Credit Card Quick

What you Aren’t Doing Could be Hurting your Credit Score

Credit Score

What? I’m not approved for the car loan? How could this be? I’m doing everything right. Aren’t I?

You may think that your credit score is picture-perfect; after all, you have a few credit cards and you manage to pay on them every month. So, what’s the problem? The truth is that there may be things you aren’t doing that are putting a dent in your credit score:

1. You aren’t using your credit card – Many of us think that because we have a credit card we automatically have good credit, but this just isn’t true. An open credit card is a good first step, but in order to establish a solid credit history (and therefore bump up your credit score) you must spend on the card regularly. What many people don’t know is that simply making a purchase or two each month is enough to begin building a strong credit score.
2. You aren’t looking at your credit report – What you don’t know may hurt you, especially when it comes to your credit report. Any credit report could have a number of errors or discrepancies that can damage the best credit score. It is therefore important that you make a point of ordering a copy of your credit report at least once a year so you can review it carefully and check for any errors. Of course, if you spot anything that doesn’t look right, it is important to immediately contact the appropriate credit reporting agency and submit a request for an investigation.
3. You aren’t paying attention to your credit card’s due date – The only way to ensure a strong credit score is by paying your credit card on time, each and every month. Many people think that failing to pay their card on time every once and a while won’t harm their credit score, but the truth is that even one missed payment can put a dent in your credit score and open up the possibility of your credit card company raising your interest rate.
4. You aren’t paying down your credit card balance – Paying the minimum balance just doesn’t cut it when it comes to building a strong credit score. The credit reporting agencies see large credit card balances for extended periods as a red flag, as it often indicates you are spending beyond your means. Keep your spending in check and pay those credit card balances down every chance you get.

Not Happy with Your Credit Card’s Interest Rate? Here’s What You Can Do

Introduction

A credit card that may have been a perfect match for you over the years may not seem like such a perfect match when you are informed your credit card interest rate is going to be increased. The truth is that many credit card companies are taking a number of actions to recoup losses they incurred as a result of the credit crisis and CARD Act legislation, including raising interest rates and slashing credit limits.

If you recently received an unsavory letter from your credit card company informing you of an interest rate increase, fear not; there are a few things you can do to combat this change.

• Contact the credit card company and negotiate a lower rate – One of the first things you should do when dealing with a rising interest rate is to simply contact the credit card company and negotiate a lower rate. Don’t forget to remind them that you have been a valued customer for “x” number of years and that you always pay your bill on time. This is the perfect time to play the “good customer” card with your credit card company, as many companies will appreciate a solid customer and accommodate a drop in their interest rate.
• Threaten to cancel your account – If playing the sugar-sweet card doesn’t work, simply threaten to cancel the card if the company doesn’t want to listen to your request. Although this tactic doesn’t always work, it’s always worth it if they aren’t receptive to your other negotiation tactics.
• Look for a competitive balance transfer offer – If you are unable to negotiate a lower interest rate with your credit card company, now may be a good time to begin looking elsewhere. In particular, it may be time to look at the newest balance transfer credit card offers, particularly if you currently have a balance with your credit card. Many credit card companies are offering very attractive balance transfer offers these days, so it pays to consider switching credit cards to one with a good balance transfer offer and a competitive interest rate following the promotional period.

Not-so-Obvious Actions That Can Have a Negative Impact on Your Credit Score

Credit Score

Think you have it together when it comes to your credit score? Well, you may be missing some key actions that can have a negative impact on your otherwise-spotless credit score:

• Opening too many accounts in a short period – Although opening a new credit card account certainly won’t damage your credit score, opening two or three could. If a lender notices that you have been opening many accounts or lines of credit in a short period of time, it may raise a red flag that you are in financial trouble.
• Selling your home through a short sale – Although many homeowners are told that a short sale won’t hurt their credit score, the truth of the matter is that the loan is reported to the credit reporting agencies as a “settled” loan. In other words, a short sale is just as bad in the eyes of the credit reporting agencies as a foreclosure.
• Signing for someone else’s loan – Although you may think you’re simply doing a good deed for a friend or family member by helping them obtain credit, the truth is that this debt goes directly onto your credit score, thereby raising your debt amount and lowering your chances of getting the best rate for any number of things, such as a car loan or a mortgage.
• Paying only the minimum balance – Although it may seem like you’re doing the best thing by paying on your card each month, paying just the minimum balance could raise a red flag with a potential lender because it may signal that you’re under financial stress. In other words, the chances of getting approved for more credit are unlikely because many lenders view your financial health as shaky.
• Taking out a cash advance – If there is one bit of good advice to remember when it comes to your credit card it is: Avoid cash advances at all costs! If you are in an emergency situation and you absolutely must get your hands on cash, then by all means use it. But don’t use a cash advance as simply a way to get easy cash! Cash advances are not viewed favorably in the eyes of the credit reporting agencies and lenders, so it is best to always avoid them.

New Incentives Make Rewards Credit Card Offers Enticing

Choosing Credit Card

You may not have ever given the idea of a rewards credit card much attention, but with some of the new incentives being offered with rewards credit cards these days, you may just want to take another look at a rewards credit card.

In fact, you may have noticed an increase in the number of credit card offers you receive for rewards credit cards. If you look further into these offers, you will quickly notice that credit card companies are pulling out all the stops when it comes to their rewards card offerings, and some of these perks may be just what you’ve been looking for.

From thousands of extra airlines miles to merchandise discounts and gift cards, the new rewards credit cards are more appealing than ever.

Only Good Customers Need Apply

One major thing that has changed, however, is that credit card companies are only interested in consumers in good financial standing. So if you have a strong credit score, chances are you’ve been receiving your share of offers for rewards credit cards.

For example, CHASE Freedom is now offering $300 cash back if you spend $500 in three months. The Citi Forward card is similar, as it offers its customers 6,000 “Thank you” points for making $600 in purchases and singing up for their paperless billing. In addition, this card will give you another 1,200 points just for paying your bill on time and for not exceeding your credit limit.

Standing Out From the Crowd

The change in the credit card industry is likely because credit card companies are now looking for new and exciting ways to stand out from the crowd in the already-saturated rewards credit card market. And, after weathering the recession storm, credit card companies are now actively competing with one another for the best customers. In fact, in the first quarter of 2011, there were more than 1.4 billion credit card offers sent to consumers.

Recent data also shows that nearly 60 percent of credit card offers sent to consumers in the past quarter had some kind of incentive attached to it, such as cash back rewards, gift cards and bonus airline miles.

In short, it may be time to look a little closer at the next credit card offer you receive in the mail!

Sound Advice for Keeping your Credit Card Spending in Check

Credit Card Debt

Just when you think you have your credit cards under control, you open your credit card statement and are more than a bit shocked at the balance. How did you get here again?

The truth is that spending on a credit card is a very easy action that is often done with little forethought. And that could mean a recipe for disaster. If you want to keep your credit card spending under control, here are some tried-and-true words of advice:

• Never spend beyond your means – Many people have heard this, but few people really abide by it. Turn your spending into things you truly want and can afford, not things you want but really cannot afford. As a general rule, if you cannot afford to pay off your purchase in a month or two, you probably shouldn’t purchase it. And the best case scenario is to charge only what you can afford to pay in full the following month.
• Think twice before using a retail credit card – Retail credit cards are so enticing. From their special coupons and deals to their “member only” perks, it is very easy to fall into the trap of a retail credit card. However, this enticing card may also come with a hefty interest rate and even heftier fees. Plus, many studies have shown that people spend much more in a store when they have a store credit card in their back pocket.
• Cut down on your credit cards – The truth is that most people need only two credit cards: one for everyday spending and another one for emergency use. Don’t go overboard and shove numerous credit cards in your wallet; it will only encourage overspending.
• Stop and think before you charge – Often times, simply by stepping back and taking a moment to stop and think about the purchase you are about to make on your credit card, you may spend less. Credit card spending, because it requires no upfront cash, is a habit that can quickly spin out of control if you don’t really take the time to reevaluate the importance of your purchases.

Your Credit Card Application has been Rejected: Now What?

Credit Repair

You may be quite surprised to find that your latest credit card application was rejected. Ouch!

After licking your wounds, there are a number of things you can and should do following a credit card rejection:

• Even if you applied online or via phone for a credit card, you will receive a written notice in the mail regarding your rejection. It is important to read this letter so you can gain some insight regarding your reason for rejection. If the letter does not give you the answers you are looking for, you should contact the credit card company directly and ask them for a more detailed explanation. After all, you cannot change or improve things if you don’t know what to change.
• You are entitled to a free copy of your credit report once a year; and again if you are rejected for a credit card offer. It is very important to take them up on a free copy of your credit report, particularly if you don’t understand why you were rejected. After you receive your free credit report, carefully examine it for any unknown charges, errors or discrepancies, and immediately report them to the appropriate credit reporting agency.
• Take the information you gleaned from your credit report to better your credit score. Although it stings to be rejected for a credit card, the best thing you can do is work hard to improve your credit score. Often times, simply by paying your bills on time and curbing your credit card debt for a period of as little as six months, you can raise your credit score high enough to be approved for a credit card.
• If you still want the many conveniences of having a credit card, but your credit is not strong enough to qualify for an unsecured credit card, consider applying for a secured credit card. A secured credit card, because it requires a cash deposit typically equal to your credit limit, allows individuals to be approved for one even if their credit score isn’t great. Plus, a secured credit card can help you begin building a strong credit history and improve your credit score.

Smart Travel Tips for your Summer Vacation

News

You’ve packed up the kids, the sunscreen and your best summer romance novel, so what’s left?

How about your finances? If there’s one thing to be prepared for, it’s handling your finances and protecting yourself during your summer travels. Here’s what to do:

• Contact your credit card company, particularly if you are traveling out of the country, and advise them of your travel plans. Many times, credit card companies will put a spending freeze on your credit card if they see unusual activity on the card, so it is best to advise them of your travel plans so you can avoid dealing with a frozen account while away on holiday.
• Take the credit card, leave the cash. Although you will want to have a bit of cash on hand while traveling, in general it is best to charge your expenses on a credit card. A credit card will provide you with a number of protections and, unlike cash, can be easily replaced if lost or stolen.
• Charge your car rental, hotel reservation and airline tickets. Many credit cards (check yours before you leave) offer such perks as lost luggage insurance, airline ticket insurance and car rental insurance. It just doesn’t make sense to pay for these things out of pocket when your credit card likely offers them for free.
• Place a hold on your mail service while you are away. It is always best to put in a request with your local post office so they can hold your mail until you return. Mail sitting in a mailbox for any period of time is an invitation for credit card thieves to swoop in and steal your credit card and other personal information.
• Keep your credit card company phone number in a separate location so you can quickly contact your credit card company if your card is lost or stolen. Write down the phone number for a lost or stolen credit card (it’s usually located on the back of your card), and stash it in another piece of luggage so you can quickly get a hold of your credit card company in case of an emergency.

What to Consider when Applying for a Secured Credit Card

Introduction

If you want to establish or re-establish your credit, a secured credit card is often the way to go. Because a secured credit card requires a cash deposit as collateral, even those individuals with the poorest of credit can be approved for this type of card. Although the terms and conditions of most secured credit cards are relatively straightforward, it pays to really understand what these types of cards can offer.

Before you apply for a secured credit card, it is important to consider a number of factors:

• APR: Although, in general, secured credit cards have higher interest rates than unsecured credit cards, the APR from card to card does vary. In other words, compare the APR of several secured credit cards before you apply for one. Although you will want to compare APRs between secured credit cards, keep in mind that your ultimate goal should be to pay off the card balance in full, each month, as to develop good credit habits and build a strong credit score.
• Fees: Many secured credit cards come with an annual fee, so it is important to check these out when comparing secured credit cards. In addition to an annual fee, you may find that other fees, such as over-the-limit charges, can be quite steep (as high as $25 per transaction). It is important to understand, though, that the credit card company must disclose all fees related to the card, so carefully read the card’s fine print.
• Deposit: A secured credit card will always require a deposit, but the amount of that deposit will vary from card to card. In general, a secured credit card company will ask for a deposit of a few hundred dollars. Few cards – if any – will request a deposit of more than $1,000.
• Credit reporting: One of the most important parts of a secured credit card is their credit reporting to the three credit reporting agencies.  It is therefore very important to find out whether the credit card company reports to just one credit reporting agency or all three credit reporting agencies. In short, only apply for a secured credit card that reports to all three credit reporting agencies so you can use your credit history with the secured credit card to begin building a stronger credit score.

Consequences of the CARD Act You May not Have Considered

News

The CARD Act, in many consumers and CARD Act proponents’ eyes, has been a major success. This federal legislation, in essence, was enacted to protect the rights of credit card holders. Just some of the protections afforded to consumers under the CARD Act include: no unannounced interest rate hikes; a limit on student credit cards; and better transparency regarding credit card terms and conditions.

Although the CARD Act was created and enacted to protect the rights of consumers, it has also had some unexpected consequences:

• Higher interest rates – As soon as word spread that the CARD Act was underway, credit card interest rates began to climb. Whether or not the rising interest rates had anything to do with the CARD Act is uncertain, but it seem rather coincidental that these two things occurred around the same time. Consider that the average interest rate is above 16 percent, up from 14 percent in the first part of 2009.
• More fees – Because the CARD Act placed limitations on the fees that credit card companies could charge consumers, the credit card companies have found new and interest fees to charge to make up for the lost revenue. Expect such things as “minimum finance charges” and “inactivity fees” to be commonplace with credit cards now as a result of the CARD Act.
• Lower credit limits – The struggling economy and the CARD Act likely worked together to cause credit card companies to steadily lower credit limits on consumers. In fact, you may have been one of those consumers who were shocked to find your credit card limit had been slashed by your credit card company.
• Less credit card approvals – Perhaps one of the biggest changes to come about as a result of the CARD Act is that credit card companies are no longer willing to offer credit to those individuals with questionable credit histories. Of course, the flailing housing market over the last two years, combined with the poor economy, also played a part in credit card companies pulling back when it comes to approvals, but the CARD Act has definitely played a part in this new era of tighter credit standards.

The Many Advantages of a High Credit Limit

Introduction

It may seem quite counterproductive to have credit cards with high credit limits. But, the truth is that your high credit card limits may actually be helping you achieve your financial goals. Here’s why:

• A high credit limit improves your credit score – Have a credit card with a high credit limit increases your debt-to-income ratio, which comprises about 30 percent of your overall credit score. Therefore, a credit card or two with a high credit limit boosts your debt-to-income ratio, thereby raising your credit score. However, there’s a catch: every time you spend on your credit cards, your credit score lowers. Spending a bit doesn’t affect it much, but spending at or near your credit limit surely does. It is therefore vital that you never flirt near your credit limit for any length of time.
• A high credit limit provides you with a financial cushion – A credit card is a very useful financial tool, particularly if you find yourself in a financial emergency. Having access to a large credit line is incredibly important because it protects you financially if you need access to cash in a pinch. From a broken down furnace to emergency travel plans, having access to a credit card with a high credit limit is invaluable.
• A high credit limit allows you to keep the cash at home when you travel – If you travel on business or pleasure, a credit card can be your best friend. However, a credit card with a low credit limit won’t get you very far. Instead, a credit card with a generous credit limit allows you travel and charge everything from your airline tickets to your hotel room and leave the cash at home. In addition, using credit cards for travel also affords you a number of protections, including everything from travel interruptions to lost luggage.
• A high credit limit allows you to transfer higher-rate balances – If you are currently paying too much interest on other credit cards or loans, having a credit card with a high credit limit will allow you to transfer those higher-rate balances onto your credit card with a competitive interest rate.