Credit Card Quick

Pumping and Dumping: Be Careful when using this Rewards Credit Card Tactic

Credit Card Rewards

There is a tactic used by many credit card customers called “pumping and dumping.”

This newest tactic is used when credit card customers open an account to take advantage of credit card rewards bonuses and points during a promotional time period, only to “dump” the credit card thereafter.

The Allure of Sign-Up Bonuses

Sign-up bonuses for rewards credit cards are quite common, as this is how many creditors lure customers into signing up for their credit card. However, many credit card customers are now signing up for these rewards bonuses and then quickly canceling the card once they have earned the bonus rewards and once the promotional rate has ended.

Earning air travel mileage is often a popular reason for “pumping and dumping,” as many customers are out for free or reduced air travel. Although this tactic has worked for many credit card customers, it can potentially backfire if used too often.

Tracking your FICO Score

The reason for this is because opening up and subsequently closing a large number of credit cards over a short period of time can lower your FICO score. So, although you think you are making out a like a bandit with rewards points, you may be actually hurting your credit score – and your ability to obtain low interest rates – in the process.

Another reason why “pumping and dumping” may be detrimental to your credit score is because a portion of your credit score is based upon the length of time you have had credit. In other words, a long relationship with a single creditor will likely give you a boost in your credit score, while short relationships with a number of creditors will likely put a ding in your credit score.

Many credit card analysts often recommend closing the newest credit card accounts before you close older accounts, as this will help protect your credit score.

Finally, “pumping and dumping” can prove to be quite confusing for many individuals, as opening and closing several accounts at any given time can result in forgotten accounts and forgotten payments. Often times, sticking to one or two credit cards, instead of becoming involved in a cycle of opening and closing various accounts, allows you to better track your spending and your credit cards.

There’s an App for that: Managing your Credit Card from your iPhone

Introduction

Managing our credit card accounts has never been more convenient and practical, and it looks like it just got a little bit easier.

Citibank has teamed up with the iPhone to allow individuals to effortlessly complete their mobile banking services. Called the Citi Mobile Suite, this iPhone application allows cardholders to access and manage their credit card accounts from their mobile phone, from any location and during any time of the day or night. Could it get any easier?

Advantages of Mobile Banking

Mobile banking; in particular, banking from your mobile phone, has never been easier, and the benefits are clear:

• Mobile banking allows credit card customers to keep an eye on their account, at any given time, thereby giving customers more control over their spending habits. Haven’t we all opened our credit card statements and stood there in awe at the balance because we didn’t realize we charged so much the month before? Mobile banking applications for mobile phones eliminates this monthly surprise by allowing customers to check their balance and their recent purchases, whenever and wherever.
• Mobile phone banking allows customers to keep a close eye on their credit limit so they don’t exceed it and incur costly over-the-limit fees. It allows customers to stay within their budget and not overspend without thinking.
• Mobile phone banking, like the one offered through Citi, allows customers to text requests regarding their credit card account, including balances and transaction history. This feature takes the concept of mobile banking one step further, as it allows customers to receive important information about their account on demand.
• Mobile phone banking allows credit card customers to track spending on their credit card as to prevent identity thieves from obtaining their credit card numbers and charging up their credit cards. The ability to view credit card purchases at any given time is a huge blow to identity thefts who before could potentially make unauthorized purchases for weeks before getting caught. The more connected we become to our credit card accounts the less likely that identity thieves will be able to get away with fraudulent spending.

Credit Card Shopping: What to Consider when Choosing a Credit Card

Choosing Credit Card

Choosing a credit card is a bit of an art. One credit card doesn’t fit all, and your spending habits, your wants and your needs all play a part when determining which type of credit card is right for you.

Your credit card can be an extremely useful financial tool, so it is up to you to decide which type of credit card will best fit your lifestyle, your financial needs and your budget.

What to Consider when Choosing a Credit Card:

• Decide which type of spender you are – Are you the type of spender who pays your bill in full each month, or do you anticipate carrying a balance? Will you use your credit card for personal use, or is it primarily for business purposes? Will you use your card for daily expenditures, or will you only use it for emergency purposes? All of these questions are necessary, as there are a number of cards that cater to different spenders. For example, an individual who pays off his/her balance every month will likely need not worry about APRs, but instead focus on details such as annual fees and rewards programs.
• Find the best APR – Do your research and find the cards with the most competitive interest rates. Decide whether a fixed or variable interest rate is best for you, and then determine whether the quoted interest rate is a promotional one, as this will likely change within a year’s time to a higher APR.
• Consider whether you need a balance transfer option – Many individuals who find a new credit card with a more competitive interest rate often transfer their old balances onto their new card. Although this is generally a good idea, it is important to fully understand all of the terms and conditions that accompany the balance transfer offer. Some things to consider: the APR on balance transfers; the length of time the promotional rate will stay in effect for the balance transfer; and the balance transfer fees associated with the balance transfer.
• Read the fine print – Commonly referred to as the credit card’s terms and conditions, the fine print on your card is chocked full of very important information about your account that you must fully understand. Don’t accept a credit card offer if you don’t fully understand the card’s terms and conditions, and ask questions if something doesn’t sound right.

Start Small: Steps you can take to Today to Rebuild your Credit for Tomorrow

Credit Repair

The past year has been tough for many people, and that goes for their credit scores, too.

If you experienced the loss of a job or other financial mess over the past year and you are now eagerly looking forward to a brighter 2010 then you must begin to assess your credit score and work towards building it back up.

In order to repair your dinged-up credit score, you must begin at the beginning again. Unfortunately, creditors simply are not willing to extend credit anymore to those with poor credit scores. So, what does that mean for you?

That means that you must begin taking small – but very necessary – steps to repair your credit so that you can once again enjoy a strong credit score and all of the advantages that go along with it.

• Start with a secured credit card. Make a point to charge purchases on that card each and every month and pay them off in full each month.  A secured credit, although backed by your cash deposit, is a great way to begin proving your credit worthiness to creditors. Check out the terms and conditions of several secured credit cards, as annual fees and charges for these types of cards can vary greatly.
• Once you have developed a consistent payment history with your secured credit card, consider taking out a small retail credit card. Continue to pay on this card, each and every month, so that you can further build up your credit score.
• Once you have shown a strong payment history of at least 12 months, you can often begin applying for unsecured credit cards. However, if you are denied a credit card after this time period, don’t automatically start applying for more cards in hopes that you may get approved for one; too many credit inquiries will only further hurt your already low credit score.
• If your poor credit history is a result of irresponsible spending, consider heading to a credit consumer counseling service. These non-profit organizations are there to help you make better decisions and to start helping you to build a responsible approach towards credit cards.

Reasons Why You Should Not let Your Credit Card Become Inactive

News

There are many changes taking place in the credit card industry; most of which are in your favor. However, there are a number of new regulations taking place, courtesy of the credit card companies, that may not be in your favor.

One of the most important new rules to consider is that not using your credit card can cost you. Most consumers were always under the assumption that having a credit card and using it only for emergency purposes was the best way to go. However, credit card companies are now changing up the rules and either charging you an inactivity fee or canceling your credit card if you don’t use it enough.

This may prove to be quite confusing, especially for consumers who were told to never cancel their credit card accounts in fear of lowering their credit score. Now, financial advisers are recommending canceling credit cards that you no longer want to use or need, as you could be facing inactivity fees if you keep these inactive accounts open,

Inactivity fees are no doubt a ploy by credit card companies to get you to start using that credit card that has been taking up room in your wallet. After a year of recession woes and credit card regulations, creditors are now finding new ways to once again encourage their credit card customers to start spending on their credit cards.

What you can do to avoid inactivity fees:

• Make a point to charge a purchase at least every six months. This will prevent the credit card company from charging you an inactivity fee. Check your card’s terms and conditions regarding inactivity fees for specific details.
• If you are charged an inactivity fee on a credit card you no longer want or need, cancel the card and ask that the inactivity fee be removed.
• If you are considering a large purchase in the near future, don’t cancel the credit card, as this could lower your FICO score. Instead, simply make a purchase or two – and pay them off before interest can accrue.

The Advantages of Bi-Monthly Credit Card Payments

Introduction

We all know that a good credit score is highly important in today’s economy. It is therefore all the more important that we do what we can to maintain a great credit score. For some individuals, this may mean making bi-monthly credit card payments instead of monthly ones.

Making bi-monthly credit card payments (paying on your credit card twice a month, instead of once a month) may make the task of paying on your credit card a more easily manageable one. Smaller payments, for some individuals, are just easier to budget, and may allow them to pay more on their credit card than if they were paying once a month.

Why it may pay to make bi-monthly credit card payments –

• You can time your payments with your paycheck –  If you are paid every two weeks then a bi-monthly credit card payment plan may work out well for you. For individuals living paycheck to paycheck, paying on their credit cards, a little bit at each paycheck, allows them to better manage their money and get their credit cards paid each month.
• Paying bi-monthly may allow you to pay down your debt more quickly. For example, paying bi-monthly will allow you to make 26 smaller payments each year – or 13 payments instead of 12 – thereby allowing you to pay down your debt more quickly. You’d be surprised to find what one more payment can do to your balance!
• Bi-monthly payments may help you achieve a sense of satisfaction and gratification. Bi-monthly payments are just as much about your feelings as they are about your financial well being. In other words, you may end up feeling much more in control of your finances by paying bi-monthly, and you may end up feeling more accomplished and gratified.

For many individuals, bi-monthly payments simply help them achieve their financial goals, and allow them to better budge themselves, based on their bi-monthly paychecks.  In the end, achieving a balance with your credit card debt will help you tackle your debts and make them all the more easy to pay off.

Give bi-monthly payments a try – your FICO score will thank you for it!

When Co-Signing for a Credit Card may not be the Best Idea

Introduction

You may be approached by a loved one asking you to co-sign for a credit card, and you may have difficulty deciding if this is the best decision to make. So, what do you do?

For many individuals, the idea of co-signing is met with a great deal of trepidation, and rightly so. After all, you are just as responsible for the credit card bill as your loved one is. So, if they fail to pay the bill, guess who’s responsible? And, if they act irresponsibly with the credit card, guess whose credit score will suffer?

It is because of the above reasons that you must seriously consider whether co-signing for a loved one is the best idea. Here are a few situations where you may want to decline a request to co-sign for a credit card:

• Your loved one has a shaky employment history – The bottom line is that the only way to pay for a credit card is by working, and if your loved one is not currently employed, or has a habit of moving from job to job, co-signing for a credit card may not be in your best interest.
• Your loved one has a poor history – or no history – of handling credit – For most individuals, there’s a good reason why they can’t obtain credit, and it usually has to do with poor credit mistakes in the past. If your loved one has never handled credit, this may also be a warning sign for you to decline co-signing for the card. If there were legitimate circumstances under which your loved one’s credit was damaged (the loss of a spouse, a divorce) then you may feel better co-signing for a credit card.
• Your loved one has a history of making bad decisions – If your loved one made rash purchases in the past that they could not afford then you must ask yourself what is preventing them from doing the same thing if you co-sign for a credit card? Your loved one may make all the promises in the world, but in the end it is their actions that speak much louder than their words.

The Top Four Reasons why Maintaining a Strong Credit Score is more Important than Ever

Credit Score

FICO scores are now, more than ever, the most important thing you have going for you when it comes to obtaining any kind of financing. Because of the poor economy and the near collapse of the credit industry over the last year, creditors are now being extra cautious when it comes to lending money.

From credit cards and auto loans to home loans and personal loans, creditors now want clear proof that you are a good credit risk; and your FICO score is often the first thing they look at to determine this.

Here are the four top four reasons why your FICO score is now more important than ever:

1. Your ability to purchase a car or home relies on it – Don’t even think about snagging an auto loan or a home loan if your FICO score isn’t exemplary. Creditors use to give loans to even those with poor credit; they simply charged them more in interest and finance charges. However, today’s credit industry is decidedly different, and individuals with poor credit scores are no longer squeaking by. Instead, only those individuals who have proven themselves to be great credit risks are getting the loans.
2. Your ability to save on finance charges relies on it – Many credit card companies are willing to give credit cards to individuals with lower FICO scores, but they certainly tack on high interest rates to go along with them. Although individuals with very low FICO scores can not get any type of credit card (unless it is secured), only those individuals with the best credit are now getting the lowest interest rates.
3. Your ability to have access to credit relies on it – Having access to credit is highly useful for most individuals. From purchasing a vehicle to using a credit card in the event of an emergency, most all of us are thankful for being able to have access to open credit. However, in today’s economy, only those with strong FICO scores will be afforded this luxury.
4. Your ability to obtain a great job may rely on it – Just when you think it can’t get any worse regarding your FICO score, employers are now looking at applicants’ FICO scores to determine if they are trustworthy and responsible.

Changes to your Credit Card in 2010

News

The Credit Card Accountability, Responsibility and Disclosure Act, which is set to go into effect as of February 10, has changed many of the ways in which consumers use credit cards and credit card companies handle consumers’ credit card accounts.

This new credit card legislation comes with its share of changes, most of which will take place as early as next month. The changes to the credit card industry are designed to protect consumers and hold credit card companies accountable for responsible behavior, but they may also result in more responsible behavior from credit card consumers. In other words, consumers are sure to benefit from the upcoming changes, which include:

• You credit card’s interest rate cannot be raised if you are just a few days late on your payment.  This is welcomed news to many credit card consumers who, in the past, saw their credit card interest rates soar when they missed their monthly payment by a day or two.
• The creditor can raise your card’s interest rate if you are more than 60 days late making your payment. However, if you make your payments on time for the next six months following your late payment, your creditor must lower your rate to its original APR.
• Any amount paid on your credit card bill, above the minimum payment, will be automatically applied to your highest interest rate balance. In other words, if some of your balance carries a 9.99% interest rate and another portion of your balance carries a 14.99% interest rate, your credit card company must apply your excess payment to the 14.99% balance, thereby helping you pay off your debt quicker and pay less interest on your debt.
• Your credit card company must give you at least 25 days from the closing date of your statement to make your credit card payment. Before the legislation took place, many creditors were decreasing the amount of time the cardholder had to get his or her bill paid, thereby resulting in many delinquent payments (and plenty of related fees and penalties).

Check your credit card statement and carefully read all of the enclosed terms and conditions so you can be aware of the changes to your credit card and how they will affect you.

The Differences between Secured and Unsecured Credit Cards

Choosing Credit Card

Most consumers find that credit cards are not only a practical financial tool, but a necessary one. Even individuals who don’t use credit cards on a regular basis are all too aware that credit cards are important for doing everything from renting a car to reserving a hotel room.

For many individuals, the question of secured and unsecured credit cards is often raised. In particular, many individuals are confused about the differences between a secured and unsecured credit card, and which one is right for them.

With today’s changes in credit card terms and conditions, and with the recent credit card legislation currently enacted by Congress, many individuals are downright confused when it comes to credit cards. We all want the advantages of credit cards, but many of us don’t want the hassles associated with them. There is a way to make credit cards work for you; you just must educate yourself on both the advantages and disadvantages of each so that you can make the right financial decision.

There are benefits to both secured and unsecured credit cards, and there are also challenges associated with each of them.

Secured Credit Cards

Advantages

• Easy to Obtain
• Typically Requires no Credit Check – Ideal for Individuals with Poor Credit, No Credit or those who have Filed for Bankruptcy
• Ideal for Individuals who may have difficulty Managing their Debt
• Keeps Spending in Check
• Ideal for Individuals who are Looking to Build or Rebuild their Credit

Disadvantages

• Requires a Cash Security
• Typically has a Low Credit Limit
• Often comes with High interest Rates
• Often comes with High Fees and Strict Terms and Conditions

Unsecured Credit Cards

Advantages

• Gives the spender great buying power
• Often comes with Low Interest Rates and other Advantageous Reward Programs
• May be an Ideal way to Borrow Large Sums of Money
• May act as a Personal Loan
• May be Ideal for Consolidating Higher Interest Debt

Disadvantages

• Can Lower One’s Credit Score if it isn’t Handled Responsibly
• May come with High Interest Rates and Costly Terms and Conditions
• May be Dangerous for Individuals with Poor Spending Habits