When you sign up for a credit card, you are essentially signing on a contract which contains terms and conditions you must adhere to in order to abide by the contract. The consequences for not meeting those obligations can be financially severe. It has never been more important to fully understand how credit works than now because of the high fees and penalties for not paying your bills on time.
Credit is not something to take lightly. If you don’t understand how it works or how you are supposed to manage it, you likely will never be credit worthy. It can be all too easy to lose a good credit standing by making simple mistakes.
Here are just a few terms and credit related terms that you should know about before even applying for a credit card.
Why Should You Know About FeesFor every different credit card there are different fees. If you don’t read over the information about how much fees are, how they are incurred, or how you can avoid them, you might be shocked when you are hit with fees your weren’t expecting and a balance you can’t pay. You want to verify and understand maintenance fees, annual fees, late fees, over the limit fees, balance transfer fees, and other associated terms your credit card issuer uses. For many, the interest rate is the only fee that is a major concern but it’s the other fees that can get you into a problem situation.
Why You Should Know About TransactionsIf you are putting your name out there as well as your financial information when making a credit card purchase, it is in your best interest to understand how the transaction process works. When you use the card for purchases the rules will likely be different than if you used the card at the ATM. If you transfer balances from one card to the next, do you know how much that will cost you? Not all credit cards work the same way. Make sure you know how your billing cycle works and what your grace period timeline is.
Why You Need to Understand RewardsIf you take the time to sign up for a rewards credit card to benefit you, it only makes sense that you understand how the rewards program works. You’ll want to find out how you earn bonuses, what the bonuses entail, if there is a limit on the bonuses, or if the bonuses expire. Essentially there is no point in earning rewards if you have no clue how to use them.
There are many more items that should be reviewed per each credit card agreement and it is your responsibility to do just that in the interest of protecting your credit. Don’t rely on the credit card companies to highlight the fine print. Get yourself a good magnifying glass and really know what you are getting before applying for a credit card.
Saturday, May 30, 2009
Little Bonuses You Get When You Use Credit Cards
It can be very easy to forget the benefits of credit cards among all the negative reports that credit cards receive. When people choose the right credit card(s) to use; and then use them responsibly however, credit cards can actually give you little bonuses that make them better than cash. Responsible credit card use means you don’t charge more than you can afford, you pay your balances off in full each month instead of carrying a balance from one month to the next, and the card offers advantages over cash such as cash back, rewards, or other card features that you probably forgot you even have!
Take a closer look at your credit card agreement to find out what other features your credit card might offer, including things like:
Proof of Purchase (Extra Receipt): Returning items without receipts often means you can’t get your money back. It’s hard to keep track of those little white slips of paper, though! If you buy items with a credit card, your credit card statement will show the itemized purchases and you should be able to use that as proof of purchase. It includes the store name, and sometimes a brief description of the item, which should be sufficient to the store clerk when you need to exchange or return an item. If not - you can always see if your card offers purchase protection coverage - and let the credit card company go after the retailer on your behalf!
Rental Car Insurance Coverage: When you rent a car, you’ll be asked if you need car rental insurance coverage. But what many people forget is that if they pay for the rental with their credit card, often times the credit card includes complimentary insurance coverage and buying it from the rental company is a waste of your money.
An Extended Warranty: Many credit cards will extend the standard warranty for 90 days or 1 year if you buy using a credit card.
Don’t forget about these little perks for using credit cards, they can come in handy!
Take a closer look at your credit card agreement to find out what other features your credit card might offer, including things like:
Proof of Purchase (Extra Receipt): Returning items without receipts often means you can’t get your money back. It’s hard to keep track of those little white slips of paper, though! If you buy items with a credit card, your credit card statement will show the itemized purchases and you should be able to use that as proof of purchase. It includes the store name, and sometimes a brief description of the item, which should be sufficient to the store clerk when you need to exchange or return an item. If not - you can always see if your card offers purchase protection coverage - and let the credit card company go after the retailer on your behalf!
Rental Car Insurance Coverage: When you rent a car, you’ll be asked if you need car rental insurance coverage. But what many people forget is that if they pay for the rental with their credit card, often times the credit card includes complimentary insurance coverage and buying it from the rental company is a waste of your money.
An Extended Warranty: Many credit cards will extend the standard warranty for 90 days or 1 year if you buy using a credit card.
Don’t forget about these little perks for using credit cards, they can come in handy!
Why Banks are Passing Credit Card Debt to their Consumers
The global recession has certainly hit the global industry –and has hit it really hard. This is precisely why credit card companies are actually passing much of the financial burden they shoulder onto their customers. And this is precisely why if you have a credit card of your own, you should be aware of the existing situation and do your best to avoid using plastic for now. Bad loans and the increasing rate of unemployment have certainly made it all the more difficult to deal with credit cards for virtually all banks in the industry.
Because there are just so many people defaulting their loans, banks are now passing on that financial burden on you, the consumer. At present, banks have actually passed on close to 8.5% of their financial burden on to their customers who still have strong paying abilities. Moreover, banks are now doing all that they can to make up for their losses. You just might have experienced some of these attempts as well. For now, banks have resorted to increasing their interest rates, reducing the credit limits of their customers, and even closing down the accounts of their customers entirely.
If you are beginning to notice any of these attempts being implemented on your credit account, then you should contact your financial advisor or lending institution right away. After all, as a paying customer, you do have your rights that you should exercise to protect yourself. Yes, there are new rules to be implemented regarding the limitation of rate increases. However, these rules will not be implemented until 2010, and it is impractical to wait that long.
So, what should you do then? Take the initiative! Be frugal, first and foremost. Do not resort to using plastic at just any given time. As much as possible, prepare enough money for all the expenses that you have to take care of – rent, groceries, utility bills, and the like. Prepare a budget plan so that you will see for yourself where your money comes from and where it goes – and stick to that plan! The economy has certainly taken a turn for the worse and you should not just wait for it to alleviate somehow.
But if you are unfortunately at the losing end – meaning you are one of the people who have defaulted, do not fret just yet. Yes, there is still hope for you. There are actually credit cards for bad credit that you can sign up for, you know. Now, you may be asking yourself, just what good would these bad credit credit cards do for me? Wouldn’t signing up for them just worsen my situation? Yes, these are indeed worthy questions to ask.
Still, you have to remember that even if credit cards for people with bad credit are available, it would still be better to practice frugality. Do not wait for the new laws to be implemented – take the initiative and spend your money wisely.
Because there are just so many people defaulting their loans, banks are now passing on that financial burden on you, the consumer. At present, banks have actually passed on close to 8.5% of their financial burden on to their customers who still have strong paying abilities. Moreover, banks are now doing all that they can to make up for their losses. You just might have experienced some of these attempts as well. For now, banks have resorted to increasing their interest rates, reducing the credit limits of their customers, and even closing down the accounts of their customers entirely.
If you are beginning to notice any of these attempts being implemented on your credit account, then you should contact your financial advisor or lending institution right away. After all, as a paying customer, you do have your rights that you should exercise to protect yourself. Yes, there are new rules to be implemented regarding the limitation of rate increases. However, these rules will not be implemented until 2010, and it is impractical to wait that long.
So, what should you do then? Take the initiative! Be frugal, first and foremost. Do not resort to using plastic at just any given time. As much as possible, prepare enough money for all the expenses that you have to take care of – rent, groceries, utility bills, and the like. Prepare a budget plan so that you will see for yourself where your money comes from and where it goes – and stick to that plan! The economy has certainly taken a turn for the worse and you should not just wait for it to alleviate somehow.
But if you are unfortunately at the losing end – meaning you are one of the people who have defaulted, do not fret just yet. Yes, there is still hope for you. There are actually credit cards for bad credit that you can sign up for, you know. Now, you may be asking yourself, just what good would these bad credit credit cards do for me? Wouldn’t signing up for them just worsen my situation? Yes, these are indeed worthy questions to ask.
Still, you have to remember that even if credit cards for people with bad credit are available, it would still be better to practice frugality. Do not wait for the new laws to be implemented – take the initiative and spend your money wisely.
Cash Back Cards - a Plastic Option to See Through
Tired of reading through blogs and articles that all seem to point out that it is best to freeze your credit card to death than to keep it with you at all times? Don’t you worry — this won’t do the same.
As a plastic user, I have already exhausted all the possible means to find out how I can make the most out my card. I have done my own research and reading. I have even gone the extra mile by talking to my creditors. While it is really wise to just not own a credit card and just live within my means, I just can’t. I am already as dependent as you are.
What separates me from the lot is the fact that I don’t intend to be bothered by credit forever. I may be now but not for long so I try my best to manage my credit accounts well. I have a credit account management scheme of my own and I practice it religiously. What I would like to share today is something not most of us live out — it is taking advantage of cash back credit cards. I know of four ways to making the most of credit card reward programs that are most applicable in our everyday lives.
Let me begin with the first two that you can bear in mind when opening a credit card account.
Applying for a credit card is something that might appear as a common transaction to you. You might already be aware of the process and all but you may not be aware of these two things that you have to remember as you go about the application. This is especially helpful in deciding which kind of card to pick.
Pick a card based on your spending habits. If you keep this in mind, you would be able to take advantage of the reward programs more often.
Pick a card that automatically gives you rewards without you having to inform anyone. You are a busy person and a small reward, even if it can turn big once it accumulates, won’t be on the top of your priorities. Have a card that automatically delivers what you deserve without prompting.
Once you already have the right card that can give you your ever-deserved rewards, make sure to use it. Use your rebate cards regularly. Also avoid “points” cards. Reward cards that acquire points and allow you to use these points on your next purchase are often less openhanded than cash back cards.
As a plastic user, I have already exhausted all the possible means to find out how I can make the most out my card. I have done my own research and reading. I have even gone the extra mile by talking to my creditors. While it is really wise to just not own a credit card and just live within my means, I just can’t. I am already as dependent as you are.
What separates me from the lot is the fact that I don’t intend to be bothered by credit forever. I may be now but not for long so I try my best to manage my credit accounts well. I have a credit account management scheme of my own and I practice it religiously. What I would like to share today is something not most of us live out — it is taking advantage of cash back credit cards. I know of four ways to making the most of credit card reward programs that are most applicable in our everyday lives.
Let me begin with the first two that you can bear in mind when opening a credit card account.
Applying for a credit card is something that might appear as a common transaction to you. You might already be aware of the process and all but you may not be aware of these two things that you have to remember as you go about the application. This is especially helpful in deciding which kind of card to pick.
Pick a card based on your spending habits. If you keep this in mind, you would be able to take advantage of the reward programs more often.
Pick a card that automatically gives you rewards without you having to inform anyone. You are a busy person and a small reward, even if it can turn big once it accumulates, won’t be on the top of your priorities. Have a card that automatically delivers what you deserve without prompting.
Once you already have the right card that can give you your ever-deserved rewards, make sure to use it. Use your rebate cards regularly. Also avoid “points” cards. Reward cards that acquire points and allow you to use these points on your next purchase are often less openhanded than cash back cards.
Read Your Way Smoothly Through a Credit Report
There are times when you would need to secure a copy of your credit report out of need or want to manage your credit accounts effectively. Whichever among these is your reason, it is always wise to secure a copy of your annual credit report. It is your right anyway — you might as well exercise it.
First things first — make sure to get your credit report from each of the three credit-reporting agencies (TransUnion, Equifax and Experian). It is common misconception that getting one of these would be enough. Remember: creditors have the option to choose which among these three they would want to subscribe to so a complete credit report would be such report from all these three combined.
Another thing to remember is that it is best to obtain a consumer copy of your credit report. I know you may be tempted to ask your friend who works in a bank to just secure you a copy but this is not wise, as the one they have won’t be consumer-friendly. This means the one you requested for would be a lot easier to read and understand.
Now that you know these two things to remember when obtaining a copy of your credit report, you can start sailing through that piece of paper that can tell you if your credit history is in good shape or not.
Your credit report would have four sections: Identifying Information, Credit History, Public Records, and Inquiries. Below is a description of each.
Identifying Information. These are just basically information about you — your name, social security number, driver’s license number, your address, telephone numbers, the like. If you find any piece of information incorrect, don’t fuss yet. Oftentimes, it was just left that way to avoid cutting off links and committing graver mistakes. And you can always fill out the request form that comes with the credit report to correct them.
Credit History. This is simply a list of all your credit accounts with detailed information, such as creditor name, account number, what kind of account it is, and the status of the account. A part that you may want to check closely in this section is that which says how well you paid the account.
Public Records. With crossed fingers, hope that this section is blank. An item on this section indicates a problem, such as bankruptcy.
Inquiries. Another harmless section but one you should look into. Through this section, you would know who requested to see a copy of your credit report either because you applied for another form of credit or simply for promotional purposes.
First things first — make sure to get your credit report from each of the three credit-reporting agencies (TransUnion, Equifax and Experian). It is common misconception that getting one of these would be enough. Remember: creditors have the option to choose which among these three they would want to subscribe to so a complete credit report would be such report from all these three combined.
Another thing to remember is that it is best to obtain a consumer copy of your credit report. I know you may be tempted to ask your friend who works in a bank to just secure you a copy but this is not wise, as the one they have won’t be consumer-friendly. This means the one you requested for would be a lot easier to read and understand.
Now that you know these two things to remember when obtaining a copy of your credit report, you can start sailing through that piece of paper that can tell you if your credit history is in good shape or not.
Your credit report would have four sections: Identifying Information, Credit History, Public Records, and Inquiries. Below is a description of each.
Identifying Information. These are just basically information about you — your name, social security number, driver’s license number, your address, telephone numbers, the like. If you find any piece of information incorrect, don’t fuss yet. Oftentimes, it was just left that way to avoid cutting off links and committing graver mistakes. And you can always fill out the request form that comes with the credit report to correct them.
Credit History. This is simply a list of all your credit accounts with detailed information, such as creditor name, account number, what kind of account it is, and the status of the account. A part that you may want to check closely in this section is that which says how well you paid the account.
Public Records. With crossed fingers, hope that this section is blank. An item on this section indicates a problem, such as bankruptcy.
Inquiries. Another harmless section but one you should look into. Through this section, you would know who requested to see a copy of your credit report either because you applied for another form of credit or simply for promotional purposes.
Credit Cards: Choosing the Right Card that Fits Your Life Style
The idea of credit cards has been around longer than that of bills. The first forms were called credit markers. These markers indicated different amounts that were borrowed. Later on, business establishments adopted the concept and introduced prepaid charge cards to insure loyalty from their customers.
It eliminated traveling around with large sums of money and provided security for customers. The downside is that not all parts of the country had the same establishments that the owner has subscribed to. Hence, individuals at that time had to get 12 cards or more, especially those who travel a lot.
The modern credit card, designed by Frank McNammara, enables every purchase in various stores and business establishment to done using only one card. This was made possible for the credit card company served as the ‘middleman’ between the client and store. This ingenious scheme became a large hit that banks, such as American Express and Visa, were forced to issue their own cards. Today, especially with most transactions done online, credit cards are extremely necessary.
Modern credit cards have different schemes to suit every individual’s lifestyle. American Express and Diner’s club cater to those who spend for entertainment and frequent travelers. The credit limit is usually high and there is no interest to be paid. The credit balance should be paid monthly, except for things like airline tickets in which you have an option of paying on an installment basis. Also, owners of these cards have an annual fee to be paid, which decreases as the purchase volume increase. So, if you have a regular purchase of $100, you will have to pay $25 or around 2% of your total purchase. Hence, for your $1000 expenditure per month, you will be charged $20.
Another kind of credit card is the Bank Card. These cards are issued by members of Visa and MasterCard. Unlike travel and entertainment cards, bank cards are payable on an installment basis and would charge anywhere from 18 to 23% interest. The minimum payment would 11/2 percent of the balance for the given month or $20 if the amount is less. The interest would then be compounded for the next month.
So, if you made a $100 purchase for this month and paid $20, the new outstanding balance would be $81.20. And if the following month you did the same thing, you would get a new balance of $163.62 for the interest has already been compounded. The same is true for retail cards issued by establishments like gasoline outlets and department stores. But retail cards are only usable for purchases with the same establishments and some of their affiliate companies.
Although credit cards have high limit, it is important to purchase only those you can afford to pay for at the end of the month. Buying something worth more than what you earn needs a lot of assessment to avoid financial complications.
It eliminated traveling around with large sums of money and provided security for customers. The downside is that not all parts of the country had the same establishments that the owner has subscribed to. Hence, individuals at that time had to get 12 cards or more, especially those who travel a lot.
The modern credit card, designed by Frank McNammara, enables every purchase in various stores and business establishment to done using only one card. This was made possible for the credit card company served as the ‘middleman’ between the client and store. This ingenious scheme became a large hit that banks, such as American Express and Visa, were forced to issue their own cards. Today, especially with most transactions done online, credit cards are extremely necessary.
Modern credit cards have different schemes to suit every individual’s lifestyle. American Express and Diner’s club cater to those who spend for entertainment and frequent travelers. The credit limit is usually high and there is no interest to be paid. The credit balance should be paid monthly, except for things like airline tickets in which you have an option of paying on an installment basis. Also, owners of these cards have an annual fee to be paid, which decreases as the purchase volume increase. So, if you have a regular purchase of $100, you will have to pay $25 or around 2% of your total purchase. Hence, for your $1000 expenditure per month, you will be charged $20.
Another kind of credit card is the Bank Card. These cards are issued by members of Visa and MasterCard. Unlike travel and entertainment cards, bank cards are payable on an installment basis and would charge anywhere from 18 to 23% interest. The minimum payment would 11/2 percent of the balance for the given month or $20 if the amount is less. The interest would then be compounded for the next month.
So, if you made a $100 purchase for this month and paid $20, the new outstanding balance would be $81.20. And if the following month you did the same thing, you would get a new balance of $163.62 for the interest has already been compounded. The same is true for retail cards issued by establishments like gasoline outlets and department stores. But retail cards are only usable for purchases with the same establishments and some of their affiliate companies.
Although credit cards have high limit, it is important to purchase only those you can afford to pay for at the end of the month. Buying something worth more than what you earn needs a lot of assessment to avoid financial complications.
Aid Your Bad Credit Score With a Gas Card
For those consumers who drive to work or school each day, all need to the same thing – gasoline. For those same consumers who also have bad credit issues in the past can use gasoline to their credit advantage. Many companies offering gas cards will also offer additional discounts and promotions to help save money on gasoline. Besides the potential savings, consumers can also have a positive impact on their credit score, especially when their current score is less than perfect.
One powerful tool to boosting your credit rating is by applying for a gas card at your local gas service station. Many of the gas credit card issuers are more lenient when reviewing credit histories and applications. When you are approved for a gas card, you need to use it wisely and be sure to pay off balances each month. Your active credit account coupled with regular and consistent payments will be reported back to the credit reporting agencies, which in turn boosts your credit.
As time goes by and you continue to use and pay for your gas card responsibly, you will see an improvement in your credit rating, which may enable you to apply for and be approved for traditional credit cards. There are many major credit card companies that offer gas rewards cards which still bring you discounts and savings every time you pay at the pump with some providing additional rewards such as cash back or points for redemption.
Rebuilding bad credit is not an impossible feat. You can work to eliminate debt and repair your credit but it will be a long process. By applying for a gas card, you can help expedite the process and help you towards better credit and more choice in the credit card market.
One powerful tool to boosting your credit rating is by applying for a gas card at your local gas service station. Many of the gas credit card issuers are more lenient when reviewing credit histories and applications. When you are approved for a gas card, you need to use it wisely and be sure to pay off balances each month. Your active credit account coupled with regular and consistent payments will be reported back to the credit reporting agencies, which in turn boosts your credit.
As time goes by and you continue to use and pay for your gas card responsibly, you will see an improvement in your credit rating, which may enable you to apply for and be approved for traditional credit cards. There are many major credit card companies that offer gas rewards cards which still bring you discounts and savings every time you pay at the pump with some providing additional rewards such as cash back or points for redemption.
Rebuilding bad credit is not an impossible feat. You can work to eliminate debt and repair your credit but it will be a long process. By applying for a gas card, you can help expedite the process and help you towards better credit and more choice in the credit card market.
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