Credit Card Quick

Should you Purchase Credit Card Monitoring Services?

Identity Theft

With all the scary stories of credit card and identity theft running rampant on the news these days, many of us feel rather vulnerable when it comes to your credit cards and the safety of our identity and personal information.

With that said, many consumers check their credit reports frequently as to ensure the safety of their identity. Many consumers also take it one step further and purchase credit monitoring services.

What are Credit Monitoring Services?

Credit monitoring services are paid services, through one of the three credit reporting bureaus: Equifax, Experian and TransUnion.  Credit monitoring services may also be provided through independent companies, such as Lifelock.

What do Credit Monitoring Services Do?

Instead of you, the consumer, checking your credit report for signs of non-authorized activity, the reporting agencies do it for you, with a price tag of around $60 to $180 per year. Credit reporting agencies, through credit monitoring services, monitor your credit report for any unusual changes and then alert you to these changes. The advantage of credit monitoring services is that you can catch any suspicious activity almost as quickly as it happens, thereby lessening your chance of being caught in an identity theft situation.

Lifelock, and companies like them, often go one step further when it comes to protecting your identity, as they review how your credit is being used and if your social security number has been compromised or used fraudulently.

Are Credit Monitoring Services Worth the Money?

According to a recent study by Javelin Research, the use of credit monitoring service has dropped off nearly 42 percent since 2008. Unfortunately, though, credit card and identity theft has risen dramatically during this time.

The truth of the matter is that most people do not think about identity theft until they have become victims themselves. Although consumers have several options when it comes to protecting their identity, paying for credit monitoring services may very well be the best defense against fraudulent credit card use and identity theft.

In addition to purchasing credit card monitoring services, you can also protect yourself by: shredding any and all personal documents; safeguarding your social security number and your social security card; and being selective about where and when you use your credit card.

The Dangers of Shuffling your Credit Card Balances

Introduction

You have likely heard of the “credit card shuffle”; you know, using one card to pay off another card or using one card to pay the minimum payment on another card.

Let’s face it: the struggling economy has left many of us with too many bills and not enough cash. As a result, consumers have had to get creative, and that means doing the credit card shuffle.

Although you may think that you are preventing problems by shifting around balances and using one credit card to pay the bill of another credit card, the truth is that you may simply be delaying the inevitable and putting yourself into a situation that you may not be able to get out of.

Credit card use over the last few years, for many individuals, has gotten out of hand. Instead of making purchases and paying them off in a reasonable amount of time, many consumers found themselves using their credit cards to live beyond their means and pay for things that they had no way of realistically paying back in the short term.

As a result, many consumers are now in over their head in credit card debt and they are quickly running out of options.

Paying Credit Card Balances with other Credit Cards

It only makes sense that using one credit card to pay another credit card’s payment each month is a disaster in the making. If you have resorted to this action, then perhaps it’s time to realize that there are bigger problems at hand. If your debt is too much to handle it may be time to talk to a non-profit consumer credit counseling agency, as they may be able to help you identify your money mistakes and put you on a plan to begin paying off your debt.

Transferring Credit Card Balances

If you want to use one credit card to pay off another, make sure the balance transfer offer is attractive and make sure that the balance transfer fee is reasonable (three percent or less of your transferring balance). In addition, get a game plan in place for paying off your debt, and take measures to ensure that you don’t simply begin spending again on the card’s that you have transferred.

How to Avoid becoming a Victim of Identity Theft

Identity Theft

Can you really avoid becoming a victim of identity theft? Perhaps not altogether, but there are several steps you can take to lessen your chances of having your personal identity hijacked.

There are perhaps two reasons why identity theft has become all-too-commonplace in today’s society: identity thieves are becoming more and more capable of using technology to access our personal information, and we use plastic for nearly everything.

We still want to enjoy using our credit cards and the freedom and flexibility that goes along with them, so here are a few tips that can help you avoid becoming the next victim of identity theft:

• Don’t abandon the use of your credit card, just become a bit more selective regarding where and when you use it. In other words, don’t shop from a website you don’t know and trust, and avoid using plastic in settings with which you are unfamiliar.
• Make it a weekly (or if you use your credit card frequently, daily event) event to check your credit card account. In other words, don’t wait for your statement to arrive to check the activity on your account. Thanks to the power of the Internet, we can create an account through the credit card company and check the activity on our card at any time of the day or night.
• Consider engaging a credit freeze on your credit report at all times. This will allow you to instantly become aware of any individual or lender that attempts to open another account or line of credit in your name.
• Check the security of your bank and make sure they have the most up-to-date fraud monitoring technology.
• Play it safe when it comes to your password, either for your bank card or your credit card. This may seem like a no-brainer, but it is vital to choose passwords that are not obvious. We often choose passwords that are easy to remember; unfortunately, these passwords are also ones that are quickly figured out by identity thieves.  Re-consider your passwords and change them, if necessary. In addition, if you think that your password may have been compromised, don’t waste time changing it, as it could spell trouble with your accounts.

The Facts about Pre-Screened Credit Card Offers

Choosing Credit Card

Many of us have received credit card offers in the mail, with the words “pre-screened” on them. What does it mean to be pre-screened for a credit card?

Many banks and credit card companies send out pre-screened credit card offers to people based on several factors, such as their income, their credit history and other personal information.

An Ideal Applicant

In other words, a pre-screened credit card offer is one that was well thought out by the bank. Instead of credit card offers that are sent out to the masses, pre-screened credit card offers mean that the creditor has done a background check and found you to be an ideal applicant for the card.

The creditor may use your borrowing history, your credit score and other personal information to qualify you for a pre-screened credit card offer. Creditors may also offer pre-screened cards to a particular group of individuals, such as homeowners or those who belong to an organization. If you get a pre-screened offer in the mail, you can be assured that the creditor has done substantial checking on you to determine that you are the ideal applicant for its credit card.

Your Credit Worthiness

A pre-screened credit card usually means that you will almost always get approved for the credit card, versus an invitation-style credit card offer, which may or may not mean you will be approved without first determining your credit worthiness.

Often times, credit card companies are able to target a particular group of individuals by paying the major credit reporting agencies (Equifax, Experian and TransUnion) to provide them with a list of individuals who meet its criteria. These inquiries by credit card companies are often referred to as “soft inquiries,” meaning that they don’t have a negative effect on your credit rating.

You may receive a pre-screened credit card offer in the mail with the words “pre-approved,” “pre-qualified” or “pre-selected, although they all generally mean the same thing.

Although creditors in the past focused on several different types of people, even sub-prime borrowers, today’s customer that receives a pre-screened credit card offer will likely be an individual with a strong credit history and an excellent credit score.

You’re not ready for a Credit Card if…

Introduction

So, you think you’re ready for a credit card?

Chances are you are more than ready for your first credit card. However, there are also a number of factors that may hinder your ability to handle the responsibilities that come along with a credit card.

Here is our list of reasons why you may not be ready for a credit card:

• Your employment history is dotted with periods of unemployment – In order to afford a credit card you must have steady income. Spending on your credit card, only to be unemployed in the short term, is the quickest way to miss payments and watch your credit card score slide. Although we all can’t anticipate the loss of a job, if your employment history is less than stellar, you are likely not ready for a credit card.
• Your utility/rent payments are often late – You pay your rent and utilities each month; well, most of the time. You may be a week or two late, but you still pay on time. Although you may not see a problem with this, your creditor certainly would. Paying a credit card just a few days late can ultimately damage your credit score, so make a point to become more responsible about all payments in your life before applying for a credit card.
• You’re not quite sure where your money goes each month – You can’t quite remember how you spent your money last month – or the month before. All you seem to know is that you drain your bank account to near-nothing each and every month. In order to properly handle a credit card, you must have an understanding of your income and your monthly obligations. If you don’t have a good, working budget, chances are you will be unlikely to handle the financial responsibility of owning a credit card.
• You don’t understand the basic rules of handling credit – In order to properly handle a credit card you must understand how credit cards work. In other words, it is important to research credit cards and the responsibility that comes along with them before you can expect to be ready for one.

Credit Card Cash Advances: Resist the Temptation

ATM Credit Card Debt

Cash advances may seem like a great idea at the time, but they may end up being your worst enemy when it comes to your credit card balance.

Cash advances on credit cards typically work like this: you need cash so you use your credit like you would an ATM card and withdraw money at any ATM machine. Sounds pretty simple, right?

Well, the process of obtaining a cash advance is the easy part. It’s the fees and interest rate that comes along with it that may end up causing you problems.

Let’s talk about why it may in your best interest to avoid cash advances:

• If you use the cash advance feature on your credit card, expect to pay a fee. In fact, every major credit card charges a fee for cash advances. You can expect the fee to range from $10 and up. Some credit cards charge a percentage of the cash advance amount, which can also be significant.
• If you have a great rate on your credit card, don’t expect the cash advance option to carry the same, competitive interest rate. In fact, you can expect to pay double – even triple – the amount in interest than you would on purchases and balance transfers. Some credit cards charge as much as 24 percent for a cash advance!
• Unlike purchases, where you can avoid interest charges by paying your balance off in full when your statement arrives, the interest on a cash advance begins to accumulate the day you take the cash advance. To put it into perspective, if you took a cash advance for $1000 at the beginning of your billing cycle, you could end up with more than $70 in interest charges by the time your bill arrives.
• Consider that if you pay just the minimum payment on your credit card with an interest rate of 24 percent for a cash advance, you could, in theory, only pay the cost of the interest each month, thereby leaving you with an untouched balance.  Sounds scary, right? This fact alone may be enough to make you run for the hills before you take out a cash advance!

Are your Credit Cards Stressing you Out?

Introduction

If you seem to stress out every month the credit card bill arrives, and you stash it under the other bills, avoiding it as long as possible, you could very well be suffering from credit card burnout.

However, it is unlikely the credit card itself is a source of your stress; instead, it is likely how you are handling your credit card that is the problem.

If you want to de-stress yourself from your credit card troubles, and you don’t want to abandon them altogether because you understand their worth, there are a few ways in which you can begin to enjoy a healthy relationship with your credit cards, and your finances in general:

• If you have more than handful of credit cards and you find managing them every month is a chore, it may be time to pare down your credit card collection. In particular, consider ridding yourself of retail credit cards, which generally come with hefty interest rates and fees and instead choose a major credit card with a competitive, fixed rate on which to make your purchases. Consider, too, that possessing too many credit cards can result in you forgetting payments, which could ultimately damage your credit.
• Use your credit card for good! Yes, it may sound like an odd concept, but the reality is that credit cards can offer you great insight regarding your monthly spending habits. Use your credit card to make everyday purchases, from groceries to clothing and birthday gifts, and you can soon begin to see spending patterns when you examine your monthly credit card statement. With awareness comes knowledge and knowledge can propel you to make the necessary changes to better manage your finances.
• If your spending habits are out of control or not in line with your priorities or goals then use this information to make important changes in your life. Once you begin to understand the importance of mindful spending, credit cards can no longer overwhelm you. In fact, once you have mastered the art of responsible spending and budgeting, you may actually begin to look forward to opening your credit card statement each month!

Seniors and Credit Card Debt: The Link to Bankruptcy Filings

Bankruptcy

We all know about the financial challenges facing many million Americans. However, what we may not be aware of is the fact that elderly individuals are also suffering from the effects of the credit and housing crisis.

In fact, seniors, unlike most of the younger generations, are living on fixed incomes and may rely on personal savings, Social Security payments and pensions to make ends meet. However, many seniors, in an attempt to meet their daily expenses when other sources just don’t cut it, are turning to credit cards.

The Problem with Seniors and Debt

The difference between seniors and younger individuals, however, is that they may have no means with which to pay off credit card debt, thereby leaving them with few alternatives.  It is no wonder, then, that credit card debt is the leading cause of bankruptcy among seniors, according to Forbes. In fact, Forbes reported that more than two-thirds of seniors who filed for bankruptcy claimed credit cards with high interest rates were the main cause. Conversely, just 53 percent of younger individuals reported credit cards as the reason for filing bankruptcy.

The number of individuals aged 65 and older filing for bankruptcy increased from 2.1 percent in 1991 to 7 percent in 2007. The median age of individuals seeking bankruptcy protection also increased during this time, growing from 36.5 to 43 years old, according to Forbes.

Why Seniors may Struggle with Debt

In addition to older Americans filing for bankruptcy, a report shows that this age group is also far less likely to ask for help from family and friends. Many individuals in this age group may also be experiencing financial difficulties because of high medical bills. Finally, older individuals may be less likely to negotiate their debt with creditors before seeking protection under the bankruptcy laws.

Even despite the stricter bankruptcy rules and costs, seniors are still struggling with finances and subsequently filing for bankruptcy. These statistics are undoubtedly linked to higher medical bills, smaller, fixed incomes and few options regarding repayment of their credit card debt.

Is it Possible to Have a Good Credit Score without a Credit Card?

Credit Score

Many individuals, after a difficult couple years, have decided to abandon credit cards altogether and live a cash-only lifestyle. If you, too, are fed up with the credit card industry and all of the challenges that this industry has faced over the past two years, you may be tempted to also abandon credit cards.

But is this the right decision to make?

The Effects of Closing your Credit Card Accounts

Let’s first assume you have credit cards to begin with and you cancel them. Your available credit comprises 30 percent of your credit score, so closing credit card accounts will have an adverse effect on your credit score. In fact, having absolutely no utilization percentage is worse than having a low utilization percentage caused by high credit card balances and low, available credit.

You can be certain to have a better credit score by just having a small balance on a credit card.  If you cancel your credit card and have no other credit cards open, you will likely lose points on your credit score.

In addition to open credit, though, is your credit history. In other words, if you don’t have any other open accounts, but you have a long length of credit history, you may still maintain a strong credit score.

Other Items Affecting your Credit Score

However, your credit score is not only determined by the use of credit cards. Other items, such as auto loans and student loans, can help you maintain a strong credit score.

Keep in mind, though, that if you fail to have any other type of loan and you don’t have any credit cards, you could fail to have a credit report at all. The minimum scoring criteria, according to FICO, is determined by at least one open account that has been updated in the past six months. In other words, if creditors don’t report anything on your credit score for six months, you could fail to maintain any type of credit score at all.

Your best bet? Keep at least one credit card open and make a point of charging on that card at least three to four times a year.

Should you Use your Home’s Equity to Pay off your Credit Cards?

Credit Card Debt

If you find yourself knee-deep in credit card debt and you have an adequate amount of equity in your home, you may have considered using that equity to pay down your debt and assume a lower interest rate with a longer repayment period.

Because so many Americans have assumed too much debt over the years, many of them are anxious to erase the debt. Because of this, many people have turned to the equity in their homes as a way to satisfy their credit card debt, consolidate their bills and assume a lower, monthly payment.

Some homeowners have taken out home equity loans to pay off their debts, while others have chosen cash-out refinancing. Whatever you choose, however, is all the same when it comes to using your home’s equity to pay off debt.

Consider your Options

For some homeowners, this may be a smart, financial move. For others, however, this is not the case. Some financial advisors warn consumers about using the equity in their homes to pay off credit card debt, as this changes the debt from unsecured to secured. In other words, because credit card debt is an unsecured debt, creditors cannot take your home or any other assets away from you if you fail to pay. However, if you transfer your credit card debt into a home equity loan and you fail to pay on that loan, the bank can repossess your home to satisfy the debt.

So the question is: should you risk losing your home to pay off your credit card bills?

Consider your Financial Situation

If you have ever found yourself in a situation where you have been unable to pay your bills, then taking out additional debt in the form of a home equity loan probably isn’t in your best interest. Instead, if you are struggling to pay bills, you should probably seek the help of a nonprofit debt settlement company instead of taking out another loan.

In the end, if you are considering taking out a home equity loan, keep in mind that your personal financial situation may be far different from your neighbor’s financial situation. Therefore, always weigh both the positive and negative aspects of any large financial transaction, especially when it concerns your home.