Credit Card Quick

How to Determine which Type of Credit Card is Right for you

Choosing Credit Card

Finding a credit card that provides you with the services and terms that fit your budget and your lifestyle is not difficult to do, but it certainly requires a little research and planning.

It is up to you to educate yourself on the terms and conditions of your credit cards so that you can use the card responsibly and secure your credit score.

If you are in the market for a new credit card, there are three questions you should ask yourself:

• What do I need in a credit card?

Just as there are loan programs for different needs, there are certainly different credit cards for different needs, budgets and lifestyles.

Credit card reward programs, for example, may be ideal for individuals who use their credit cards regularly, or for business travelers who use their credit cards for hotel stays and meals. Credit cards with high credit limits may be ideal for big spenders, while basic cards with no frills may suit individuals who use their credit cards for emergency purposes only.

Whatever the case, decide which kind of credit card you are, and find the card that meets your needs.

• Do I understand the terms of the credit card?

Although recent changes in credit card laws have made it easier to decipher the cardholder’s agreement, it still may prove quite difficult to read and understand the fine print.

Before you accept a credit card offer, read the entire agreement and make sure you fully understand what it says. If you don’t understand something, ask the company for an explanation.

Some important terms to pay attention to include: annual percentage rate, finance charges, grace period, late payment fees, minimum payment, over-the-limit fees and periodic rate.

• Do I really need this credit card?

If your credit is overextended, and you are merely looking for another source of open credit, then it may be time to reevaluate your credit situation.

It is also important to note that many credit card companies are tightening their belts regarding to whom they will offer credit, so make sure your credit score is strong and your debt is manageable before applying for a new credit card.

Taking Responsibility – How the Credit Crisis has Changed the Way we Use Credit Cards

Introduction

It seems like it was just yesterday when the economy was strong, the housing market was booming and credit was flowing like water. Credit was not only easy to come by, but downright effortless at times.

Even those individuals with poor, little or no credit were being inundated with credit card offers. Fast forward to just a few years later and we find that the economy is weak, the housing market is flat and credit isn’t all that easy to come by anymore.

The recession has affected us all in one way or another. Even if we are fortunate enough to have our jobs and our home, we are all discovering that obtaining credit isn’t for just anyone anymore.

Credit card companies, having been burned in the past by easy credit and delinquent credit card holders, are now recognizing that they must become more choosy with whom they will extend credit.

How the Credit Industry has Changed:

• Don’t expect to obtain personal loans and auto loans without providing documentation regarding your income and your credit worthiness.
• Don’t expect to receive credit of any kind without a strong credit score. If your credit score is weak (anything below 700, according to many industry standards), order a copy of your credit report from all three of the credit reporting agencies and make it a point to begin repairing your credit.
• Don’t expect to miss your credit card payments without being penalized. Credit card companies have adopted much stricter rules and regulations regarding delinquent credit card holders in an attempt to encourage individuals to pay their credit cards on time every month. In fact, many credit card companies now raise a card holder’s interest rate if he or she misses just one payment.
• Don’t expect to obtain loads of credit if you have too much debt. Now more than ever, credit card companies are especially aware of an individual’s debt-to-income ratio. In fact, they are using this number as a guide when extending credit.

Calculate your debt-to-income ratio (take your current income and consider how much of that goes toward paying debt each month) and, if it’s above 30 percent, consider ways in which you can pay down your debt before applying for a credit card or personal loan.

Five Easy Ways to Use Credit Cards to Improve your Credit Score

Credit Score

When used correctly and responsibly, your credit cards can do wonders for your FICO score. And we all know that a good FICO score goes a long way towards obtaining other types of credit and loans.

It is therefore crucial that you understand the ins and outs of credit cards and the many ways in which they can affect your credit score.

You can damage your credit card score if you:

1. Don’t use your credit cards – You must use your credit cards – at least a few times a year – for them to be recognized as available credit on your FICO score. And your available credit makes up about 30 percent of your FICO score. It is therefore important that you exercise your credit cards regularly – even those credit cards that are put aside for emergency purposes.
2. Close out your credit cards - Many credit card holders believe that they are helping their credit score by closing out unused credit cards; however, the act of closing out unused credit card accounts lowers an individual’s credit score because it lowers his or her percentage of available credit. A simple solution is to cut up the credit cards you no longer use, but keep the accounts open.
3. Apply for credit too often – Every time you apply for a credit card it is recorded on your credit report. Therefore, if a number of credit inquiries from credit card companies appear on your credit report your credit score will likely be affected, particularly if you are routinely being denied credit. The solution: if you are experiencing trouble getting credit, order a copy of your credit report (which is free if you have been denied credit for any reason) and work to repair the problems which are standing in your way of obtaining credit.
4. Don’t make your credit card payments on time and in full - This may seem like a no-brainer, but many credit card holders don’t see an occasional late payment or partial payment as a big deal. The fact is, however, that even occasional missteps on your credit report can have a big impact on your ability to obtain credit and to obtain competitive interest rates.
5. Run up high balances on your credit cards – Once again, the amount of available credit makes up about 30 percent of your FICO score. Therefore, as you charge up your credit cards your available credit begins to dwindle, along with your credit score. The solution: make an effort to pay down credit card bills before applying for any type of consumer or business loan.

How to Use Reward Credit Cards to your Advantage

Credit Card Rewards

There are loads of different types of credit cards available to consumers today, and many come with excellent reward programs.

If you are interested in a reward credit card, then you should start by considering your wants and needs. A frequent business traveler, for example, may find that a rewards credit card with hotel points may be the ideal card to have, as the rewards program could result in free hotel stays and other perks.

On the other hand, a credit card that offers a cash back program may appeal to an individual who uses his or her credit card on a frequent basis and will likely earn cash back points.

From airline and hotel points to cash back and gift reward programs, there are plenty of reward credit cards from which to choose.

Points to remember when using a reward credit card:

• Read the details of the consumer agreement carefully, and make sure you understand the terms of the reward program. If you have any questions, contact the credit card company to clarify the card’s terms and conditions before accepting the credit card offer.
• Check your points frequently to make sure there are no discrepancies between your records and the credit card’s records. Many credit card companies offer online accounts which allow you to easily check your credit card point information at any time.
• Use your credit card for everyday purchases to quickly rack up credit card points. Remember: the more you use your credit card, the quicker you will see your rewards points accumulate.

It is important, however, to always make sure you have the cash to back up your purchases, as you will want to be able to pay off your balance in full every month to avoid costly finance charges.

• Make it a priority to pay your account on time every month, as many credit card companies will take away any earned points (and will likely increase your interest rate) if you are tardy on payments.
• If you find that you are not using your credit card enough to earn significant reward points, you may want to consider switching to a no-frills credit card, as the interest rate will likely be more competitive.

What you Need to Know about Balance Transfers

Credit Card Debt

Balance transfers are often used by credit card holders in an effort to obtain lower interest rates on existing balances.

You have no doubt received an offer from a credit card company enticing you with lower interest rates on transferred balances. Are these offers worth it? Do they actually save you money? What are the catches? Below are several factors to consider.

• Pay attention to the terms of the balance transfer, particularly whether the advertised interest rates applies to just the balance transfer, or to purchases, as well. Some credit card companies offer the promotional interest rate to balance transfers only, and instead charge a much higher interest rate on purchases.
• Pay attention to transaction fees, as they can be significant, particularly when transferring high balances. In fact, some transaction fees can be as high as four percent of the balance transfer rate, or $40 per every $1,000 your transfer.
• Pay attention to the duration of the promotional, or “teaser” balance transfer rate. Most credit card companies offer their balance transfer rates for a set period of time (usually six months to a year). Afterward, the rate can jump significantly, leaving you with high interest payments unless you transfer your balance again to a new card. Before you transfer your credit card balances to a new card, you may want to make sure you are able to pay off the balance during the promotional interest rate time period.
• Pay attention to your monthly payments and make it a priority to pay your bill on time and in full every month. Many credit card companies are now penalizing credit card holders for just one missed or tardy payment. This can result in a termination of your transfer balance interest rate and a jump in your annual percentage rate.
• Pay attention to your old cards when transferring their balances to a new card. To protect your credit, you should pay close attention to your old cards by making the payments until the balance transfer is complete and by verifying that the balances are paid in full. The best rule of thumb is to continue to make payments on your old cards until you receive a bill with a zero balance.