarantees on-time payments of life's most critical and time-sensitive bills. Whether it's a mortgage or rent payment, or perhaps a credit card bill, being late is not something you have to worry about each month with online bill pay.

Most banks have made their bill payment services free of monthly service fees, as well. So, there are no more excuses for not taking advantage of one of the greatest leaps in financial convenience to come along in the past 20 years. Bear in mind, however, that regardless of whether you use online bill pay for the convenience factor, or just to rack up rewards, it's critical to pay off the credit card used each month. Non-discretionary spending like rent, mortgage, utilities, etc, can get out of control in a hurry if allowed to pile up month after month on a credit card. As with everything involving credit, discipline is paramount.

Credit Card Cancellation How-To

2009-02-04T13:24:00.001-05:00

You are considering canceling a credit card. Perhaps you found a credit card you like better. Maybe you just have too much plastic in your wallet, or you no longer use that individual credit card. But cancelling a credit card the right way involves more than simply cutting it in two with a pair of scissors. Because it can be a confusing undertaking for many consumers, we will outline the important steps in the process.

Before we get to the steps involved, you should consider the possible effect cancelling a credit card may have on your credit score. Even closed credit card accounts can legitimately appear on your credit report for up to seven years after the date of last activity, as they become part of your credit history. Be aware that closing an account is not necessarily a good short-term strategy for boosting your credit score. One method creditors use to evaluate your ability to manage credit responsibly is by looking at how much credit you are using compared to the total amount of credit available to you. So it could look bad to owe the same amount to creditors while having fewer accounts open. Also, you should think twice about canceling your oldest credit card, as having longstanding accounts with good payment histories can help your credit score. If the credit card account has no negative items, there is probably no reason to close it. Also, avoid canceling a large number of credit cards all at once. Meanwhile, you should weigh your personal circumstances. Consumers seeking a loan for a car or home mortgage, for example, may want to wait until they get the loan before cancelling a credit card.

Provided you have considered these issues and have another credit card you can make charges on, you are ready to cancel your credit card. Closing an account the right way takes time, patience, and organization. But it’s important to be thorough in order to cancel your credit card correctly.

The first step is to pay down the balance in full on your credit card. For one thing, credit counselors note that there is no need to cancel an account until you are done with it. Separately, if you inform the card issuer that you are thinking about leaving, it could raise your interest rates to the highest allowable by law as a penalty for closing the account, if you do so with an outstanding balance.

Next, you will need to call the issuer, using the customer service number printed on the back of your card, on the monthly statement, or both. If you do not have that information handy, you can request the bank’s phone number from the toll-free information number: 800-555-1212.

Once you reach a bank customer service representative, you will want to confirm that your balance on the credit card is zero. Then inform them that you are cancelling the card. Be aware that some credit card companies will allow you to cancel without even speaking to a representative. However, others will transfer you to a special department for the sole purpose of trying to convince you not to cancel. After all, it costs the card issuer more to find new customers than to maintain existing ones. You may be offered incentives for keeping the card active, such as a lower interest rate. Even though these offers may sound appealing, consider the impact of keeping the credit card open. If you are convinced you want to cancel, remain firm if the representative tries to change your mind. Request a name and address you can write to with a notice of your cancellation.

Write a short letter to the card issuer, preferably directly to the name you may have been given, informing them of your decision to cancel your credit card and requesting written confirmation of the account’s closure. The letter should include your name, address, phone number, and account number. Also, state that you want your credit report to reflect that the account was “closed by request of the cardholder.” You may also want to include the check number (or a copy of the cancelled check or other payment verification) that you used to pay off your account balance, as well as the date the check cleared with your bank. Make a copy of this letter for your records. Additionally, you can place your destroyed credit card in the envelope with the letter. Send the letter via certified mail or return receipt requested so you can prove the company received your letter.

Then you wait a month, as it could take up to 30 days to close your account. After that time, get a copy of your credit report and make sure it indicates the account was “closed at customer’s request” (meaning you broke off the relationship with the bank, not the other way around) and that the account actually was taken off your credit report. Should the credit report show the account was “closed by creditor,” that reflects badly on you and therefore you will want to get this resolved. If that happens, repeat the process: call the customer service number to report the mistake, follow up with a letter by certified mail (including a copy of your original letter requesting that the account be closed), and check your credit report again. Be sure to keep at it. It is not the credit bureau’s responsibility to make sure your credit report is correct, so you need to check that what the creditors have told the credit bureau is accurate.

As you go through the process of canceling your credit card, you may want to keep thorough notes on who you spoke to, what they said, and when. That way, if anything goes wrong down the line, you will have all the facts recorded. When you get a return receipt from your certified mail, keep it with the log you are keeping and note the date the receipt comes in.

You Might be Headed for Credit Card Debt Trouble If...

2009-02-03T14:31:00.001-05:00

There is good debt (such as student loans and home loans) and bad debt (credit card debt, high-interest loans). There is also an acceptable level of consumer debt, as well as just plain too much debt. You could find yourself on the path towards having too much credit card debt if you find yourself in any of the following situations:

Your wallet contains more credit cards than photos of your kids, grandchildren, boyfriend, girlfriend, spouse, pets, etc.
You and your credit collector are on a first-name basis and exchange birthday, anniversary, and holiday cards.
Your mailman sues you for the medical costs associated with his lower back pain after carrying around your credit card statements.
You have moved residences at least once to keep a step ahead of your creditors.
Your pay more in interest charges than you do in taxes.
You start to think the national debt doesn't seem so bad.
One month of your interest payments could pay for that dream vacation to Hawaii you've always wanted to go on.
You forget which credit card has a balance that will cover the purchase you are about to make.
You have to hand the merchant more than two credit cards before your purchase is approved.
Your credit reports takes three days to download off the Internet.
You are surprised to see someone else's credit card is one you don't already have.

If these situations sound familiar, then you should take steps to pay off your credit card debt and perhaps cancel some of your many credit cards. Also, you may want to consider a balance transfer to a low interest credit card.

Visa Security Keeps Cardholders Safe

2009-01-31T23:40:00.002-05:00

Visa credit card holders can take comfort in the fact that their security is in good hands. Visa's security program uses a number of methods to ensure that your Visa account information is never compromised.

Visa Continuous Monitoring

Visa's Continuous Monitoring is a key part of its multiple layers of security. Alongside other fraud monitoring tools, Visa can often spot fraud based upon unusual card transactions. By identifying items that are outside the cardholder's typical purchasing pattern, Visa can note fraudulent activity as quickly as possible. This acts as an early-warning system to identify fraudulent activity.

Visa does this by working alongside financial institutions and merchants to continually monitor your account to detect suspicious or unusual activity. By doing this, Visa is able to function pro actively to stop fraudulent transactions. Among the red flags that may signal fraudulent activity are:

The shipping address does not match the credit card billing address, or the shipping address has suddenly changed.
A significantly larger purchase compared to the normal purchase patterns for the account.
A change in the name on the credit card account.
A change in the birth date or social security number on the account.

While Visa is always on the lookout for fraud, you can play a role as well in your own protection. Since most identity fraud is self-detected, you can act as your own fraud monitor by paying careful attention to your bank statements, particularly online. According to a recent report by Javelin Strategy and Research, accessing your account online can provide easier identity theft protection than simply looking over monthly paper statements and bills. Should you notice a suspicious transaction, immediately contact your financial institution to report it. By following these simple steps, you can better protect your credit card from unauthorized use.

Visa Identity Theft Assistance

Another important layer of the Visa Security Program is Identity Theft Assistance. If you are the victim of identity theft, help is available. Through a unique partnership with the consumer network Call For Action, identity theft victims have access to free, confidential counseling by dialing 1-866-ID-HOTLINE.

Call For Action's consumer hotline offers access to help from trained counselors to guide consumers step-by-step through the process of recovering their identities. You can also get assistance from Call For Action via their website.

Visa 3-Digit Code

Yet another layer of Visa security comes in the form of the Cardholder Verification Value, or CVV2. This 3-digit code found on the back of your credit card inside the signature area helps ensure the physical credit card is in the cardholder's possession when shopping online or making purchases over the phone, helping to prevent unauthorized or fraudulent card use.

While the signature panel on the reverse side of your credit card typically has a series of numbers, only the final three digits comprise the CVV2 code. When shopping online or over the phone, this code lets merchants know that the credit card is in the right hands. Merchants will ask for the CVV2 at checkout from the cardholder. Then, the information is transmitted electronically to the card-issuing bank to verify its validity. Within seconds, the CVV2 results are sent back with authorization. Should it be returned invalid, merchants have the right to stop the transaction. For the cardholder's added protection, merchants are prohibited from keeping or storing the CVV2 number following completion of the credit card transaction.

Common Credit Card Appearance

2009-01-31T23:37:00.002-05:00

No matter what credit card you carry in your wallet (or the variety of credit cards you keep on hand for various purchases), it shares some physical characteristics with the cards used by consumers across the U.S. The common features of the many, many different credit cards in circulation are their size and the appearance of a number emblazoned across the front.

Credit cards have a similar size to one another because of an organization known as the ISO. The ISO, or International Organization for Standardization, is the standard-setting body of international representatives that produces global commercial and industrial standards. The ISO establishes standards for the size of credit cards and other ID cards, as well as determining what cards are made of and ensuring their standards are ideal for a wide array of uses.

The ISO is the reason your credit cards are made of PVC and are generally the same size across the board, which allows for easier processing and recognition. It also ensures that your credit cards remain standardized.

Credit cards also share a common numbering scheme. A credit card number contains a single-digit major industry identifier (MII), a six-digit issuer identifier number (IIN), an account number, and a single-digit checksum.

The Major Industry Identifier number corresponds to the issuer category. For example, a "1" denotes airlines, "2" airlines and other industry assignments, "3" travel and entertainment, "4" banking and financial, etc. American Express would fall into the travel and entertainment category, while Visa, MasterCard, and Discover Card are in the banking and financial category.

The first six digits of the credit card number (including the initial MII digit) make up the issuer identifier, which denotes the credit card network to which the number belongs. Some of the better-known issuer identifiers include:

American Express -- 34xxxx and 37xxxx
Visa -- 4xxxxx
MasterCard -- 51xxxx-55xxxx
Discover -- 6011xx

The maximum length of a credit card number is 19 digits, with the maximum length of the account number field being 12 digits (initial 6 digit issuer identifier minus the final digit check number). Each issuer has a trillion possible account numbers.

The final digit of your credit card number is a check digit, similar to a checksum. The algorithm used to arrive at the correct digit is called the Luhn algorithm, after IBM scientist Peter Luhn. The check digit is used to confirm the initial digits of the card number. The benefits of using a checksum is that it prevents casual attempts to invent credit card numbers, as only one in ten will be valid. Additionally, it serves to prevent mistakes when the credit card number is manually recorded.

Separately, credit cards feature issue and expiration dates, as well as extra codes such as issue numbers and security codes. However, not all credit cards have the same sets of extra codes used to identify that the card is authentic.

Credit Card and Debit Card Blocking

2009-01-14T15:41:00.002-05:00

Sometimes, businesses will charge more on your credit card or debit card than what you actually authorize. If you have ever been told shortly after you stayed in a hotel or rented a car that you were over your credit card limit or had your debit card declined (although you knew you had available credit or money in your bank account), you could have encountered what is known as card "blocking." With blocking, a merchant does not actually take out all that money, but does prevent you from spending it in order to make sure they get paid. A block essentially reserves funds available through a credit or debit card to make sure cardholders do not exceed their credit limit, or, for debit cards, their bank account balance, before checking out of a hotel room or returning a rental car.

Usually, card blocking remains unnoticed -- but that could change if you have a card balance near your credit limit or have a low checking account balance when paying by debit card. If you are away from home on a vacation and without access to the Internet, you may have trouble figuring out how all your charges add up to an exceeded credit limit.

Credit card blocking generally takes place when a consumer checks into a hotel or rents a car, instances where a credit card or debit card is needed prior to actual payment. In such cases, the clerk usually contacts the company that issued your card to provide an estimated total. Once the transaction is approved, your available credit (when a credit card is used) or the balance in your bank account (when a debit card is used) is reduced by this amount. Hotels will estimate on the high side and can lock in the hold for three days or more, until your actual charges clear and are posted. This is a block, which some companies refer to as placing a "hold" on those amounts, and can quickly eat up your credit limit.

While some hotels will add a percentage of the room rate onto the hold, other will tack on a set dollar amount. For example, use of a credit card or debit card upon check in to a $100-a-night hotel room for a planned stay of five nights could mean that at least $500 would be blocked. Additionally, hotels and rental card companies often add anticipated charges for "incidentals" like food, beverages, or gasoline to the blocked amount. These incidentals can vary greatly among merchants. Meanwhile, restaurants run your credit or debit card before you tip and usually add on what they expect you to give. If they guessed too high, the amount is adjusted, although it can take a few days. Merchants set the hold amount, but banks choose whether to hold the funds and for how long.

Visa requests that financial institutions issuing its cards release all holds in under three business of the request or when the transaction clears, whichever comes first.

If you pay your bill with the same credit card or debit card you initially used when you checked in to a hotel, the final charge or amount on that card will likely replace the block in a day or two. However, if you pay your bill with a different card, or with cash or a check, the company that issued the card you used at check-in might hold the block for as long as 15 days after you've checked in. That happens because they were not informed of the final payment and did not know you paid another way.

Blocking is perfectly legal and does not require any disclosure. Sometimes blocking is also used by gas stations, by companies cleaning your home, and other businesses to make sure credit or account money will be available to complete payment.

Holds at self-service gas stations can be especially troublesome for debit card users, since they are not removed for up to three business days, until the gas station carries out a "batch" transaction that gives the bank the actual amount. According to the spokesman for the Consumer Action activist organization, oil companies vary in the hold amount, from $1 to $100.

If you are either nowhere near your credit limit or have plenty of money in your bank account, blocking is unlikely to be an issue. But if you are nearing your credit limit of have a low balance in your account, be careful. Not only can it be embarrassing to have your card declined, it can also be inconvenient, especially when you need to make an emergency purchase with insufficient credit or money in your bank account. With debit cards, depending on the balance in your bank account, blocking could result in charges for insufficient funds while the block remains in place.

In order to avoid the trouble that can result from credit card and debit card blocking, you can take the following steps:

When checking into a hotel or renting a car (or if another business asks for your card in advance of service) find out if the company is "blocking," how much will be blocked, how the amount is determined, and how long the block will remain in place.
Use the same credit card or debit card at the start of the transaction that you plan to pay with for hotel, motel, rental car, or other "blocked" bills. Find out from the clerk when the prior block will be removed.
If you do pay with a different credit card or debit card, by cash, or by check, remind the clerk that you are using a different form of payment and ask them to remove the block promptly.
Call your current card issuer to inquire if they allow blocks, for how long, and from what types of merchants. If they do, you may want to think about getting an overdraft line of credit from your bank. Ask about a plan that always automatically covers the overdraft and does not involve a separate bank decision on whether or not to pay it each time. Although you could incur some interest on this plan if you don't pay off the amount fairly quickly, you would not have an overdraft that goes unpaid. Talk to your bank about an overdraft line of credit, how it would work, and how much it costs.

To reiterate, when looking for a credit or debit card, it's important to consider whether the issuer permits blocks, for how long, and from what types of merchants. You may want a card from an issuer that uses shorter blocks.

Card Issuers Encourage Debit Card Signature Transactions

2009-01-13T11:18:00.000-05:00

Debit cards provide a choice for consumers who make a purchase with their plastic. Debit card users can opt to go the "debit" route and enter their personal identification number (or PIN) when making a transaction. Or, they can decide to use their debit card as they would a credit card and sign for the purchase. When it comes to bank issued debit cards, there are a number of ways the bank encourages you to put down your John Hancock.

Upon first thought, there may seem to be little difference between keying in your PIN number or signing your name for a debit card purchase. But in fact, the decision could have an impact on your wallet.

With consumers increasingly choosing to make debit cards their plastic of choice (debit cards now make up over one-third of all card transactions), banks are looking for a way to increase business from this consumer choice. With experts noting that signing for debit purchases is more profitable for the banks, they are encouraging customers not to stick with the PIN.

Although banks make more money from signed debit card transactions, the extra cash is made off merchants, not consumers. Merchants pay higher fees when consumers choose to use their signature. With PINs, merchants pay credit-card companies and their bank partners a flat fee to process the debit transaction, generally between $0.10 and $0.50. However, the merchant fees for processing a signed debit transaction are a percentage (typically 2.49%) of the transaction value.

One method some banks use to persuade cardholders to sign for debit purchases is by charging "point-of-sale" fees for entering a PIN. These banks charge the consumer $0.25 to $0.50 per transaction, while other tack on a monthly fee of $1 to $2. Whether you personally will pay a fee could stem from which bank you use, where you live, and even the type of account you have. According to an estimate from the American Bankers Association, 13% of consumers pay such fees. Industry watchers note that although POS fees have existed for years, they have become more common as consumers make everyday purchases with debit cards. At present, only two of the largest U.S. banks have been charging POS fees -- Wells Fargo and U.S. Bancorp.

Meanwhile, banks are also using incentive programs like those offered for reward credit cards to spur signature-backed debit transactions. Signing for debit card purchases can reward consumers, including those whose cards bear the imprints of big names like Visa and Citi, with all sorts of rewards. However, with a PIN, rewards take longer to earn, if they can be had at all. So even if you pay a fee for your debit card, you could be missing out on rewards if you choose to enter a PIN when making a purchase. Therefore, it's important to read the fine print in your card agreement.

Credit Line Shouldn't Be Viewed as Part of Your Income

2009-01-12T23:58:00.000-05:00

Too frequently, consumers view their credit card's line of credit as they do with their own paycheck -- as an amount of money they have to spend as they please. They may simply add their credit limit amount to their earnings total and decide the sum is how much they have to use for expenses and purchases. But such thinking is what gets many people into serious problems with credit card debt. Unlike using your own money, when you pay for something with a credit card, you are in fact borrowing from the card issuer to fund your purchase.

Your own money could come from sources such as your paycheck or earnings from investments. However, with credit card spending, you are paying using someone else's money. This is different than paying with a debit card or prepaid credit card, which either draws money directly from the consumer's checking account or from an amount of money pre-loaded onto the card. If you have trouble keeping yourself from burning through an entire line of credit, perhaps one of these other payment cards would be a good option for you.

Credit limits are often large numbers that can make you feel like you have the deepest pockets in the neighborhood. If you have a good credit history, getting one a sizable credit limit is not too difficult. Consumers may be rewarded for a solid credit history with a substantial line of credit when they apply for a new credit card. Or, they may have the line of credit on an existing credit card extended if they pay their bills on time and have proven to be an a low-risk borrower.

But before you begin swiping that credit card with the huge line of credit, think about how much money you actually have to spend. Don't ring up charges you will have to struggle to pay back with your own cash.

Having a large line of credit could be a problem for those consumers that have trouble only spending what they make or less. You do not (and most likely should not) spend as much as your credit limit allows. You will have to eventually pay this borrowed money back. When it is time to do so, where is that money going to come from? Remember that the line of credit extended to you by a credit card company is not the same as your personal income.

Keep Your Credit Card Safe When Shopping For an Online Bargain

2009-01-11T23:22:00.001-05:00

Most credit card users already are aware that their credit card information could be at risk on the Internet if precautions are not taken. News stories have focused on major security breaches that endangered consumers with loss of personal financial data. But what many financial fraud experts are warning is that hackers are increasingly targeting small, commercial Websites.

In certain instances, fraudsters are able to gain real-time access to these small websites transaction information, enabling them to steal valid credit card information and hastily ring up large numbers of fraudulent charges.

Identity thieves may have fewer potential victims at smaller websites, but they are often able to operate with greater ease due to potentially less robust software the sites use for online order processing, or due to a dependence on outsourced Web site security. Fraud prevention professionals note that many smaller websites sometimes rely on generic shopping cart software that they neglect to update with the latest software security patches.

For victims of identity theft, a stolen credit card number is often just the first step a thief will take. Generally, the criminals who steal credit card information do not use it themselves, but instead sell it along with many other card numbers to other scammers. The theft of credit card data, combined with other personal information, can allow identity thieves to gain additional information about their victims, according to experts.

Identity theft victims may find that criminals make charges at websites that sell online background checks on consumers. These background checks can help fraudsters create a more complete file on a victim to aid further in identity theft or establish a more appealing record for re-sale in the identity theft underworld. Thieves who start with a credit card number may also get ahold of the a phone number, address, e-mail address, and other data that can be used to gain further information on the target or open up new lines in the victim's name.

Regardless of the prevalence or sophistication of internet criminals, risk can potentially be mitigated by only shopping online with merchants you trust (i.e. larger, established retailers) and that have secure checkout pages. It may also be a good idea to closely monitor your credit report activity on a quarterly or even monthly basis with the three major credit bureaus to ensure no one is trying to establish unauthorized credit in your name.

Credit Card Dangers May Lurk on Smaller Websites

2009-01-10T23:44:00.001-05:00

Most online shoppers are cognizant of the fact that their credit card information is usually safeguarded and feel justifiably confident when performing e-commerce transactions. Despite news stories that have focused on major security breaches that endanger hundreds of credit card numbers, online shopping continues to prosper. But what many financial fraud experts warn is that hackers are increasingly targeting small, commercial Websites in search of unprotected credit card numbers.

Identity thieves may have fewer potential victims at smaller websites, but they are often able to operate with greater ease due to defects in the software the sites use for online order processing, or due to a dependence on outsourced Web site security. Fraud prevention professionals note that many smaller websites rely on generic shopping card software that they neglect to update with the latest software security patches.

For victims of identity theft, a stolen credit card number is often just the first step a thief will take. Generally, the criminals who steal credit card information do not use it themselves, but instead sell it along with many other card numbers to other scammers via underground chat rooms. The theft of credit card data, combined with other personal information, can allow identity thieves to gain additional information about their victims, according to experts.

Identity theft victims may find charges made at websites that sell online background checks. These consumer background checks can help fraudsters create a more complete file on a victim to aid further in identity theft or to establish a more appealing record for re-sale in the identity theft underworld. Thieves who start with a credit card number may also get hold of a victim's phone number, address, e-mail address, and other data that can be used to gain further information on the target or open up new lines of credit in the victim's name.

What cardholder would expect an unexplained charitable donation on a credit card bill to be the handiwork of criminals? But savvy consumers may find the tell-tale signs of Internet thieves in such small, unexplained charges. A $1 donation made to a charity’s website can allow an identity thief to determine whether a credit card is still valid.

The danger to credit card data at Web merchants has become serious enough that Visa and MasterCard recently threatened to fine online businesses that fail to work towards meeting stricter security guidelines.

Visa released a report in September 2006 showing that four of the top five causes of credit card related breaches were digital security limitations at merchants of all sizes. These weaknesses included misconfigured Web servers, missing or outdated software security patches, and the use of vendor-provided default passwords and settings – all of which represent violations of new credit card industry standards.

Online merchants need to be more aware of the threat from hackers, while consumers need to be aware of what sites are taking the necessary precautions to guard their credit card information. Some of the victims that have fallen prey to hackers have been those that found the cheapest vendor possible through a bargain shopping website. Cardholders should make sure that any site they decide to shop on takes all the necessary steps to ensure the security of credit card transactions.

After all, what is the value of saving a few dollars if it comes at the cost of your credit card information?

Keeping Watch on Credit Card Fees Could Save You Money

2008-12-25T18:09:00.001-05:00

Credit card users who haven't bothered to read the fine print in their cardmember agreements could be paying more than they expect, should they incur a late payment fee.

Credit card issuers occasionally update their rates, fees, and penalties, so it requires ongoing diligence to stay informed. Disclosures that were a single page one decade ago now can total 20 pages, on average. Late fees, while hardly new, have increased markedly since the mid-1990s to about $30 on average, and often reach up to $39.

At the same time, other types of credit card fees are important to consider. balance transfer fees are fairly common, which generally amount to about 3% of the transfer amount. The good news is that most credit card issuers cap balance transfer fees at $75, which can make transferring a large balance considerably less painful.

Looking ahead, some credit card issuers are considering a fee for cardholders who pay off their balance in full each month, according to experts. This is because so called "transactors" are unprofitable for most issuers. Additionally, some card issuers are considering interest rate increases automatically triggered by a credit rating decline, even if cardholders make payments on time.

What is a credit card user to do? First on the agenda is a yearly review of their credit cards, especially each card's APR. Find out the reason for rates above 14% by calling the credit card issuer. Be on the lookout for recurring fees. Although the card may have initially been a no fee credit card, a fee could have been added on at some point. Beware of fees for exceeding the card's credit limit and for making payments by phone.

Once fees have been identified, ask the card issuer to have them removed. A good customer may be able to get them reversed one or perhaps even two times. Also be sure to make at least the minimum payment well before the due date if you're not able to pay the balance in full.

While staying on top of credit card fees is not easy, it is worth the trouble in order to save your hard earned money.

Let Credit Cards Work Together to Save You Money

2008-12-23T19:54:00.001-05:00

With credit cards providing all sorts of benefits, choosy consumers can get a lot of mileage from having a decent assortment of plastic. Issuers are creating credit cards that target different categories of users, enabling smart consumers to apply for a number of credit cards and only use each credit card in a way that provides the maximum benefit.

However, this approach should not be taken by consumers who have trouble paying off their credit card balances each month, paying on time, or who have damaged credit histories. Those individuals who do better to limit the number of credit cards they hold.

To start, consumers should learn about the variety of available credit card options by visiting websites like CreditCardXPO.com. When considering rewards credit cards, shoppers can drill down into the terms and conditions of the reward plan to find out such things as when the plan expires and if there is an annual limit to the amount of rewards they can earn.

Consumers may want to evaluate their own household needs, picking three to five credit cards that will help the family the most. Perhaps the family could use a cash back credit card, a gasoline credit card, and an airline credit card. Should both members of a married couple each have good credit scores, the husband and wife can separate their card applications, allowing them to take advantage of new deals from issuers who may have already signed up one spouse but not the other.

Consumers can select a main credit card that provides an appealing rebate, making any transactions with this card that do not fall into another category they have a card for.

Perhaps you will decide to use a credit card that provides 0% interest for one year on balance transfers or cash advances. Consumers should call their card issuer to find out the date the balance must be repaid by to avoid any interest charges, marking this date on their calendar. They may then decide to put this credit card aside and not use it for any purchases until the balance has been paid off. Check to see if the card charges fees for balance transfers.

Meanwhile, they can choose a credit card that offers benefits at places they spend a lot of money, such as home improvement stores or at restaurants.

After a year using their selection of credit cards, consumers may want to add up the total of how much they have earned and saved by using the right card at the right time. With card issuers often retooling rewards programs, consumers may also want to review the terms for the plastic they are carrying and decide if they would do better to make some swaps for cards that would provide greater benefits.

When juggling multiple credit cards, it is very important to keep up with payments so you don't get slammed with penalty fees and charges. Online bill payments can help, with consumers making sure they send an automatic payment to each credit card issuer before the payment's due date.

Credit Card Information at Risk When Throwing Away an Old Computer

2008-12-22T14:46:00.004-05:00

With the rapid pace of technological innovation today, the computer you just bought a year ago may already seem outdated. So it's likely you regularly buy a new one. But what to do with the "old" computer? While there a number of options for getting rid of a PC, simply throwing away your computer may be the worst idea, as it can provide a danger to the environment and public health, as well as to sensitive personal data, including your credit card information.

Your computer, like most electronic devices, contains mercury, cadmium, and other hazardous materials. These substances can be hazardous if dumped in a landfill. As a result, it is worthwhile to investigate ways to safely recycle or dispose of your PC.

Your credit card information is also as risk when you simply throw a computer into the trash. If you have made Internet purchases on your PC, or perhaps saved budgeting information to your hard drive, sensitive credit card and financial information could be on your computer. Even if you erased files by throwing them into the computer's Recycle Bin, they can still exist on your hard drive.

There is good reason to be concerned about who could get ahold of the information on your old computer. Banking information and credit card details taken from the hard drives of computers that were recycled or put on the used market have been sold in places as far away as Nigeria. Whoever buys the discarded computers can recover data from unerased hard drives, making your credit card information a dangerous tool in the hands of identity thieves.

As a result, smart computer users should take precautions when they throw away their PCs, just as they would with any credit card statements or other paperwork that contains sensitive card information. One way to erase credit card and other information from your hard drive is through the use of commercial software that acts as a digital file shredder by overwriting files and making them not recoverable.

Or, you can literally smash your hard drive. First, you can remove panels from your computer to get at the hard drive. Then, take off the top and use a hammer to destroy the hard drive.

Still, an old computer does not need to be thrown away. An older computer can function as a dedicated file server in a small office or home network, or can be a reliable backup should anything (virus, theft, damage, etc.) happen to your new PC. If you have wiped your computer clean with the type of software described above, you may want to sell the computer, or donate it to a charitable organization (earning yourself a tax deduction in the process). For those consumers looking to recycle a PC, take a look at the webpage of the National Recycling Coalition's Electronics Recycling Initiative: http://www.nrc-recycle.org/resources/electronics/.

Remember that while an old computer may simply be trash to you, it could be a potential goldmine for those looking to commit identity theft.

Protect Your Credit Card From the Latest Identity Theft Techniques

2008-12-19T11:18:00.001-05:00

Most credit card users are aware that they need to be wary of identity thieves who would like nothing better than to gain the card number from an unsuspecting consumer. So while consumers should continue to be wary about giving out their credit card information in person, by phone, or over the Internet to anyone who they don't know, there are some other things to also look out for.

Many sandwich shops offer coupons for a free sub. Some thieves have taken to buying up a number of these coupons, and then picking up a similar number of credit card applications. These criminals will go to a shopping mall or other highly-trafficked area and ask people to sign up for a credit card to get a free sandwich. Once the person has filled out the application, the thief has all their personal information, including a social security number. To an identity thief, this information is much more valuable than the cost of a hoagie.

To avoid becoming a victim of this scam, consumers can apply for credit cards online at secure Websites like www.CreditCardXPO.com.

Another way identity thieves are getting at credit card information is through the use of that popular piece of technology, the camera phone. As the cardholder goes to use their plastic at an ATM or somewhere else the card number is publicly visible, the nearby thief snaps a photo.

Cardholders using an ATM or taking their credit card out in public should notice if anyone nearby has a camera phone at the ready or appears to be getting a look at the card number. Consumers should try and keep the actual card number obscured by their hand when they take it out from a wallet.

Make an identity thief's life tougher by always thinking about ways to protect your credit card information and taking the necessary precautions.

Credit Cards Provide a Safety Net for Cash-Strapped Consumers

2008-12-18T14:01:00.003-05:00

Many people live beyond their means. But for cash-strapped consumers simply looking to get by, credit cards act as a safety net, helping them to make ends meet during tough financial times.

Not everyone who carries a credit card debt is a spendthrift. While some cardholders certainly are compulsive shoppers or buyers with little self-control, this is not always the case. A degree of the massive debt in this country can be attributed to Americans who simply lack the necessary savings to get out a jam. As a result, borrowing money is their only choice when times are hard.

Many Americans, from the middle class on down, find that basic necessities become tougher to pay for each year. With an already-tight budget, the events that can force a consumer to run up credit card debt are by no means unusual.

The cost of medical care can be a huge burden, with many necessary procedures or treatments falling beyond the monetary means of the average person. Likewise, with many U.S. companies scaling back operations or moving them overseas, layoffs are a constant threat to the American worker. Without their main source of income, the unemployed may turn to a credit card as their sole access to funds. Meanwhile, the sky-high divorce rate in the U.S. produces not just broken homes, but difficult financial situations for people accustomed to making ends meet on a combined income.

The critics who charge that the American public are unable to live within their means and are simply too willing to rack up unnecessary debt on credit cards should consider these factors. Challenges like medical costs, job loss, and divorce can leave consumers with little choice but to use their credit card for staples like food, gas, and clothing.

For those consumers who need a credit card to get out of a jam, consider a credit card that offers a low interest rate. That way, when financial pressures do ease up, it will be easier to pay back any outstanding balance on the card.

Protect Yourself From Credit Card

2008-12-17T22:24:00.000-05:00

By now, most savvy credit card users know to carefully review their bill each month for any unauthorized charges. Scrutinizing you credit card statement for unusual activity can alert you to the activities of fraudsters who have improperly gotten hold of your account information, since even the most careful consumers may have their financial information stolen.

One way thieves are trying to sneak unauthorized charges past credit card users is through the use of smaller transactions. Realizing that major charges will jump out when cardholders examine their credit card bill, thieves hope that lesser amounts (particularly when they appear on lengthy statements) will sneak past the eyes of watchful consumers.

A single thief may place these small unauthorized charges, which some people have labeled "spam charges," on the credit cards of hundreds of different people. While a single major charge in the hundreds of dollars may stand out on a credit card bill, consumers may simply be able to write off a smaller transaction, perhaps deciding it was something a spouse or another family member put on the card.

To prevent spam charges, consumers should take all the usual precautions, including only shopping online at secure websites that begin their addresses with "https" as opposed to "http." When using Microsoft's Internet Explorer, users should look for a small yellow padlock icon in a shaded bar near the bottom of the screen. By double clicking on the padlock, surfers will bring up the site's security certificate, which they should check to make sure it hasn't expired and that the name on the certificate matches the name of the company the purchase is being made from.

Additionally, some experts recommend having one credit card that is used only for online shopping, instead of paying with all your different credit cards on the Internet. When shopping for a credit card for online use, consider the range of options available at CreditCardXPO.com, such as low interest, rewards, and cash back credit cards. By using just one card online, consumers will be able to make easily keep track of spending and notice any unusual transactions.

Separately, Internet users can secure their home computers against viruses or by using a spyware detector such as Ad-Aware or SpyBot, which both offer free downloads.

If consumers discover unauthorized charges on their credit card statements, they should be sure to inform their card issuer. Cardholders are not responsible for unauthorized charges -- provided they are promptly brought to the attention of the credit card company.

While it may not be clear how thieves gained access to credit card information, that does not mean consumers should stop using their plastic when buying items online. Credit cards often are a better choice for Web purchases than other payment methods since they provide legal rights, including the ability to dispute payments. Certain credit cards also offer protection such as insurance or extended warranties.

Googling Your Name Can Turn Up Credit Card Data

2008-12-16T18:45:00.002-05:00

It's a popular diversion: type your name (or a friend's name) into an Internet search engine like Google and see what results pop up. Occasionally, the search results may contain something you wish wasn't publicly available, like your credit card number. With no hacking required, a simple Google search could turn up your credit card number, along with your name and address.

Often, credit card and other data may appear on the Internet as a result of identity theft, and the criminals who traffic in stolen identities for their own illegal gain. These identity thieves are able to snatch cardholder information from online businesses that take credit card orders but do not employ proper security measures to protect customer information from hackers.

Identity thieves then traffic in your personal data, attempting to buy or sell it online, along with thousands of others. They may sell information that includes a debit card PIN and credit card numbers, Social Security number, home phone number, e-mail address and password, and a mother's maiden name -- enough information for a multi-year identity theft outing. Your data could crop up on a Website established for just such a purpose, although, more often, stolen credit card information is traded behind closed doors in Internet chat rooms where information is more difficult to trace.

Criminals may post stolen credit card and other personal information online for a number of reasons. They may want to provide a sample of the information they are looking to sell, allowing others to test the goods to prove they are valid before making a purchase. Or, the thief may be seeking to make it more difficult for law enforcement to trace illegal use of the credit card back to him -- muddying the waters by allowing others to get hold of the data which they too can use to make charges. Additionally, the thief may be trying to simply improve his status in the underground community.

Administrators who run the chat rooms where credit card and other personal data is traded have the ability to kick people out of the room and set passwords, in addition to loading programs onto the page which enable online criminals to check the authenticity of stolen credit card data in real time. Administrators can use hacked merchant credit card accounts to verify the information before posting it in the room. Generally they do not actually charge the credit card, instead running authorization transactions, which do not cost the cardholder anything but confirm whether a specific card is usable. The merchant is charged the minimum transaction fee (generally about $0.10), and the consumer remains unaware their credit card account is about to be compromised.

To prevent your credit card information from becoming another items floating along the information superhighway, be wary of fraudsters employing phishing scams or other techniques that try and get you to reveal personal information. The credit card data that shows up through an online search may have been derived from a phishing scheme. Separately, be sure that you only conduct online transactions through secured websites, with Internet addresses that begin "https" and often display a lock icon.

If searching Google for your name does produce a result containing your credit card number, you can take action. Cancel the credit card, look over statements from your other credit cards for unusual transactions, and get a copy of your credit report from each of the three national credit bureaus: Equifax, Experian and TransUnion. Additionally, you can ask the three credit bureaus to have a freeze or fraud alert put on your account.

Additionally, you should file a report with the Internet Crime Complaint Center. The IC3 will refer your case to the appropriate law enforcement agencies.

While doing a search for your name alone does not put you at risk, the same cannot be said for Googling your credit card number, according to cyber-security experts. Search engines could keep tabs on the search and thus your credit card data. AOL recently ignited an uproar when it provided researchers with the search terms used by over 50,000 subscribers -- including Social Security numbers, medical conditions, and other information that could be used to identify a Web surfer. It pays to remember that once personal information enters cyberspace, it is impossible to know where it will end up.

Be Credit Card Savvy When Shopping for the Holidays

2008-12-15T14:00:00.000-05:00

Before you step out the door with your credit card in hand for some holiday shopping, take some time to go over both your credit card statement and the credit card's terms and conditions. Such a review can help you avoid irresponsible spending with your credit card and can help those with multiple credit cards choose the best plastic for making holiday purchases.

One of the first things to consider is the credit limit for the credit card you will use for gift buying. Be sure that your credit limit has enough room to accommodate all the holiday presents you plan to buy. You certainly do not want to go over your credit limit during the holiday season. If your credit card balance is near your limit, even a few gifts could be enough to send you past the limit -- and into the world of penalty fees and higher interest rates, the credit card equivalent of a lump of coal in your stocking.

To prevent this from happening, find out the amount of your credit card balance either by looking at a statement or by calling the credit card issuer directly, and compare this to your credit limit. It may be possible to set up an e-mail alert through your credit card issuer that lets you know when you are nearing your credit limit. If you are getting close, you should try to pay off more on your credit card balances in November and December so that your bill in January doesn't end up including any nasty fees or a steeper interest rate.

Another thing to be careful of when using a credit card at holiday time is the danger of finance charges. For shoppers with several credit cards, avoid charging items on plastic with two-cycle billing. A credit card with two-cycle billing allows the card issuer to charge interest retroactively.

To understand two-cycle billing, let's say your credit card has a zero balance at the start of December. During your holiday shopping, you charge $1,000 on that credit card. You then pay $990 in January toward your credit card balance, with plans to pay interest on the remaining $10 on your next bill. However, two-cycle billing will charge interest on the entire $1,000 although you already had paid 99% of the balance on time. As a result, the amount of interest you pay will be significantly higher than it would with single-cycle billing.

Using a low interest credit card can save you from paying more for those holiday gifts, since carrying a balance means you do not get a grace period on new purchases.

Meanwhile, it's good to plan for the possibility that not every gift will be exactly what everyone on your list wanted. It might be hard for your aunt to enjoy a sweater that is two sizes too small, for example. Therefore, hold onto any credit card receipts as well as the original packaging the gift came in to help your friends and family make any necessary returns. Also, remind whoever gets the gift to leave tags on any presents they would like to return or exchange.

And, when making the initial purchase, you should ask about each store's return policy, since some stores may be tougher about returning merchandise, particularly with items that were on sale or seasonal. While a store should post its exchange or return policy, it is not required to do so by law, so asking the salesperson is a smart move. Gift receipts, offered by many stores, can be enclosed with the present to make returns easier.

Separately, if the gift you just bought later goes on sale, you may be able to ask the store for a price adjustment.

Happy shopping!

Credit Card Fraud Danger Lurks in Magazine Inserts

2008-12-14T21:14:00.001-05:00

Consumers who receive magazines or catalogs in the mail could be the target of credit card fraud. Many magazines and catalogs arrive in the mail with pre-printed, pre-approved credit card applications containing your personal information -- presenting a golden opportunity for identity thieves.

While these credit card applications make it easy for consumers to apply for some extra plastic, they also make it simple for identity thieves to apply for a credit card in your name.

Too often, magazines and catalogs may be thrown away without considering the fact that these credit card applications, along with the consumer's name and address, is easily accessible to any criminal willing to do a little digging. Other consumers may make a habit of giving away old magazines without the possibility of identity theft even crossing their minds.

Experts encourage consumers to tear out these inserts and destroy them, as well as cutting out the name label printed on the publication.

Credit Card

2008-12-12T17:58:00.000-05:00

Credit card issuers will often mail out notification of changes to a card's terms along with the bank's privacy policy. But if consumers don't look carefully, the notice of a change in their credit card's terms could get lost in the shuffle.

The bank may keep you up-to-date on its privacy policy when you open a new account, on an annual basis, or when the privacy policy gets changed. The credit card issuer's privacy policy outlines the ways in which the bank collects and uses your personal information, including data on your income, account balance information, and credit history. The privacy policy likely notes the way your personal information is shared both within the bank and externally -- with financial and non-financial companies alike.

Additionally, the privacy policy regarding your credit card may explain when your information is shared, such as to protect against fraud, when reporting to a credit bureau, and with your consent.

You may have the ability to request that certain personal information is not shared in specific cases. Perhaps you do not want non-financial companies to get a look at your data, or maybe you would rather that certain branches of your bank not have access to sensitive information about you. Still, your request may be overridden by the law and certain information may be exempt from your request for protection.

To exercise some power over how the credit card issuer treats your personal information, you will need to get in touch with them. The bank should provide contact information in the mailing so you can inform them of your privacy policy choices.

While all this privacy policy information is very helpful to the cardholder, you are more likely to be concerned about changes to your credit card terms. "Change in term" notices are often enclosed along with the mailing that provides information on the bank's privacy policy. However, the printed material announcing a change to your credit card terms may be easily overlooked if you think the letter only contains privacy policy information.

An issuer may notify you of changes to a credit card's terms involving the interest rate, the events which trigger the credit card's default APR, and various fees.

The notification of a change in the credit card's terms can also offer you the chance to opt out -- that is, the ability to decide you don't want to continue using the card once the new terms take effect. Opting out involves notifying the credit card issuer that you do not accept the changes. You will need to read your opt out information carefully to find out the proper way to opt out.

Opting out of card terms that no longer resemble what you signed up for can be a smart decision. After all, if you applied for a low interest credit card, but the new terms put you in danger of triggering a high default APR, then you may not want to accept the changes to your credit card.

So when you receive a letter from the bank regarding your privacy policy, be sure to also look for information on any changes to your credit card terms.

Paying Off Credit Card Debt Vs. Funding Your 401k

2008-12-11T14:32:00.002-05:00

When we are presented with two options that both seem good, it can be tough to make a decision. This is true in the case of the choice between using extra money to pay off credit card debt or to invest in a 401k retirement program -- both of which are recommended by financial advisers.

In an ideal situation, it would be possible to both pay off credit card debt and contribute the maximum amount to an employer's 401k retirement fund. But for most of us, we have to make the most of a limited amount of money. So for Americans faced with the decision between paying off credit card debt and funding their 401k plan, how should we best put our money to work?

First, consider your credit card debt. According to the Federal Reserve, the average interest rate on credit card accounts is nearing 15%. That is very costly, especially since credit card interest payments are not tax-deductible. So with most credit cards charging 15% interest on whatever balance is owed, paying off credit card debt is equal to earning a guaranteed 15% return on your money.

Next, consider your 401k plan. Many employers will contribute $0.50 for every dollar you put into the plan, for a guaranteed 50% return on your investment. Additionally, the money you invest in your 401k plan grows tax-free until you take it out. That is a major difference from the money used on a credit card, which gets no special tax treatment.

Based on this logic, it looks like the 401k, with its tax-advantaged 50% return, trumps paying off your credit card debt and its regular "return" of 15%. However, when you consider that a 50% employer match on your 401k investment is a one-time deal, while 15% interest on a credit card balance in ongoing, it becomes clear that you should first pay off the credit card debt.

But in order for the math to work in your favor, after paying off the credit card debt, you have to make sure not to run up a balance again in the future. Additionally, once you have erased your credit card debt, you should contribute the full amount to your 401k.

It is almost always a good idea to avoid carrying a credit card balance. But what if you feel you should begin contributing to your 401k immediately, and therefore have to revolve a credit card balance to do so? Could this be a better option for you than paying down your entire credit card balance first?

To do the math, imagine you have $150 each month in extra money as well as a $4,000 credit card balance racking up 15% interest. In this case, the minimum credit card payment each month would be about $90.

If you choose to first get rid of your credit card debt, by using the full $150 each month to pay down your balance, you could eliminate the credit card debt in 32 months at a cost of $756 in total interest. After your credit card balance had been reduced to zero, you could then invest the entire $150 into your 401k each month. With an employer match of 50% and an annual 8% return, your 401k would reach $5,410 in 54 months -- the same time frame we will consider below.

However, if you decide to begin contributing immediately to your 401k, putting $100 a month toward paying off your credit card debt and the other $50 into your retirement plan, it will take those 54 months to eliminate your credit card debt at a cost of $1,341 in interest. With the employer match and an 8% annual return, you would have $4,890.

By first paying off your credit card debt, it would be erased almost two years sooner than by trying to use money for both the debt and the 401k simultaneously. Meanwhile, your 401k would grow by an additional $500 over the 54 months. Therefore, paying off your credit card debt first, then investing fully in your 401k, wins out.

Of course, since a credit card bill is paid with after-tax dollars while a 401k is funded with pretax dollars, a truly real-world comparison must include the impact from taxes.

As an example, if you are in the 25% federal tax bracket, you need to earn $200 to net $150 after taxes to pay off your credit card debt. But if you decide to tackle the debt while also investing in the 401k as outlined above, you need to earn just $183 for the $100 after taxes and the $50 pretax. The difference could then be also invested in your retirement account.

Using this approach of both paying down the credit card debt and investing in the 401k, you would have $6,508 at the end of the multitasking period. But if you first paid off your credit card debt, you would then have more to contribute to a 401k, which would in turn yield $7,188.

Therefore, when given the option, it makes financial sense to first tackle your credit card debt completely before then moving on to contribute the maximum amount to your 401k plan. One way to quickly reduce credit card interest payments (which can save you both time and money) is to apply for a balance transfer credit card with a lower APR than the credit card you are currently using. Lower interest rates mean smaller credit card bills, which in turn mean less time paying off a credit card balance and an earlier start contributing to a 401k.

In closing, to truly make the most of your money, employ good financial behavior. Always pay off your credit card balance, and be sure to take advantage of a 401k plan that offers an employer match.

Credit Card Users Need Not Strive for Perfect Credit

2008-12-10T13:05:00.003-05:00

Most consumers probably know that credit card applications are approved or denied on the basis of their credit score, that all-important number with a huge bearing on your ability to borrow money. While many of us wish our credit score was higher, experts suggest there is not much reason to concern yourself with striving in vain for a perfect score, particularly if your credit score is already excellent.

For starters, even those people who are exposed to lots of credit scores have to admit perfect scores are very, very rare -- if they are ever seen at all. With the popular FICO score, the range goes from a very poor 300 all the way up to a perfect 850. But even the vice president of public education at Experian, one of the three major credit bureaus, acknowledges that she has never seen an 850.

Rather, she notes that the majority of high scores peak at about 825. As a result, your time may be better spent looking for the Loch Ness Monster or Bigfoot rather than hoping to catch a glimpse of a perfect credit score.

Another reason why credit card users need not struggle to hit the top end of the credit score range is practical -- they just aren't going to see much benefit going from excellent to perfect. Washington, D.C.-based advocacy group Consumer Action explains that consumers who improve their credit score from a 775 to an 850 will not see a difference in their rates.

Therefore, if you are able to get a fair interest rate and enough credit when you apply for credit cards, there are other things to focus your energies on as opposed to battling to get your credit score even higher. For example, try alphabetizing the items in your refrigerator.

However, for those of us who have been denied a credit card or loan due to credit scores below the high 700s, there are ways to get your score up that you may or may not have heard before:

Don't go overboard with your use of credit. Even those consumers who pay off their credit card balance every month could still show debt on the day their credit history gets pulled, explains FICO-score developer Fair Isaac Corp. By always using credit carefully, you can be confident that you credit use will appear sensible no matter when your lenders look at your credit history. Aim to use about 25% of your available credit.

Keep credit card applications to a sensible number. While it may be tempting to fill you wallet with the great variety of credit cards available through CreditCardXPO.com, if you want to emulate those people with the highest credit scores, it might be better not to. That is because those consumers with the top credit scores tend to apply for credit much less than the average of twice a year. And, having an excellent credit score means you are more likely to get approved for those credit cards you really want.

Keep your creditors honest. Even if you always pay your bills on time, it won't do your credit score much good if creditors don't report how dependable you are. If a creditor mistakenly hits you with a fee for late payment, be sure to call them and get the situation resolved quickly. Otherwise, you may be not only end up paying unnecessarily, but your credit score may take a hit unfairly.

Don't be afraid to look at your credit report. Like taking a look in your basement, it may be scary to discover what is actually contained in your credit report. Additionally, some consumers may worry that pulling their own credit history could hurt their credit score. But this is not the case. In fact, purchasing or taking a free look at your credit history could actually help your credit score, if you use the supplied information to correct any mistakes in the report and to improve your credit use. While you may not end up with perfect credit by following these recommendations, you can still be content knowing that your improved credit score is the best it can be.

Pay by Credit Card to Help Your Credit Score

2008-12-09T20:08:00.002-05:00

You might think that just because you are financially responsible, with no debt and a responsible borrowing history, that your credit score would undoubtedly reflect that. But you may actually not be providing the credit bureaus with enough information to help your credit score if you do not use your credit card.

That lack of credit card use could leave your credit report "unscoreable." In fact, some 50 million Americans have too little credit activity to qualify for the most commonly used credit score.

If you do not use any credit for six months, the credit bureaus may be unable to calculate your credit score. While you should still be able to borrow money under these circumstances, any approvals will take longer and you might end up paying a higher interest rate.

Even positive information only stays on your credit history for so long, so it is important to show that you have paid off recent debts. As older auto loans and mortgages disappear from your credit history, replace them with an ongoing display of responsible use of credit cards.

Just a little credit card use is enough to keep your credit score up-to-date. All it takes are some charges on your plastic, and then the quick payment of your credit card bill. These charges could be as small as using your credit card for groceries or gas -- which could also earn you a little something in return if you pay with cash back credit cards or reward credit cards.

You may wonder why credit scores matter if you do not plan to borrow any money. But should you find yourself in an emergency and needing a home-equity line of credit immediately, or you buy a second home and require a mortgage, a solid credit history is crucial. Additionally, the rate on your homeowners and auto insurance could be influenced by your credit history.

As a result, it is a smart move to stay aware of your own personal credit history, which is used to calculate your credit score. You can order a free credit report every 12 months from the three major credit bureaus -- Equifax, Experian, and TransUnion.

Meanwhile, it is not only people who prefer paying by cash, check or debit card that may find themselves without a credit score. If you have lived abroad for some time and have not used a U.S. credit card while overseas, you could find yourself without a credit score on your return home.

Therefore, many Americans will see their credit histories benefited by consistent use of a credit card and prompt repayment of their bills.

Pay Attention to Pennies and Minutes When Paying a Credit Card Bill

2008-12-08T15:02:00.001-05:00

Most consumers know that there are penalties for failing to pay their credit card bill in full or on time. But the penalties can be no less severe when you are short a few pennies or late a couple of minutes with your payment.

When paying your credit card bill, you probably know that if you can't pay the amount in full, you should at least pay the monthly minimum. Doing so will spare you the pain of getting walloped by an interest rate that suddenly jumps to a much higher level. However, you could still get hit with a spike in your credit card's interest rate if your minimum payment is even a few pennies shy of the monthly minimum.

Let's say the minimum payment on your latest credit card statement is $230.11, but the check you mail out totals $230. While that $0.11 difference may not be much, it can end up costing you lots of money. That is because your credit card issuer will still consider your payment below the minimum payment due. And, as all wise consumers know, credit card interest rates may go up when the payment is less than is required. That could spell trouble for what may have started out as a low interest credit card.

Meanwhile, you likely make sure to get your credit card payment sent out so that it reaches the bank in plenty of time before the due date. But what if you happen to mail a check or approve an online payment that arrives late, even by a few minutes? In the credit card issuer's eyes, your payment is late nonetheless. And, that could result in a hefty late charge on your next credit card statement.

One way to make sure your full credit card payments get where they need to be on time is by setting up an automatic electronic payment plan. You can do this through the bank you have a checking account with or through the website of your credit card issuer. Most credit cards list a website address on the back, which you can visit to set up a user ID and password. If you encounter any problems, you can dial the toll-free customer service number that is usually listed on your credit card or on your card statements.

Even if you have great credit, a small mistake could tarnish you excellent credit history. So be sure to pay the minimum on your credit card bill (or more) in advance of the due date.

Simple Rules Can Help Prevent Credit Card Debt

2008-12-05T17:41:00.000-05:00

Credit Counseling Service has one simple consideration: whether you can manage your credit card properly.

As the CEO of the nonprofit group that helps consumers break free from debt, Richard Skaggs has seen a lot -- including individuals carrying as much as $200,000 in credit card debt.

However, the Consumer Credit Counseling Service's chief executive said following some easy steps can keep consumers from falling into the pit that is credit card debt.

Skaggs urges credit card users to establish a budget and then to follow that budget exactly. In other words, don't be tempted to charge that plasma TV to your credit card on a whim when you haven't budgeted for it this month.

Also, he tells consumers not to carry a balance on their credit cards for longer than six months. Skaggs explains that beyond that point, the compounding of simple interest can produce a very expensive balance to pay off. If it helps, think of your credit card balance as a snowball that grows larger as it rolls downhill.

Furthermore, reward credit card holders might end up spending more than the reward itself is worth if they don't pay attention to the fees and interest associated with their credit card. Visitors to CreditCardXPO.com can view such information for a specific credit card by clicking on the "apply here" button, then selecting an underlined link for "pricing and terms" or "terms and conditions."

The CEO also recommends looking for a low interest credit card if your credit card's interest rate is excessive. Still, he tells consumers to be aware of the normal interest rates on any balance transfer credit cards once the low introductory rates expire.

Overall, Skaggs stresses the importance of consumers taking responsibility and managing their finances.

And, should credit card holders get in over their heads, many card issuers will work with customers who take the initiative to call with the goal of working out a payment plan.

Take Easy Precautions to Avoid Credit Cards Pitfalls

2008-12-04T15:50:00.001-05:00

While careless use of a credit card can leave you in debt, approaching your credit cards with a dose of common sense will ensure this doesn't happen. By taking some relatively easy precautions, your credit card will always be a helpful tool.

Having a wallet full of plastic can make it tough to keep track of how much you owe on each -- which can spell trouble when it is time to pay your statements. Therefore, try to keep your plastic at a manageable level. For some consumers, that may mean only carrying one of two credit cards.

But just because you scale back on your credit cards doesn't mean you should go ahead and cancel all your excess plastic. For one thing, canceling numerous credit cards all at once may result in a drop in your credit score. This is because the total balance across your credit cards will increase to a higher percentage of your overall credit limit when you have fewer cards.

Additionally, by holding on to credit cards you have had for a while, you will maintain your credit history. So instead of getting rid of your rarely-used cards, dust off older credit cards and use them occasionally to keep the accounts active.

Meanwhile, many credit card users end up in debt trouble when they revolve a balance from month to month, allowing interest charges to accumulate. Other consumers end up having to pay late fees when they neglect to get a payment in on time or when their check gets tied up in the mail.

Instead, opt to have the balance on each credit card paid by the due date using an electronic funds transfer from your checking account. In addition to helping you avoid late fees, the knowledge that whatever you spend is coming out of your bank account can be a sharp reminder to keep spending in check.

Visit the credit card issuing bank's website to set up an electronic funds transfer. You can get help with this by calling the bank's customer service number printed on the back of your credit card, as well as on statements.

Sometimes, consumers may revolve a balance on their credit card because they do not have enough money to pay their entire bill at the end of each month. To prevent yourself from spending more than you can afford, record the amount of every credit card transaction in your checkbook.

By following these steps, you will avoid the pitfalls many consumers fall into when they use credit cards recklessly. And, if you use a reward credit card or cash back credit card, your careful spending will actually help you come out ahead.

Online Search Tool Allows Users to See if Social Security, Credit Card Numbers Available on the Internet

2008-12-03T14:51:00.002-05:00

A new free online tool can help consumers find out if their Social Security and credit card numbers are available publicly on the Internet. Using TrustedID's StolenIDSearch.com, consumers can search a limited database that includes 2.3 million pieces of information.

Social security numbers, unlike credit card numbers, are widely exposed through public documents. While it is fairly easy to get a new credit card in the case of loss or theft, it is much tougher to receive a new Social Security number. In fact, individuals are limited to three replacements of their paper Social Security card each year and 10 over their lifetime.

Why are Social Security numbers so easily accessible? One reason is the frequency with which they are used. Companies that provide a service first and bill you later (such as utilities and cell phone providers) ask for a Social Security number in order to check your credit report to ensure you are reliable borrower.

Meanwhile, every doctor and dentist's office in the U.S. has a record of patient's Social Security numbers -- the security of which is up for debate. And, up until 2004, states were allowed to include Social Security numbers on drivers' licenses, while before 2001 states could sell lists with those numbers.

Separately, thieves may obtain Social Security and credit card numbers through the use of "key logging" software that is secretly installed on computers to record what is typed, as well as through phishing schemes that trick consumers into entering personal information onto fake websites that are designed to look like those of a bank or credit card issuer.

Luckily, recent developments are working in consumers' favor. States and counties have started to remove images of documents from their websites that include Social Security numbers, or to block out the numbers themselves.

New York is among four states that have taken down links to images of public documents containing Social Security numbers, while the Texas attorney general on February 21, 2007, issued a legal opinion that county clerks could be committing a crime by revealing Social Security numbers online.

TrustedID has assembled a database of compromised Social Security and credit card numbers that could be bought or traded online. While its StolenIDSearch.com tool is free, TrustedID sells services to consumers that provide them with greater control over who views their credit reports.

For consumers that find their data has been compromised, ordering a copy of their credit report from three main credit bureaus is the first step. CreditCardXPO.com visitors should use /free-credit-report.php to request a credit report from credit bureaus Experian, Equifax, and TransUnion.

Should you turn up any unexplained accounts on your credit report, alert the credit bureaus, credit card issuers, and merchants involved. You can also let the Federal Trade Commission and local law enforcement know, and you may decide to freeze your credit to block anyone from opening new accounts in your name.

But all consumers, regardless of whether their Social Security and credit card information is floating in cyberspace, should request copies of their credit reports each year. Also, computer users should install anti-virus and anti-spyware software on their PCs and make sure it stays updated.

Getting a Credit Card Early Can Save You Money Later On

2008-11-29T14:24:00.004-05:00

Getting a credit card relatively early in life, and then using it responsibly, can help you build a solid credit history. This relatively simple move can provide you with a respectable credit score that can translate into major savings. On the flip side, it can cost you significantly over the course of your life to have a bad credit score, or not have a credit score at all.

Consumers should be aware that their credit score is a major factor when qualifying for a loan, renting an apartment, or even getting hired for a job. Additionally, a credit score impacts how much consumers pay in interest charges, for insurance, and even for cell phone contracts.

There are a number of groups you will encounter during your lifetime that will pay close attention to your credit score. Making a good impression through consistent, conscientious use of your credit cards will build a credit history that they will find impressive and will help you save money.

Lenders make up the primary group who look at credit scores. For lenders, a good credit score can translate into the best rates on a credit card, mortgage, car loan, or small business loan. Meanwhile, without a credit score, qualifying for a loan or credit card might be impossible.

Insurers will also consider you credit score -- among them the majority of auto insurers as well as home insurers. According to a recent Consumer Reports survey of eight popular auto insurers, it was shown that drivers with the highest credit scores could pay as much as 31% less on their premiums than if credit scoring wasn't considered, while drivers with low scores would pay up to 143% more than if credit scoring wasn't considered.

Meanwhile, landlords are increasingly deciding whether to rent out apartments based on the applicant's credit score, since they see a credit rating as a way to determine whether you pay your bills on time. Without a credit score, or with a low credit score, you could end up needing to find a co-signer for your lease. Alternately, you might end up being asked for a higher rent or security deposit.

Job applicants may find that their potential employers give them notice of plans to look over their credit report, with the Society for Human Resource Management reporting that 35% of employers pull credit reports on potential hires. Employers may consider bad credit to signal irresponsibility, or they may worry that employees with financial problems will be distracted while on the job.

Nowadays, even your cell phone provider may use a look at your credit report to guarantee your reliability when it comes to bill paying. With a poor credit history, that could mean you do not qualify for the best cell phone rates. Separately, you might have to pay a deposit, or you could get refused a contract.

So what's a consumer to do in order to build the best possible credit history? Students may want to apply for a student, using the credit card to occasionally make purchases, then paying off the balance every month. It is often easier to qualify for a credit card while in school than after graduation, since credit card issuers assume that parents can lend a hand if their child gets into too much debt.

For those adults who are not in school or are wary of applying for a full-fledged credit card, a secured credit card like the New Millennium Bank Secured Platinum Visa or MasterCard can help them begin building a credit history. After a year of on time payments with a secured credit card, you should have enough credit history to get an unsecured credit card and get your deposit on the unsecured card returned.

There are a number of credit cards for people with bad credit that can also help you to start building or improving your credit history.

Even if you do intend on applying for a loan, renting an apartment, or getting an insurance policy sometime soon, by building a solid credit score now, you have it when the time comes that you need it.

After all, someone who starts their credit history early and makes payments on time, never maxes out their credit cards, and pays more than the minimum balance each month can end up paying thousands of dollars less down the road than a similar consumer who is irresponsible with their credit.

Your Credit Card May Protect You from Rental Car Damage

2008-11-28T17:51:00.002-05:00

As anyone without plastic knows, it can be tough to rent a car without a major credit card. However, the benefit of renting a car with plastic is that you may be able to pass on the collision protection the rental agency tries to sell you, since your credit card may automatically provide this coverage.

The protection sold by the car rental agency is generally known as collision damage waiver (CDW), and is an agreement under which you are not liable for loss or damage provided you follow certain conditions. But at $15 to $25 a day, you may prefer to forego this option.

Luckily, you often can. Even if your regular auto insurance doesn't cover your rental car, your credit card may provide ample protection. Many credit cards offer collision protection, at no additional cost, when you pay with plastic. And, if your credit card covers collision damage, it will also include loss-of-use and towing charges.

For American Express, the rules are similar, with a credit card that covers CDW also covering loss of use. A MasterCard may or may not cover CDW depending on the bank issuer. However, a MasterCard that covers CDW will also cover loss of use.

If you rent a car in your home country, most credit card CDW is secondary, paying only what your regular auto insurance won't cover after you file a claim. When you rent abroad, the credit card CDW is primary (the credit card pays your entire claim), so there is no need to ever involve your other insurance. However, be aware that some countries you drive in may require you to purchase CDW from the rental agency, even if your credit card offers coverage, and that not all rental companies accept credit card CDW.

For cardholders that carry one of a few specially negotiated credit cards from American Express, Visa, and MasterCard, primary CDW is provided on all rentals, including those in the U.S.

Consumers who use a personal AMEX credit card but want primary coverage when renting with their plastic can opt for "Premium Car Rental Protection," which provides primary CDW, as well as accidental death and dismemberment insurance and secondary medical and personal property insurance.

Premiums begin at $19.95 per rental, regardless of length, with higher-coverage options available at a higher cost. Enrollment is free and coverage will apply automatically every time you rent. This offering from AmEx can be a good choice is you usually rent cars for two days or more.

If you plan to rent a car, find out if your credit card issuer provides CDW, if it applies in the countries you will be driving your rental car, exactly what is covered (personal injury or personal property may not be included), if there are any restrictions and limitations that apply, the maximum number of rental days CDW will cover, the types of vehicles covered, and how the claim procedure works.

You may want to discuss the worst-case scenario with your credit card issuer. Additionally, you may want to request a copy of the credit card issuer's insurance policy. That way, you have in writing exactly what is and is not covered before you decline CDW from the car rental agency.

By accepting coverage from the car rental agency, you automatically forgo any coverage supplied by your credit card. Conversely, when you decide to use the CDW offered by your credit card, you will need to decline the rental agency's protection. As a result, some rental companies may view you as technically liable for the entire deductible, which may equal the cost of the rental car.

Therefore, these agencies could put a hold on your credit for the value of the car, essentially freezing part of your line of credit. Find out how much any hold will total and when it will be removed. To keep from tying up your credit, you can use one credit card for car rentals and hotels, and another credit card for making daily purchases. If you don't have enough credit left on your card to cover the value of the car, you may have to buy CDW insurance.

Minimum Payments Are Not Your Friend

2008-11-27T15:41:00.002-05:00

If you are like most Americans, it is not uncommon to have spent a bit more on your credit card each month than you have coming in your paycheck. That has simply become a fact of life in our consumer culture. The instant gratification habit has overwhelmed our better judgment when it comes to managing our personal finances.

And, it can be equally common for Americans to rely on the ubiquitous "minimum payments" option to keep the credit card companies at bay for another month. That credit card minimum payment is now averaging 4%, by the way, up from the old industry standard of 2% of outstanding balances. This change was foisted on the banking industry by a congress that was nervous of the financial and political impact of an indebted credit card constituency.

But, even with a doubling of the minimum payment rate, it can still take many, many years before a debt is paid down at that rate. It is simply imperative to begin aggressively attacking the principal of the debt and not just service the interest payments. Otherwise you will be on a perpetual treadmill of credit card debt.

The tried and true credit card debt elimination strategies still hold true, even in today's fast paced world. They are to simply stop adding fuel to the fire and begin chipping away at the core problem. For example, if you have $9,000 of outstanding credit card debt at 14% interest (the national average by the way), the best approach is to stop using your credit cards for new purchases and transfer the balances to a low interest credit card. Then, begin aggressively paying down that new credit card (which you will not use for new purchases, either). Without the burden of interest payments, coupled with a little financial self-discipline, you will be amazed at how quickly you will find yourself coming up for fresh air and becoming debt free.

But what if you think you really need all those existing credit cards to get through life? Well, it's probably okay to keep one in a drawer for emergencies, but having a wallet full of high interest credit cards is not a good idea for anyone. And, it's especially not a good idea for someone in serious credit card debt. Simply put yourself on a credit card diet and begin paying for things with a debit card, check or cash.

And, concerning how to approach financial self-discipline, a good first step is to try writing down everything you spend for 30 days. This can be a very illuminating exercise because it will show you how much money you (like most of us) waste each month on unnecessary purchases. By simply eliminating just a portion of these daily expenditures (whether it is skipping the $3 Starbucks double latte or deciding to eat lunch at your desk instead of going out), you can save an amazing amount of cash each month. And, if you can further discipline yourself to apply these savings to your credit card debt, which by now you have wisely transferred to a 0% APR credit card, you can become debt free in record time.

How To Compare Credit Card Options For Those With Bad Credit

2008-11-26T12:19:00.002-05:00

Comparing credit card options may seem like a difficult exercise for those with bad or less than perfect credit. It seems like all the major Visa and MasterCard issuers along with Discover Card and American Express prefer to only cater to those with good credit. While the major banks and credit card companies definitely feel comfortable dealing with those with the best credit many offer credit alternatives to those with less credit history or less than perfect credit.

The spectrum of options runs from standard unsecured credit cards with relatively low interest rates to those with higher risk-adjusted rates to secured credit cards and finally to prepaid debit cards. How to determine what is right for you? It's probably best to determine how you plan to use a credit card and then start looking at your product options. If you only need a card for emergencies or to book travel arrangements that require a credit card perhaps a prepaid debit card is the best option. Our section on Prepaid Debit Cards provides a comprehensive listing of leading issuers of these cards.

If you need to use the card as a short-term borrowing vehicle then a standard credit card would best meet those needs. But if your credit isn't the best you might end up paying a fairly high interest rate for that privilege. Make sure the cost of those borrowed funds is worth the expense in the long run because if you revolve a balance for very long and only make minimum payments whatever you purchase on the card will be very expensive. Usually borrowing for discretionary items like clothes, vacations or home electronics doesn't meet the "needs" criteria.

Some banks offer incentives like rewards, cash back or airline miles on their credit cards. Many banks will charge an annual fee for higher risk accounts along with a higher interest rate. If you don't carry a balance and don't incur the high finance charges this type of credit card can be a good option since the rewards you earn will offset the annual fee expense.

Finally, secured credit cards can be a good option if you want a credit card and are willing to make an initial deposit as collateral against the assigned credit line. Once you have established a good payment history the credit card issuer will begin to extend credit so that it turns into a true credit line. And, since your funds on deposit earn interest you are putting your money to work at the same time. Secured credit cards are a good way to initially build or rebuild credit since it is a low risk proposition for the bank and gets you started in the process of making timely payments which are reported to the credit bureaus.

Good Credit vs. Bad Credit: Why Is This Important?

2008-11-25T11:03:00.001-05:00

There are a lot of misconceptions, even outright lies, regarding credit, especially in terms of what determines good and bad credit. Currently, television is full of commercials for debt consolidation companies and credit counselors. Daytime talk shows abound whose premise surrounds people who have gone bankrupt by using credit cards. Many of these stories are extreme examples of what can happen to people with bad credit, but they still do not answer the million-dollar question: What is the difference between good vs. bad credit and how does this relate to getting a decent credit card deal?

Good Credit

Credit, especially good credit, is very important. It affects almost every major buying decision in our lives. Good credit can help us get a good rate on a credit card, car loan or home mortgage. It can also help us when it comes time to sign an apartment lease agreement or maybe even get a new job. But how do you get good credit?

Getting Good Credit - This may sound odd, but to get good credit, you have to have credit. This is not as confusing as it seems. Good credit ratings are gained when you borrow money from a financial group, such as a bank or credit card company, and pay it back on time and for the full amount. For example, let’s say you have a credit card from a gas station that you use only for gas because you don’t carry a lot of cash around. Each time you go to the station, you use your card to fill up your car. In so doing, you are promising to pay the credit card company back when you get their statement. When the statement arrives each month, you pay off the amount owed on time. The gas company that issued your card then reports to a credit bureau that you have paid on time and for the right amount. The more good reports that go to the credit bureau, the better your credit.

Benefits of Good Credit - Having a good credit report enables you to borrow more money at better interest rates. Why? Because the banks know that based on your credit history you are a responsible person. Many potential employers also look at credit reports as a way to judge a person’s responsibility. Hence, your good credit may even help you land a new job.

Bad Credit

There is nothing good about bad credit. It is the exact opposite of good credit. While good credit helps you qualify for car and home mortgage loans, bad credit could keep you from being able to buy these large-dollar items. It will also keep you from qualifying for credit cards and may possibly hinder your ability to rent a house or apartment.

Getting Bad Credit - It is very easy to get bad credit. Bad credit ratings happen when a person does not pay back money borrowed on time or when that person simply doesn’t pay it back at all. There are varying degrees of bad credit. A person is not automatically given a bad credit rating if he misses a payment or is late a time or two. However, if a person is continually late or he does not make a payment for several months, his credit rating will be affected and could possible hurt him in the future.

Fixing Bad Credit - Credit ratings, even bad ones, can be improved and fixed. Depending on the situation, with responsible credit usage and prompt payments, bad credit can turn into good credit over time. The first step is to understand what your credit rating is by pulling your credit report. Credit reports are available through one of the three major US credit bureaus: Experian, Equifax, and TransUnion. Understanding your credit report will help you determine if there are errors. It will also make you aware of what steps you need to take to improve your credit. Credit is a necessary part of our society. While good credit will help a person improve his quality of life, bad credit can hinder his ability to do so. If you have concerns about understanding your specific credit situation, talk to a financial or tax advisor to help you take the next step and work towards getting and keeping good credit.

How to Dispute Credit Report Errors

2008-11-24T16:10:00.002-05:00

Credit Report Basics

Your credit report contains information about where you work and live and how you pay your bills (especially credit card bills). It also may show whether you've been sued or arrested or have filed for bankruptcy. Companies called consumer reporting agencies (CRAs) or credit bureaus compile and sell your credit report to businesses. Because businesses use this information to evaluate your applications for credit, insurance, employment, and other purposes allowed by the Fair Credit Reporting Act (FCRA), it's important that the information in your report is complete and accurate.

Some financial advisors suggest that you periodically review your credit report for inaccuracies or omissions. This could be especially important if you're considering making a major purchase, such as buying a home. Checking in advance on the accuracy of information in your credit file could speed the credit-granting process.

Getting Your Credit Report

If you simply want a copy of your report, call the CRAs listed in the Yellow Pages under "credit" or "credit rating and reporting." Call each credit bureau listed since more than one agency may have a file on you, some with different information. The three major national credit bureaus are:

Equifax, P.O. Box 740241, Atlanta, GA 30374-0241; (800) 685-1111.

Experian , P.O. Box 2002, Allen, TX 75013; (888) EXPERIAN (397-3742).

Trans Union, P.O. Box 1000, Chester, PA 19022; (800) 916-8800.

Correcting Credit Report Errors

Under the FCRA, both the CRA and the organization that provided the information to the CRA, such as a bank or credit card company, have responsibilities for correcting inaccurate or incomplete information in your report. To protect all your rights under the law, contact both the CRA and the information provider.

First, tell the CRA in writing what information you believe is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request deletion or correction. You may want to enclose a copy of your report with the items in question circled. Your letter may look something like the sample below. Send your letter by certified mail, return receipt requested, so you can document what the CRA received. Keep copies of your dispute letter and enclosures.

CRAs must reinvestigate the items in question--usually within 30 days--unless they consider your dispute frivolous. They also must forward all relevant data you provide about the dispute to the information provider. After the information provider receives notice of a dispute from the CRA, it must investigate, review all relevant information provided by the CRA, and report the results to the CRA. If the information provider finds the disputed information to be inaccurate, it must notify all nationwide CRAs so they can correct this information in your file. l Disputed information that cannot be verified must be deleted from your file.

If your report contains erroneous information, the CRA must correct it.

If an item is incomplete, the CRA must complete it. For example, if your file showed that you were late making payments, but failed to show that you were no longer delinquent, the CRA must show that you're current. If your file shows an account that belongs only to another person, the CRA must delete it. When the reinvestigation is complete, the CRA must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the CRA cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the CRA gives you a written notice that includes the name, address, and phone number of the provider.

Also, if you request, the CRA must send notices of corrections to anyone who received your report in the past six months. Job applicants can have a corrected copy of their report sent to anyone who received a copy during the past two years for employment purposes. If a reinvestigation does not resolve your dispute, ask the CRA to include your statement of the dispute in your file and in future reports.

Second, in addition to writing to the CRA, tell the creditor or other information provider in writing that you dispute an item. Again, include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider then reports the item to any CRA, it must include a notice of your dispute. In addition, if you are correct-that is, if the disputed information is not accurate-the information provider may not use it again. Accurate Negative Information When negative information in your report is accurate, only the passage of time can assure its removal. Accurate negative information can generally stay on your report for 7 years. There are certain exceptions:

Information about criminal convictions may be reported without any time limitation. Bankruptcy information may be reported for 10 years. Credit information reported in response to an application for a job with a salary of more than $75,000 has no time limit. Credit information reported because of an application for more than $150,000 worth of credit or life insurance has no time limit. Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. Criminal convictions can be reported without any time limit.

Adding Accounts to Your File

Your credit file may not reflect all your credit accounts. Although most national department store and all-purpose bank credit card accounts will be included in your file, not all creditors supply information to CRAs: Some travel, entertainment, gasoline card companies, local retailers, and credit unions are among those creditors that don't. If you've been told you were denied credit because of an "insufficient credit file" or no credit file" and you have accounts with creditors that don't appear in your credit file, ask the CRA to add this information to future reports. Although they are not required to do so, many CRAs will add verifiable accounts for a fee. You should, however, understand that if these creditors do not report to the CRA on a regular basis, these added items will not be updated in your file.

Sample Credit Dispute Letter

Following is a sample letter that could be used to dispute a an inaccurate credit report.

Date

Your Name

Your Address

Your City, State, Zip Code

Complaint Department

Name of Credit Reporting Agency

Address City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute are also encircled on the attached copy of the report I received.(Identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.)

Sincerely,

Your name

Enclosures: (List what you are enclosing)

Repairing Credit Card Debt

2008-11-22T20:50:00.002-05:00

Having trouble paying your bills? Getting notices from creditors? Are your accounts being turned over to debt collectors? Are you worried about losing your home or your car? Repairing credit card debt isn't as hard as you may think.

You're not alone. Many people face financial crises at some time in their lives. Whether the crisis is caused by personal or family illness, the loss of a job, or simple overspending, it can seem overwhelming, but often can be overcome. The fact of the matter is that your financial situation doesn't have to go from bad to worse.

If you or someone you know is in financial hot water, consider these options: realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy. How do you know which will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future.

Self Help

Developing a Budget: The first step toward taking control of your financial situation is to do a realistic assessment of how much money comes in and how much money you spend. Start by listing your income from all sources. Then, list your "fixed" expenses-those that are the same each month-such as your mortgage payments or your rent, car payments, or insurance premiums. Next, list the expenses that vary, such as entertainment, recreation, or clothing. Writing down all your expenses-even those that seem insignificant-is a helpful way to track your spending patterns, identify the expenses that are necessary, and prioritize the rest. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education.

Your public library has information about budgeting and money management techniques. Low cost budget counseling services that can help you analyze your income and expenses and develop budget and spending plans also are available in most communities. Check your Yellow Pages or contact your local bank or consumer protection office for information about them. In addition, many universities, military bases, credit unions, and housing authorities operate nonprofit counseling programs.

Contacting Your Creditors: Contact your creditors immediately if you are having trouble making ends meet. Tell them why it's difficult for you, and try to work out a modified payment plan that reduces your payments to a more manageable level. Don't wait until your accounts have been turned over to a debt collector. At that point, the creditors have given up on you.

Dealing with Debt Collectors: The Fair Debt Collection Practices Act is the federal law that dictates how and when a debt collector may contact you. It states:

A debt collector may not call you between 8 A.M. to 9 P.M.
A debt collector may not call you at work if the collector knows that your employer doesn't approve of the calls.
Collectors may not harass you, make false statements, or use unfair practices when they try to collect a debt.
Debt collectors must honor a written request from you to cease further contact.

Credit Counseling

If you aren't disciplined enough to create a workable budget and stick to it, can't work out a repayment plan with your creditors, or can't keep track of mounting bills, consider contacting a credit counseling service. Your creditors may be willing to accept reduced payments if you enter a debt repayment plan with a reputable organization. In these plans, you deposit money each month with the credit counseling service. Your deposits are used to pay your creditors according to a payment schedule developed by the counselor. As part of the repayment plan, you may have to agree not to apply for-or use-any additional credit while you're participating in the program.

A successful repayment plan requires you to make regular, timely payments, and could take 48 months or longer to complete. Ask the credit counseling service for an estimate of the time it will take to complete the plan. Some credit counseling services charge little or nothing for managing the plan; others charge a monthly fee that could add up to a significant charge over time. Some credit counseling services are funded, in part, by contributions from creditors.

While a debt repayment plan can eliminate much of the stress that comes from dealing with creditors and overdue bills, it does not mean you can forget about your debts. You still are responsible for paying any creditors whose debts are not included in the plan. You are responsible for reviewing monthly statements from your creditors to make sure your payments have been received. If your repayment plan depends on your creditors agreeing to lower or eliminate interest and finance charges, or waive late fees, you are responsible for making sure these concessions are reflected on your statements.

A debt repayment plan does not erase your credit history. Under the Fair Credit Reporting Act, accurate information about your accounts can stay on your credit report for up to seven years. In addition, your creditors will continue to report information about accounts that are handled through a debt repayment plan. For example, creditors may report that an account is in financial counseling, that payments may have been late or missed altogether, or that there are write-offs or other concessions. A demonstrated pattern of timely payments will help you obtain credit in the future.

Auto and Home Loans: Debt repayment plans usually cover unsecured debt. Your auto and home loan, which are considered secured debt, may not be included. You must continue to make payments to these creditors directly.

Most automobile financing agreements allow a creditor to repossess your car any time you're in default. No notice is required. If your car is repossessed, you may have to pay the full balance due on the loan, as well as towing and storage costs, to get it back. If you can't do this, the creditor may sell the car. If you see default approaching, you may be better off selling the car yourself and paying off the debt: You would avoid the added costs of repossession and a negative entry on your credit report.

If you fall behind on your mortgage, contact your lender immediately to avoid foreclosure. Most lenders are willing to work with you if they believe you're acting in good faith and the situation is temporary. Some lenders may reduce or suspend your payments for a short time. When you resume regular payments, though, you may have to pay an additional amount toward the past due total. Other lenders may agree to change the terms of the mortgage by extending the repayment period to reduce the monthly debt. Ask whether additional fees would be assessed for these changes, and calculate how much they total in the long term.

If you and your lender cannot work out a plan, contact a housing counseling agency. Some agencies limit their counseling services to homeowners with FHA mortgages, but many offer free help to any homeowner who's having trouble making mortgage payments. Call the local office of the Department of Housing and Urban Development or the housing authority in your state, city, or county for help in finding a housing counseling agency near you.

Debt Consolidation

You may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. Think carefully before taking this on. These loans require your home as collateral. If you can't make the payments-or if the payments are late-you could lose your home.

The costs of these consolidation loans can add up. In addition to interest on the loan, you pay "points." Typically, one point is equal to one percent of the amount you borrow. Still, these loans may provide certain tax advantages that are not available with other kinds of credit.

Bankruptcy

Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, making it difficult to acquire credit, buy a home, get life insurance, or sometimes get a job. However, it is a legal procedure that offers a fresh start for people who can't satisfy their debts. Individuals who follow the bankruptcy rules receive a discharge-a court order that says they do not have to repay certain debts.

There are two primary types of personal bankruptcy: Chapter 13 and Chapter 7. Each must be filed in federal bankruptcy court. The current fees for seeking bankruptcy relief are $160: a filing fee of $130 and an administrative fee of $30. Attorney fees are additional.

Chapter 13 allows persons with a steady income to keep property, like a mortgaged house or a car, that they otherwise might lose. In Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off a default during a three-to-five-year period, rather than surrender any property. After you have made all payments under the plan, you receive a discharge of your debts.

Known as straight bankruptcy, Chapter 7 involves liquidation of all assets that are not exempt. Exempt property may include automobiles, work-related tools and basic household furnishings. Some of your property may be sold by a court-appointed official-a trustee-or turned over to your creditors. You can receive a discharge of your debts through Chapter 7 only once every six years.

Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments, utility shut-offs, and debt collection activities. Both also provide exemptions that allow people to keep certain assets, although exemption amounts vary. Note that personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. And unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or lien on it.

Damage Control

Turning to a business that offers help in solving debt problems may seem like a reasonable solution when your bills become unmanageable. Be cautious. Before you do business with any company, check it out with your local consumer protection agency or the Better Business Bureau in the company's location.

Some businesses that offer debt counseling and reorganization plans may charge high fees and fail to follow through on the services they sell. Others may misrepresent the terms of a debt consolidation loan, failing either to explain certain costs or to mention that you're signing over your home as collateral. Businesses advertising voluntary debt reorganization plans may not explain that the plan is a Chapter 13 bankruptcy, tell you everything that's involved, or help you through what can be a complex and lengthy legal process.

In addition, some companies guarantee you a loan if you pay a fee in advance. The fee may range from $100 to several hundred dollars. Resist the temptation to follow up on advance-fee loan guarantees. They may be illegal. Many legitimate creditors offer extensions of credit through telemarketing and require an application or appraisal fee in advance. But legitimate creditors never guarantee that the consumer will get the loan-or even represent that it is likely. Under the federal Telemarketing Sales Rule, a seller or telemarketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or receive payment until you've received the loan.

You should also avoid credit repair clinics. Companies coast to coast appeal to consumers with poor credit histories, promising to clean up credit reports for a fee. They don't deliver. What's more, they can't deliver: They can't do anything for you that you can't do for yourself. After you pay them hundreds-or even thousands-of dollars in up-front fees, they can do nothing to improve your credit report. Indeed, many simply vanish with your money. Only time and a conscientious effort to repay your debts will improve your credit report.

If you're thinking about getting help to stabilize your financial situation, be cautious. Find out what services the business provides and what it costs. Don't rely on oral promises. Get everything in writing. Check out any company with your local consumer protection office and the Better Business Bureau in the company's location. They may be able to tell you whether other consumers have registered complaints about the business.

Cleaning Up and Repairing Your Credit Rating

2008-11-21T12:28:00.002-05:00

It can happen to anyone. You get a credit card and start spending beyond your reach, or someone gets a hold of your social security card or an old credit card and opens up new cards in your name. The question is not how this happened, but what you can do now to clean up and start repairing your credit rating.

As you start to clean and repair your credit rating, be aware that some companies may try to take advantage of you. They may offer programs and books that, for a fee, will "erase" your bad credit. These books and companies cannot efface your credit card debt. There is no one solution or service that will suddenly fix all your credit problems. Good credit comes from good credit practices over time - especially concerning credit card payments.

Cleaning Up Your Credit Rating – Check your credit history. There are three national credit bureaus from which you can obtain a copy of your credit history. This report will give you a complete picture of your current credit situation and will allow you to check for inaccuracies. Any inaccuracies you find should be corrected immediately by contacting the creditor with whom the error resides.

Don't apply for many credit cards over a short period of time – A lot of inquiries in a short period of time looks bad and can impact your credit rating. This doesn’t mean you can’t shop around for the best deal on car loans or other larger purchases, but you should minimize the number of credit cards for which you apply, such as store or other promotionally motivated cards. As long as your inquiries for an automobile or mortgage deal are all within a 30-day period, many credit scoring programs and creditors will disregard the multiple inquiries or consider them as a single inquiry.

Know how much you owe – You should always know exactly how much you owe on your credit cards. If you have several cards with balances close to their limit, creditors might worry that you are living beyond your means. In general, debt of 75% or more of your total available credit does not look good. If you are high on your balances, concentrate on paying them down before charging more.

Close inactive or old accounts – There is no reason to keep an account open that you don’t use anymore. Banks and credit companies look at your total debt potential when determining whether or not to approve you. An old open account could cause you problems; therefore, the fewer accounts you have open, the lower a risk you are to your potential creditors. See Do’s and Dont's of Closing Accounts for more information.

Repairing Your Credit Rating Open a gas or department store credit card – If you have some serious credit issues from the past, a gas or department store can help you start repairing your credit rating. By using the card regularly and making your payments on time, you will establish yourself as a careful credit user.

Pay down balances – Paying down your current credit card balances will go a long way toward repairing your credit rating. If these payments are beyond your means, contact the credit card company directly to discuss your options. It is better to be upfront and honest with them than to avoid payments altogether. Typically, once an account goes to a collection service, the credit card company will not be able to work with you. Instead, you will be causing more damage to your credit rating.

Be responsible – How good your credit rating is or is not depends on you. Be responsible with your spending habits and know when it is good and not good to use credit.

Discuss your options with a financial advisor – A financial advisor can help you determine a strategy for managing your debt. S/he can offer options on how best to repair your credit rating with your current financial resources.

Have Bad Credit and Need a Credit Card? There is a Credit Card for You

2008-11-20T16:42:00.002-05:00

Think that a bad credit rating on a credit report will prevent you from obtaining a credit card? Think again. There are a number of companies that will issue you a credit card even when you have bad credit and need a credit card.

A credit report reflects your credit history. Credit reports are very important when you apply for loans for a mortgage, a car, or when you fill out credit card applications. What are your options if you have poor or bad credit and you need a credit card?

Secure Credit or Pre-Paid Cards
Secured credit cards are a great choice. A secured credit card or a prepaid debit card requires the user to deposit money into the credit card account before the card can be used.

Once money is deposited into the account or you have obtained some credit, the secured credit card can be used to purchase items. The prepaid debit card or secured credit card will not allow you to exceed the amount of money you deposited into the account.

An Option for Students
For high school and college students secured students and prepaid debit cards are great options. A secure student credit card enables a student to begin establishing a good credit rating on his or her credit report while learning good financial planning skills and responsibility. Also, secured credit cards prevent the overspending that often happens with unsecured credit cards since users only have access to the funds that were deposited into the account.

If you have a not so good credit card you are not going to get the best credit card rates and options available to someone with great credit. However, this doesn’t mean you can’t enjoy the benefits of using credit cards or you will always have bad credit. With a little patience, discipline and time you can improve and repair your credit history.

Before beginning any credit repair program or applying for any credit cards, discuss your specific financial situation with your financial advisor.

No Credit History? No Problem

2008-11-12T22:42:00.001-05:00

It's the Catch 22 of credit – it takes good credit to get new credit. This is especially true in order to obtain low cost credit cards. But how does one get good credit when a credit history is required to even get a credit card? It's true that most major credit card companies try to limit their financial risk by mostly approving those with excellent or good credit. But there are credit card options for those who have not established previous credit history using a credit card.

Often, the lack of credit history is equated with bad credit. B, but if you fit this category, you should not despair or feel less worthy than others. It's all a matter of how you look financially to banks and major issuers of credit cards. After all, credit card issuers are for-profit organizations that must lend money and then get that money back plus interest in order to stay in business. Someone with no history of faithfully repaying money that has been borrowed is an unknown quantity and is, therefore, either avoided or assigned a higher degree of risk (and charged higher interest rate to offset that risk).

Students are often in this category due to their age and lack of income. However, major credit card issuers have figured out that most students enrolled in 4-year colleges actually present an acceptable risk profile and generally warrant the risk of being issued credit cards. But if you are not a student, what are the options? As in most areas of commerce, there are also various types of credit card companies that specialize in different segments of the market. Several, such as First Premier Bank and Orchard Bank, offer cards to those without a credit history. Since the banks are taking on more risk and experience higher losses with this customer segment, applicants can expect to pay application, usage and annual fees for many of these products., since the banks are taking on more risk and experience higher losses with this customer segment. However, it can worth the costs involved to finally get that first credit card and begin establishing a solid credit history. And, once you have a strong track record, you can have your pick of cards that will pay you to use them.

Other options for those new to the world of credit can include retail store cards. Examples can include store cards offered by Sears, The Gap or even gasoline retailers like Exxon-Mobil. Retailers will often take a chance on new credit applicants where the major credit card issuers would not. And, once you build up a successful history of repayment you can use these store cards as a stepping stone to general use credit cards, like a Visa, MasterCard, American Express or Discover Card.

So, again, don't despair if you are just starting out and don't have a credit history. It can be like trying to get your first job without any work experience on your resume. Concerning credit, as in the world of work, once you get your foot in the door and pay your dues, you can expect to advance to bigger and better things.

When Picking a New Credit Card - Look for an Orchard

2008-11-11T11:19:00.002-05:00

Individuals with less than perfect credit, or those with no credit history know the drill. Apply for a credit card online that features great rates and rewards, wait a few weeks and then be told that their credit is not good enough to qualify. Now, that can be quite frustrating to be told you have bad credit and don't qualify. Especially when the credit card issuers keep sending out tantalizing credit card offers in the mail and running ads on television.

There are options for those wishing to establish or rebuild credit, however. Finally, there is a credit card that offers a reasonable interest rate with low fees and is specifically designed for those with less than pristine credit. It's the Orchard Bank MasterCard issued by HSBC! The Orchard Bank MasterCard features a very respectable 14.9% regular APR and initial credit lines up to $1,500.

Of particular value is the fact that the Orchard Bank MasterCard reports cardmember repayment behavior to all three major U.S. credit bureaus. Other payment card options for bad credit do not typically allow customers to rebuild their credit history. This is a critical step in creating a solid repayment record that opens new doors for low cost credit in the future.

With relaxed credit underwriting criteria, applicants are much more likely to be approved. And, getting approved is the name of the game when bad credit is in your history. Once approved, it's just a matter of staying disciplined and making on-time credit card payments to begin building a solid credit record. It's usually best to pay as you go with credit cards and living within your means. But, as we all know, that's not always possible for those of us who are struggling to keep our financial heads above water. And that's where the 15.9% interest rate can help you pay outstanding balances over time without taking too much of a toll on your finances.

Other benefits of the Orchard Bank MasterCard include worldwide acceptance at over 22 million locations and cash access at over 770,000 MasterCard/Cirrus locations around the globe. And, online shopping can be accomplished with peace of mind because the Orchard Bank Card provides complete protection from unauthorized purchases.

So, maybe it's time to finally get your credit back on track. Or, if you are just starting out it could be a great time to start building a good credit rating. Having a MasterCard credit card is essential in today's world if you want to make a hotel reservation, rent a car or book an airline flight. And with the Orchard Bank MasterCard, your chances of getting approved are better than ever.

Bankrupt and Still Getting Credit Card Offers?

2008-11-10T13:36:00.001-05:00

If you have filed for bankruptcy in the last few years and still find yourself getting new credit card offers in the mail, you aren't alone. It seems that credit card issuers either don't care or aren't aware of many consumers' credit situations. Well, in most cases, it is probably the latter situation.

The vast majority of credit card issuers, particularly the largest ones, are fairly biased towards those with superior credit. However, there are a few banks and issuers that specialize in providing credit to those with damaged credit or little credit history. But how does this explain the bulging mailboxes of those who have defaulted on previous credit card debt or declared outright bankruptcy? Basically, it boils down to targeting. And, this targeting can be intentional or faulty.

To understand how banks and other large financial institutions choose to whom they mail solicitations, you must first look at how they have traditionally made their money. Credit card issuers have pretty sound business models, which began many years ago by charging 18% interest rates and $20 annual fees to carry their cards. They also made a steady stream of income from major retailers and restaurants that accepted their cards by charging a small fee for each transaction.

Back in the day when these old rules applied, credit card issuers were extremely picky about whom they approved for credit. They simply weren't willing to absorb very much loss from cardholders that didn't pay back what was owed. And, the credit card issuers enjoyed pretty high profit margins in the 1980's and 1990's as a result.

In the early 1990's, however, the credit card issuers acquired the ability to make individual credit decisions based on very detailed credit history information. This information became available through the advent of national credit bureaus like Equifax, Experian and TransUnion. And, it wasn't just the availability of the credit information, but rather the almost instantaneous nature of the data, that made mass individual credit decision making possible.

So, with all this detailed and instant information at lenders fingertips, why do they seemingly send solicitations to everyone (including the bankrupt)? Well, this targeting data isn't free and many issuers find it more cost effective to blanket the nation in direct mail and then pull a credit report on those that actually go to the effort to apply. But, what if the offer you received says you're pre-approved up to a high credit limit amount? If you read the fine print the issuer reserves the right to deny credit if you don't pass their credit quality thresholds upon further review.

The bottom line for those with bad credit or a bankruptcy on file is to avoid the temptation to apply for one of these enticing offers in the mail. That's because it most likely will result in a denial, hurt feelings and confusion. It is probably a better strategy to begin rebuilding a solid credit history with a new credit card that is specifically designed for those with bad credit. First Premier Bank and HSBC offer excellent products to service this market and its special credit needs.

For those who wish to avoid the entire temptation of a credit card can opt for a prepaid debit card, that is accepted everywhere that accepts Visa or MasterCard credit cards. The only difference is that prepaid debit cards are funded ahead of time and act like stored value cards. These can enable students, the bankrupt and those without bank accounts to enjoy the convenience of paying for purchases (even those made online) with a plastic payment card. And, with credit cards such as the Eufora MasterCard, cardholders can build a credit history since card payments are reported to the credit bureaus.

Access to credit and debit cards is an important convenience in American life. And if your credit situation prevents you from getting approved for most credit cards (even those that show up in your mailbox) you shouldn't despair. There are always options.

Credit Repair: How to Get Back Your Credit

2008-11-09T22:19:00.003-05:00

Is your credit in disarray? Are you constantly looking at those ads on TV that promise to help you get back your credit? If so, there are there are a lot of companies that can help you repair and rebuild your credit, but there are many things you can do yourself.

The first and foremost thing you must do is NOT run away from creditors. Don’t wait for them to call you or worse, don’t take their calls or return their messages. Contact them directly as soon as you realize that you are not going to be able to make payments to discuss your options. Most creditors are not as hard on you as you might think. They WANT you to pay them back and will usually work out a repayment plan that realistically fits your budget.

Working with your creditor is the best way to prevent the need for credit repair. Your credit score may drop slightly, but nearly as bad that you would need drastic steps to repair your credit ranking. As long as you show a willingness to pay back a creditor and keep in contact with them, you may never get a blemish on your credit report. It’s when you try to ignore your creditors that they report you to the credit bureaus.

However, it is human nature to avoid conflict. If you have avoided your creditors and are being denied credit you need to take steps to start rebuilding your credit.

If you are unsure about how to proceed with your credit repair, you can get some help from your local credit counseling services. They can help you to work out a plan and a budget. There are also many non-profit groups that offer help. In addition, you can check with your employer, bank, credit union, or credit repair company to investigate options for no-cost or fee-based credit counseling programs.

Before you begin your credit repair, you should know your rights under the Fair Credit Reporting Act. These rights can help you to understand how to proceed.

First of all, you are entitled to a FREE copy of your credit history report if you’ve ever been denied credit, insurance, or employment. But you MUST ask for it within 60 days of that denial. You can also get a free copy if you can prove you are:

Unemployed and plan to look for a job in 70 days
On welfare
A victim of identity theft or fraud
Obtaining a copy of your credit report is the first step in credit repair.

If you are denied credit, insurance, or employment because of inaccurate or incomplete credit information, then the company has to give you the name and address of the reporting bureau (either Equifax, Trans Union, or Experian). If there is inaccurate or simply wrong information about credit card or other loan repayments on your credit report, then you can dispute it with the credit bureau to get it corrected. This is free to do this, but you will need to prove why the information is false. Getting this inaccurate information off your report will help your credit repair. If you don't want to take the time or just desire to avoid the potential frustration you can contact a professional and reputable credit repair company such as Lexington Law to help you with this process.

Here are some final facts that will help you to better understand how credit works and what you can and can’t change when you engage in credit repair:

A bankruptcy can stay on your credit report for 10 years
Lawsuits or judgments against you can be reported for 7 years or until the statute of limitations runs out (whichever is longer).
There is no time limit on information reported because of an application for a job with a $75,000 or more salary.
There is no time limit on information reported because of an application for more than $150,000 worth of life insurance
Applying for a lot of credit at once (e.g. multiple credit cards with multiple credit card issuers) will cause your credit score to go down.

Taking the steps to repair and rebuild your credit is the best way to ensure you can enjoy the benefits and advantages of having a credit card. Remember, your credit card is a privilege not a right. Be responsible when using it.

Credit Card Debt Collection Problems

2008-11-08T14:39:00.002-05:00

In 2005, businesses that specialize in debt for collection purchased $66 billion in delinquent credit card accounts. That amount represented a golden opportunity for debt collectors, but something entirely different for an estimated 8 million credit card users -- who were targeted for repeated phone calls, dunning letters, lawsuits, wage garnishment, property seizure, and sometimes even arrest as a result of their credit card debt.

Debt collectors pay just pennies on the dollar for the right to compel credit card holders to pay up. Debt buyers (many of whom also collect debt) work using different methods. The largest debt buyers purchase vast portfolios of credit card debt written off the books by major credit card companies. Then they divide the debt into smaller blocks for resale. Companies that buy this credit card debt first attempt to collect the money, then re-sell uncollected amounts to others further down the collection food chain.

As credit card debt is sold and re-sold, companies that acquire the right to collect it frequently know little about the debtor, just the name, last known address, card issuer and account number, and amount due. That limited amount of information can result in problems for all involved parties. Unfortunately, many large banks selling off debt have a "buy-it-as-is" attitude, supplying only minimal data when they sell accounts, and charging debt buyers sizable fees if they return for additional documentation. Due to the scant data, outdated addresses can result in consumers receiving no notice that they have been sued. And, increasingly, the wrong individual is targeted by the debt collectors.

Meanwhile, collectors encounter problems as well. Often, they have little evidence to support their claim on a past-due debt amount.

While federal banking regulators have set no rules regarding how much data the banks should provide when they sell a customer's debt, some states are taking action. For example, Maine, West Virginia, and Minnesota are developing reputations for aggressively regulating debt collection agencies that mistreat customers. Separately, judges in several states, including New Jersey, Maryland, and Michigan, consider the imbalance between debt collectors and debtors so troubling that they are seeking change.

Three justices of the Southfield District Court on suburban Detroit, Michigan, are attempting to update court rules to prevent what they describe as "predatory" practices, especially for defendants unfamiliar with the court system and unable to afford an attorney. The judges wrote:

The sale and resale of uncollected debts frequently results in cases involving outdated addresses, so debtors receive no warning when they have been sued.Suits are erroneously filed against the wrong consumers, or against people who have already repaid a debt. Debt collectors often lack evidence of the original debts that they are claiming. Debt collectors frequently misrepresent the amount owed by adding gratuitous interest charges. Even credit card holders who pay off their debts have no guarantee the matter is finished. In numerous states, debt collectors who win court judgments are required to inform the court when a judgment is paid. However, many do not. That leaves consumers powerless to remove negative items from their credit reports when they go to buy a car or refinance a home. As a result, those consumers may have to take on a higher interest rate, and with them larger payments and an increased chance of slipping back into financial difficulty.

Yet regulators, policy makers, and legislators who could intervene to right the balance between collectors and consumers are either unaware of the debt collection problems, and the tens of millions on Americans caught up in them, or are simply unwilling to act. The Federal Trade Commission, responsible for enforcing a federal law that regulates the behavior of debt collectors, has done little despite a surge in consumer dissatisfaction. From 1998 to 2005, the number of consumer complaints regarding debt collectors surged tenfold to 66,627 from 6,678. But in the last six years, the FTC has taken enforcement action against only 10 corporations.

It should be noted that creditors have the legal right to collect what is due. And, consumers usually owe what collectors are after, though they are known to frequently dispute the steep fees and interest that have been tacked on. Often, consumers get into debt by spending beyond their means, whether due to carelessness, unfounded optimism about how much debt they could carry, or extreme need. But most often, debt become unbearable following an unanticipated life obstacle, such as a family member's death, a divorce, illness, or job loss. That is why it is important for credit card users to keep up-to-date with their monthly payments in good times and avoiding unnecessary spending on their credit cards.

Credit Card After Bankruptcy

2008-11-07T14:44:00.002-05:00

Consumers who have declared bankruptcy may still need a credit card. And, although a bankruptcy filing will appear on your credit report for up to 10 years, this does not mean you necessarily will have to spend a decade plastic-less.

Following a bankruptcy, the length of time until you get approved for a credit card is up to each individual issuer. Whether you get approved or denied for a credit card (along with issues of credit quality and your credit limit) are entirely up to the banks that issue credit cards. As a result, it is possible that you could be approved for a credit card soon after declaring bankruptcy, but it depends on the issuer.

Still, it is likely that any credit card you are approved for will carry a high interest rate and a very low credit limit, based on the credit risk you appear to present to lenders. Various credit cards for people with bad credit may charge an annual fee, as well. But if you want to begin repairing a damaged credit history, responsible use of a credit card could go a long way toward accomplishing that goal.

Get your spending under control. Once you are approved for a credit card, be sure that you use it carefully, perhaps only charging for things like gas and groceries rather than making unnecessary purchases with plastic. As someone who has declared bankruptcy, you should make every effort to pay monthly credit card statements in full so that you don't end up back in debt.

Another payment card option for people who may have had suffered from bankruptcy woes comes in the form of prepaid debit cards. These cards allow the user to only spend up to the total they have deposited in advance onto the card, making prepaid cards an excellent choice for consumers that are looking to control their spending.

Regardless of which type of card you choose, avoid applying for too many cards at the same time. Multiple credit card applications make you appear desperate for credit and can hurt your credit score.

Understanding Credit Card Debt Collection

2008-11-06T12:13:00.002-05:00

If you fail to pay back your credit card debt, you may find that a debt collector is seeking to recoup the money you owe to the card issuer. The debt collection agency has established some form of a deal with your creditor that allows the collector to get the money from you.

There are basically two types of debt collection agencies. The first type, which represents the vast majority, works on a commission on behalf of your creditor and gets a percentage of the debt they collect from you. The second type of debt collector purchases your debt from the creditor at a discount, often contracting to buy debt for pennies on the dollar.

Among the first category, these commission debt collectors do not own title to the debt. Instead, the agencies collect debt on delinquent accounts referred to them by different creditors, including credit card issuers, banks, hospitals and other health care services, retail stores, or by federal, state, and local governments. According to ACA International, the Association of Credit and Collection Professionals, 33% of the original debt is usually considered a reasonable commission.

When considering the second category of debt collector, a creditor who sells a portfolio of past-due accounts gives up all right, title, and interest to the accounts once the sale of the debt is closed.

To show the value of the collection industry, for the first time, ACA surveyed collection agencies to learn exactly how much is being returned to creditors. In the survey, conducted by PricewaterhouseCoopers LLP, ACA found that third-party debt collectors recovered about $51.4 billion in 2005, out of the $141 billion in bad debt charged off by private businesses that year. Minus the cut the to the debt collection agencies, $39.3 billion was returned to creditors.

Out of that total debt, most was collected on commission. The ACA report discovered that of the debt collected by agencies in 2005, only $2.3 billion was on purchased debt.

The arrangement used by a specific debt collection agency is between that agency and the creditor. Since you are not involved in the deal your creditor cut to get the money you owe or what commission a debt collector may earn for collecting your money, just remember that you are clearly and morally obligated to pay back any debt you contracted.

How Errors on Your Credit Report Get Fixed

2008-11-05T11:44:00.004-05:00

In looking over your credit report, perhaps you noticed some mistakes. Like any good consumer, you decide it is important to get these errors corrected, so you use the instructions contained in the report on how to dispute any mistakes. This often simply means filling out a "research request" asking the credit agency to investigate the error and correct it. But what happens next?

Once it leaves your hands, credit bureaus must investigate your concerns -- often within 30 days -- unless they regard your dispute as frivolous. Additionally, the credit reporting agency must pass along all relevant information you provide about the dispute to the creditor or lender, also known as the information provider.

When the information provider receives notice of a dispute from the credit reporting agency, it must investigate and review all related information supplied by the agency. Then, the information provider has to report the results back to the agency. If the dispute error is verified, the agency is required to inform other agencies of that resolution under the provisions of the Fair Credit Reporting Act.

If the disputed information cannot be confirmed, it must be removed from your file. The credit reporting agency must fix any incorrect information in your credit report.

Also, the agency must complete any unfinished items. For example, if your credit report indicated that you were late making credit card payments, but did not show you were no longer delinquent, the agency has to specify that your account is now current.

If your credit report shows an account that only belongs to another person, the agency must remove it.

The process of re-investigating your credit report can be lengthy, but once it is complete, the credit reporting agency must provide you with the written results as well as a free copy of your credit report if the dispute results in an alteration to it. Experts recommend that consumers begin following up with credit bureaus and the creditors in question if it has been over 60 days since they began the dispute process.

Consumers should review their credit report at a minimum every two years, since there is a two-year limit on the credit bureau's liability for a mistake from the time that error is introduced into your credit report. There is some room for debate regarding when the two-year limits begins, either when inaccurate information is first filed or when the reporting agency releases a report with the wrong information. Regardless, it is a good idea to keep yourself informed of what your credit report shows and to take action to get any mistakes corrected.

Credit Repair

2008-11-04T12:00:00.004-05:00

Where consumer credit reports are concerned, the major credit bureaus, Equifax, TransUnion, and Experian, always seem to prioritize profits over precision. Sadly, every major consumer study to date has revealed their breathtaking disregard for ensuring accuracy. Unfortunately, those credit bureaus determine the quality of our lives in so many fundamental ways. Even a single credit report line item can significantly influence everything from how much we'll pay for our homes and cars to how insurance companies gauge our risk to whether or not we'll be hired for certain jobs. So it's no wonder that consumers are fighting back. In fact, many are beginning to demand that their credit reports accurately reflect their true fiscal history and intentions.

It's important to remember that the credit bureaus aren't government-sanctioned entities. Such so-called bureaus are really just privately-owned companies whose business is to buy and sell gossip about you and your neighbors.

In fact, no federal statute mandates credit reporting at all. So despite what Sears or some other credit card issuer says about negatives having to remain on credit reports for seven years, it's simply not true. The governing statute in that regard, the Fair Credit Reporting Act, states simply that most derogatory marks can remain no longer than seven years, but it doesn't sanction any minimum reporting period. In that regard, everything that appears in a credit report is optional. Unlike some credit card issuers, the government doesn't care how long something remains on a credit report, so long as items don't remain longer than the legal limit - which is usually a maximum of seven years except for bankruptcy-related items which can remain for no longer than ten years.

It's that misconception, what I've termed the Myth of Mandatory Credit Reporting, that keeps consumers subjugated to the whims of sloppy credit reporting and, unfortunately, often with terrible consequences.

Fortunately, our federal laws are designed to protect consumers rather than creditors or credit bureaus. So, for example, as I mentioned before, the FCRA places limits upon what credit bureaus can report and for how long. Other protective statutes like the Fair Credit Billing Act and the Truth in Lending Act restrict banks and other creditors with regard to how they can and can't interact with their customers. And perhaps most importantly, the Fair Debt Collection Practices Act keeps abusive debt collectors in check.

The good news is that every one of these statutes can be leveraged in order to ensure that a consumer has the best credit report possible. Remember that any company placing a mark on a credit report must comply with a phalanx of consumer protection regulations, all of which are designed to protect the average citizen. If all requirements aren't met, and if the legal imperative mandating accuracy isn't upheld, then the credit report must be revised. Even credit checks can negatively impact a consumer's credit rating. Fortunately, the governing federal statute stipulates that third parties must establish clear 'permissible purpose' before viewing a consumer's credit report, and that requirement can be enforced as well. Good consumer law firms, like Lexington Law, can assist consumers with seeing such processes through to their logical, and usually favorable, ends. Significant credit score gains can be attained in a fairly short period of time.

Until recently, an accurate credit report's worst enemies were of course the sloppy credit bureaus and those careless creditors who report to them. The sudden ascendance of the Internet during the end of the last century gave rise to something perhaps even more insidious, and that of course is identity theft, a circumstance whose negative consequences can be severe. Too often the major credit bureaus simply don't believe victims of identity theft, and consumer law firms can prove quite helpful in that circumstance.

You can get a free credit report once a year by going to http://www.annualcreditreport.com/.

A Brief History of Credit Cards

2008-11-03T10:31:00.003-05:00

Credit cards, as we know them today, have been around for just over half of a century. One of the first credit cards appeared in 1951 when loan customers of Franklin National Bank of New York were screened for credit and those approved were given a card they could use to make retail purchases. Participating merchants copied the customer information from the card onto a sales slip and the bank would credit the merchant account for the loan less a flat fee to cover the costs of providing the loan. In 1958, The American Express Company (a company built on the traveler's cheque business) began issuing a charge card for travel and entertainment charges which was accepted at participating restaurant, hotel and airline merchants.

Cardholders enjoyed the convenience of plastic charge cards (especially when on the road for business) as well as the line of credit offered by the new bank credit cards. Merchants found that credit card customers usually spent more than if they had to pay with cash (which is still true today – the average credit card purchase is 112% more than if cash is used). Accepting bank-issued cards was safer for the merchant than dealing with cash (more secure from internal and external theft and error) and less expensive than creating and maintaining a merchant-specific credit program.

Bankcard Associations
In 1959, Bank of America began issuing the BankAmericard within California, which was the first universal credit card with widespread merchant acceptance. Bank card associations began in 1966 when Bank of America formed licensing agreements with other banks. This enabled them to issue credit cards on a widespread basis and settle transactions among participating banks.

Also in 1966, a group of 14 US banks formed Interlink, a new bankcard processing association with the ability to exchange information on credit card transactions. In 1967, four California banks formed the Western States Bankcard Association and introduced the MasterCharge program (which was later renamed MasterCard in 1979) to compete with the BankAmericard (later renamed Visa in 1976) program. VISA and MasterCard are organizations that both issue credit cards through member banks and set and maintain the rules for processing. They are both run by board members who are mostly high-level executives from their member banking organizations.

As the bankcard industry grew, banks interested in issuing cards became members of either the Visa Association or MasterCard Association. Their members shared card program costs, making the bankcard program available to even small financial institutions. Later, changes to the Association bylaws allowed banks to belong to both Associations and issue both types of cards to their customers.

Credit Card Processing Evolves
As credit card processing became more complicated, outside service companies began to sell processing services to VISA and MasterCard association members. This reduced the cost of programs for banks to issue cards, pay merchants and settle accounts with cardholders, thus allowing greater expansion of the payments industry.

Visa and MasterCard developed rules and standardized procedures for handling the bankcard paper flow in order to reduce fraud and misuse of cards. The two associations also created international processing systems to handle the exchange of money and information and established an arbitration procedure to settle disputes between members.

Other Issuers Join the PartyAs mentioned earlier, American Express was among the first companies to issue a charge card. However, it waited until 1987 before issuing a credit card that allowed customers to pay over time. Their original business model focused on the travel and entertainment charges made by business people, which involved significant revenue from merchants and annual membership fees from customers. While these products are still in their tool chest, they have also developed numerous no-annual fee credit card products offering the same low introductory rates and reward programs as traditional bank cards.

Another relatively recent entry into the card business is Discover Card, originally part of the Sears Corporation. Discover Card Services sought to create a new brand with its own merchant network. The company has been quite successful at developing merchant acceptance, surpassing even Visa in worldwide acceptance locations. A 2004 antitrust court ruling against Visa and MasterCard initiated by American Express, Discover and retailing giant Walmart have changed the exclusive relationship that Visa and MasterCard have enjoyed with Banks. Going forward banks and other credit card issuers will be able to provide customers with an American Express or Discover Card in addition to a Visa or MasterCard. While the bankcard associations have dominated the card business in the past several decades the tide may be turning with the new court rulings.

The credit card has evolved significantly in the past half century and will continue to change with technology as new frontiers in payments develop. What will the payments landscape look like in another 50 years? Only time will tell.

Glossary of Common Credit Card Terms

2008-11-02T23:02:00.005-05:00

There are quite a few terms you may not be familiar with when it comes to credit cards and credit card applications. We have put together a glossary to help you better understand commonly used words, phrases, and acronyms in the credit card industry.

Account Number - A unique number assigned by a financial institution to a credit card customer. On a credit card, this number is embossed and encoded on the face of the plastic.

Additional Cardholder - When you have a credit card, it is often possible to add an additional card to the account for use by someone else. The main cardholder holds responsibility for ensuring payments on the additional card are made. Purchases are shown on the credit card statement, which is sent monthly.

American Express - Also known as AMEX, this company is one of the main international credit card issuing schemes. It issues its own credit cards—unlike Visa and MasterCard—and is responsible for its own relationships with retailers.

Annual Fee - An annual (yearly) fee associated with having a credit card. This is a separate fee from interest rate on purchases.

Annual Percentage Rate (APR) - The yearly percentage rate charged when a balance is held on a credit card. This rate is applied each month that an outstanding balance is present.

Approval Response - An authorization response that is received when a transaction is approved.

ATM - Automated Teller Machines or cash points allow you to access cash with a credit card or other card associated with your bank account. You need to enter your personal identification number (PIN) into the machine to access cash.

Authentication - The process of assuring that data has come from its claimed source, or a process of corroborating the claimed identity of a communicating party.

Authorization - Every retailer has a purchase limit above which they must seek authorization from the card issuer before they can complete the sale. Such authorization can be done by telephone or electronically at the cash till. Authorization is used to control credit card fraud. The cardholder’s available credit limit is reduced by the authorized amount.

Authorization Amount - Currency amount approved.

Authorization Code - A code that an issuer or its authorizing processor provides to indicate approval or denial for an authorization request.

Authorization Date - Date and time when the transaction was authorized.

Authorization Only - A transaction that is created to reserve an amount against a credit card’s available limit for intended purchases; the actual settlement may occur within three to five days, depending on the card type.

Authorized Amount - Currency amount approved.

Authorized Transaction - Transaction that has been approved.

Balance Transfer - When the outstanding balance of one credit card (or several credit cards) is moved to another credit card account.

Balance Transfer Fee - A fee charged by a credit card company to transfer a balance from one account to another. This fee can be anywhere from 1%-5% of the balance amount. However, many credit card companies do not charge this fee. Contact the credit card issuer for their specific fees.

Bad Credit - A term used to describe a poor credit rating. Common practices that can damage a credit rating include making late payments, skipping payments, exceeding card limits or declaring bankruptcy. “Bad Credit” can result in being denied future credit.

Bank Account - Bank account number for the merchant to which funds will be deposited.

Bank Identification Number (BIN) - The first six digits of a Visa or MasterCard account number. This number is used to identify the card-issuing institution.

Bankcard - A payment card issued by a bank.

Billing Cycle - The time between billing statements, usually 28-31 days.

Business Card (Business Credit Card) - Usually issued to corporate executives or business owners in order to more easily keep business expenses separate from personal charges.

Card Issuer - Any association member financial institution, bank, credit union, or company that issues, or causes to be issued, plastic cards to cardholders.

Card Reader - A device that is capable of reading the encoding on plastic cards.

Cardholder - An individual to whom a card is issued, or who is authorized to use an issued card.

Cash Advance - A cash loan from a credit card using an ATM or bank withdrawal.

Cash Back - Cash back returns to you a percentage of the total amount spent on your credit card over a specific period of time, usually monthly or quarterly. This feature is particularly useful if you normally pay your credit card bills in full each month, as it means you get an effective discount on the products bought with your credit card.

Chargeback - A transaction returned through interchange by an issuer to an acquirer. A transaction may be returned because of it was non-compliant with the association rules and regulations or because it was disputed by a cardholder.

Chargeback Period - The number of days from the transaction’s processing date or endorsement date, during which the issuer may initiate a chargeback.

Co-Branded Card - A co-branded credit card is sponsored by both the issuing bank and a retail organization, such as a department store or an airline. Cardholders may get benefits, such as discounts or free merchandise, from the sponsoring merchant, based on account usage and terms.

Commercial Cards - A general name for cards typically issued for business use and which may include Corporate Cards, Purchase Cards, Business Cards, Travel and Entertainment Cards.
Credit Card Number - Unique number assigned to a credit card.

Credit Limit - How much total money can be charged to a credit card account, for example $5,000.

Credit History - A partial profile of your financial life, given within a particular timeframe (usually measured in years). Your credit history shows the extent to which you pay your bills on time and how much you may owe particular parties. Credit card issuers use this information to decide whether to provide customers with credit cards.

Debit - A charge to a customer’s bankcard account. A transaction, such as a check, automated teller machine (ATM) withdrawal or point-of-sale (POS) debit purchase that debits a demand deposit account.

Expired Card - A card on which the embossed, encoded or printed expiration date has passed.

Finance Charge - Fees and other costs billed to you on your statement for using the credit cards (i.e., balance transfer fees, cash advance fees, late fees, overlimit fees, etc.).

Fixed Rate (or Fixed APR) -An annual percentage rate that does not change throughout the year, unlike an introductory APR that changes after a specific period of time.

Floor Limit - An amount that Visa and MasterCard have established for single transactions at specific types of merchant outlets and branches, above which authorization is required.

Fraudulent Transaction - A transaction unauthorized by the cardholder of a bankcard. Such transactions are categorized as lost, stolen, not received, issued on a fraudulent application, counterfeit, fraudulent processing of transactions, account takeover or other fraudulent conditions as defined by the card company or the member company.

Fraudulent User - An individual who is not the cardholder or designee and who uses a card (or, in a mail/phone order or recurring transaction, an account number) to obtain goods or services without the cardholder’s consent.

Grace Period - A period of time during which you are allowed to pay your credit card bill without being charged a finance and/or late fee. This period is usually 10-28 days.

Introductory Rate (or Intro APR) - A temporary, lower annual percentage rate, after which the APR is raised.

Issuer - Any association member financial institution, bank, credit union or company that issues, or causes to be issued, plastic cards to cardholders.

Magnetic Stripe - A stripe of magnetic information that is affixed to the back of a plastic credit or debit card. This stripe contains customer and account information that is required to complete electronic financial transactions. The physical and magnetic characteristics of this stripe are specified in the International Organization for Standardization standards 7810, 7811 and 7813.

Mail/Phone Order Merchant - A merchant that transacts business by mail or phone.

Mail/Phone Order Transaction - A transaction where a cardholder orders goods or services from a merchant by telephone, mail or other means of telecommunication, and where neither the card nor the cardholder is present at the merchant outlet.

MasterCard - MasterCard International Inc. and all of its subsidiaries and affiliates.

MasterCard Acquirer - A member that signs a MasterCard merchant agreement or disburses currency to a MasterCard cardholder in a cash disbursement, and directly or indirectly enters the resulting transaction receipt into interchange.

MasterCard Card - A card that bears the MasterCard symbol, enabling a MasterCard cardholder to obtain goods, services or cash from a MasterCard merchant or acquirer.

MasterCard Issuer - A member that issues MasterCard cards.

Merchant - An entity that contracts with merchant banks or ISO’s to originate transactions.

Merchant Agreement - A written agreement between a merchant and a bank that contains their respective rights, duties and warranties, with respect to acceptance of the bankcard and matters related to the bankcard activity.

Merchant Bank - Bank that has a merchant agreement with a merchant to accept (acquire) deposits generated by bankcard transactions.

Minimum Payment - The lowest amount of money that you are required to pay on your credit card statement each month.

Online Financial Transaction - A transaction that is authorized, cleared and settled in a single online message.

Overlimit - This refers to a cardholder account that has surpassed its credit limit with a transaction (i.e., the cardholder’s outstanding balance is beyond his/her credit limit).

Overlimit Fee - A fee charged when your balance goes over your credit limit.

Password - A sequence of characters that allows users access to a system. Although they are supposed to be unique, experience has shown that most people’s password choices are highly insecure. Humans tend to choose short words, such as names, which are easy to guess.

Per Transaction Fees - Fees paid by the merchant to the merchant bank or other contracted party on a per-transaction basis.

PIN (Personal Identification Number) - A sequence of digits used to verify the identity of the holder of a token. The PIN is a kind of password.

Plastic (Card) - This is a generic term that is used to identify any of the various cards issued to cardholders.

Point Of Sale (POS) - Location in a merchant establishment at which the sale is consummated by payment for goods or services received.

Policy - An informal, generally natural language description of desired system behavior. Policies may be defined for particular requirements, such as confidentiality, integrity, availability, safety, etc.

Posting - The process of updating individual cardholder account balances to reflect merchandise sales, instant cash, cash advances, adjustments, payments and any other charges or credits.

Primary Account Number (PAN) - The number that is embossed and/or encoded on a plastic card that identifies the issuer and the particular cardholder account.

Prime Rate (or Prime Interest Rate) - The interest rate at which banks lend to their most creditworthy (prime) customers. The prime rate is known to change but not on a regular basis.

Processing Date - The date on which the transaction is processed by the acquiring bank.

Receipt - A hard copy document that records when a transaction took place at the point of sale. The receipt contains a description of the transaction, which usually includes the date, the merchant name/location, the primary account number, the amount and the reference number.

Recurring Billing - Transactions for which a cardholder grants permission to the merchant to periodically charge his account number for recurring goods or services.

Reference Number - Number assigned to each monetary transaction in a descriptive billing system. Each reference number is printed on the monthly statement to aid in retrieval of the document, should it be questioned by the cardholder.

Refund – The creation of a credit to a cardholder account, usually as a result of a product return or to correct an error.

Retail Merchant - A merchant that provides goods and/or services in the retail industry, but that is not a mail/phone merchant, a recurring services merchant or a T&E merchant.

Sales Draft - A paper record that evidences the purchase of goods or services by a cardholder.

Secured Credit Cards - Credit cards that require collateral (property, such as a house, car or deposit of money) for approval. Generally, secured credit cards are for people with no credit
or poor credit who are trying to build or rebuild their credit history.

Service Charge - A component of some finance charges, such as the fee for triggering an overdraft checking account into use.

Settlement - The reporting of settlement amounts owed by one member to another, or to a card issuing concern, as a result of clearing. Settlement is the actual buying and selling of transactions between the merchants, processors and acquirers; along with the card-issuing entities.

Settlement Bank - A bank, including a correspondent or intermediary bank, that is both located in the country where a member’s settlement currency is the local currency, and is authorized to execute settlement of interchange on behalf of the member or the member’s bank.

Smart Card - A plastic card containing a computer chip with memory and CPU capabilities. Such a card may be used for identification or to store information, financial amounts or other forms of data. Also called an integrated circuit card or a chip card.

Standard Floor Limit - A floor limit that varies by merchant type. This refers to a currency limit on transactions, above which authorization requests are required.

Statement - A written record prepared by a financial institution, usually once a month, listing all transactions for an account, including deposits, withdrawals, checks, electronic transfers, fees and other charges, and interest credited or earned. The statement is usually mailed to the customer.

Stored-value Card - A stored-value card is a credit-card-sized device that is implanted with a computer chip with stored money value. A reloadable stored-value card can be reused by transferring a dollar value to it from an automated teller machine or other device. A disposable card cannot be reloaded.

Transaction - (1) Any agreement between two or more parties that establishes a legal obligation. (2) The act of carrying out such an obligation. (3) All activities affecting a deposit account that are performed at the request of the account holder. (4) All events that cause some change in the assets, liabilities or net worth of a business. (5) An action between a cardholder and a merchant or a cardholder and a member that results in activity on the cardholder account.

Transaction Identifier - A unique 15-character value that VISA assigns to each transaction and returns to the acquirer in the authorization response. VISA uses this value to maintain an audit trail throughout the lifecycle of the transaction and all related transactions, such as reversals, adjustments, confirmations and chargebacks.

Unsecured Credit Cards - Credit cards that are not secured by collateral. Customers qualify for such cards based on their credit history, their financial strength and their earnings potential.

User Authentication - Process of validating that a user is who s/he represents her/himself to be.

Validation Code - A unique 4-character value that VISA includes as part of the CPS/ATM program in each authorization response. This code ensures that key authorization fields are preserved in the clearing or settlement record.

Variable Interest Rate - With variable-rate cards, the APR changes when interest rates or other economic indicators change. Also known as a floating rate.

Visa - Visa International Service Association and all of its subsidiaries and affiliates.

Visa Card - A card that bears the Visa symbol and which enables a Visa cardholder to obtain goods, services or cash from a Visa merchant or acquirer.

Visa Issuer - A member that issues Visa Cards.

Visa Merchant - A merchant that displays the Visa symbol and accepts all Visa cards.

Voice Authorization - An approval response that is obtained through interactive communication between an issuer and an acquirer, their authorizing processors or stand-in processing or through telephone, facsimile or telex communications.

Void Transaction - A deletion of the transaction information.

Void(ed) - Nullifies a transaction that has been recorded for settlement, but has not yet been settled. This removes the transaction from the batch of transactions to be settled.

You've Been Approved For An Instant Approval Credit Card! Now What Happens?

2008-11-01T11:14:00.001-04:00

It's a great feeling when you receive approval for anything you do but it's especially gratifying when it comes to an instant approval credit card. There is something intensely personal about one's finances and creditworthiness that creates a good feeling of validation when that credit card with an instant approval decision comes back with a resounding "Yes!"

So once the good news has been received what comes next? Well, some credit card issuers may say they offer credit cards with instant approval but what they provide is actually just a conditional approval to keep you satisfied while they pull a full credit report from the three credit bureaus after the fact in order to cover their bases. This process is actually called "instant decision" by the banks but is not a true instant approval credit card. The banks and credit card issuers that are included within the CreditCardXPO.com links for Instant Approval Credit Cards only include those that are truly "Instant Approval", so rest assured we are aware of this difference.

A common expectation of consumers who seek instant approval credit cards is that they will immediately have access to the credit that has been approved by the bank or credit card issuer. In some cases this may be true but in general consumers will have to wait one or two weeks for their physical credit cards to show up in the mail before they can actually make purchases. There is also an additional layer of identity validation that is involved once the physical card shows up in order to protect the bank and the consumer from identity theft. The activation process involves calling from the home phone listed in the original application and verification of the last four digits of the consumer's social security number. Typically "instant use" or "instant credit" type accounts are offered in conjunction with major retailers to provide extra impetus to make a big ticket purchase. Many private label store cards provide this type of credit card with an extra incentive of getting 10% off the first purchase. But beware of the impact of having too many of these types of credit card trade lines open as they can adversely impact your personal credit score.

Another factor to consider before making an instant approval credit card application is either knowing or having a good idea of your credit score. Most credit decisions made by banks and lending institutions in the U.S. are based on what is called a FICO score, which is calculated by a company called Fair Isaac & Company. Those with less than good credit will usually be declined through an instant approval credit card application process, which can in turn further degrade the consumer's credit score due to excessive credit bureau inquiries.

FAQs About Instant Approval Credit Cards

2008-10-31T10:20:00.003-04:00

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.

Staying Out Of Trouble With Credit Cards

2008-10-30T11:47:00.002-04:00

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.

Deciding Which Credit Card is Right for You

2008-10-29T11:15:00.002-04:00

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 Amazon.com, 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.

Tips for Credit Cards

2008-10-28T11:56:00.001-04:00

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.

Choosing the Right Credit Card

2008-10-27T22:33:00.002-04:00

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

2008-10-27T13:49:00.004-04:00

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.

Types of Credit Cards

2008-10-26T21:18:00.003-04:00

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.

Credit Cards 101 -- What are Credit Cards?

2008-10-24T11:56:00.002-04:00

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:

EQUIFAX – (800) 685-1111; www.equifax.com
EXPERIAN – (888) EXPERIAN (397-3742); www.experian.com
TRANS UNION – (800) 916-8800; www.transunion.com

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.

Credi-Quette

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.

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

2008-10-23T18:51:00.000-04:00

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

2008-10-23T11:52:00.003-04:00

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.

Credit Cards and Charitable Giving

2008-10-22T15:42:00.001-04:00

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

2008-10-22T11:37:00.001-04:00

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.