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Retail Credit Cards: Should you or Shouldn’t you?

Choosing Credit Card

Many of us, lured in by our favorite department store to carry a retail credit card, begin to second guess our decision to rely on our major credit cards for retail purchases. After all, retails stores offer such great incentives to use their cards, so why not take advantage of them?

The Pros of Retail Credit Cards

Make no doubt about it: there are plenty of benefits to carrying a retail credit card for stores that you frequent. For example, the store may include you as a “loyal” customer if you spend a certain amount of money there on an annual basis, thereby allowing you to become eligible for special promotions, coupons and shopping days.

If you are looking to rebuild your credit, a retail store is also a great place to start, as they are generally easier to get than a major credit card. If you need a way to rebuild your credit score then you may want to consider a retail credit card/

Finally, if you pay your bill on time, in full, each and every month, owning a retail credit card may be a great idea, as you won’t need to worry about the super-high interest rates often attached to retail credit cards.

The Cons of Retail Credit Cards

Even with all the benefits of owning a retail credit card, there may be just as many disadvantages to owning one.

For example, if you are unable to pay off your balance in full at the end of every month then you could be hit with exorbitant finance charges. And if you fail to make even one payment, your balance could quickly become unmanageable.

If you have difficulty controlling your spending then you may want to think twice about a retail credit card. For many of us, retail credit cards are often a green light for overspending. In fact, we often purchase many things we would have never purchased if we were paying cash for them.

As with anything else, you need to decide what type of credit card is best suited for you and your financial situation. For many individuals, one or two major credit cards are all they need to manage their spending. However, if you feel as if you need a retail credit card, make sure to carefully read and understand all of the card’s terms and conditions.

Comparing Credit Cards: What to Look for

Choosing Credit Card

So, you’re looking for a credit card? Do you know what to look for? Do you know that a good credit card is more than just a low interest rate?

If not, then you’re like most Americans that fail to look at all of the features of a credit card before choosing one. For example, if you pay your bills in full each month, a credit card with a low interest rate probably isn’t that important to you; perhaps instead you may want to look at rewards credit cards or those with no annual fee. In other words, a good credit card means different things to different people, depending on their financial needs and wants.

With that said, here is a list of items that you may want to consider when shopping for your next credit card:

• Length of APR – Is the APR simply an introductory rate and, if so, what is the interest rate once the introductory period has ended? Is the rate variable or fixed? If it is variable, how is the interest rate determined? Is it tied to the current prime rate or Treasury Index?
• APR and Purchases – Is the APR different for purchases and cash advances? Does the APR apply to balance transfers?
• Late Payment Penalties – Can the creditor raise your interest rate after just one late payment?
• Annual Fee – Does the credit card have an annual fee? If so, are the credit card’s perks and rewards worth the annual fee? Is the annual fee negotiable with the credit card company?
• Payment Terms – How is the minimum payment calculated? How many days from your statement date do you have to pay on the credit card before it is deemed late?
• Website Features – Does the card have an easy-to-navigate website? Can you make payments, view your balances and check recent purchases online?
• Finance Charges – How are the finance charges calculated? How does the credit card company determine your average daily balance? Is there a minimum finance charge imposed by the company?
• Credit Limit – What is the credit limit?
• Rewards, Incentives, Rebates – Does the card offer any rewards, incentives or rebates? Are these rewards worth paying more in finance charges? How are the rewards and incentives calculated and earned? Are there rewards bonuses for signing up?

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.

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

Choosing Credit Cards over Personal Loans: What you need to Know

Choosing Credit Card

Many consumers use credit cards as a way to secure money for a wide variety of things, from home improvements to cars. Given the low interest rates and attractive terms offered by many credit card companies, particularly for individuals with prime credit, it is no wonder that many people turn to credit cards instead of personal loans.

However, is credit card debt really the same as a personal loan? For many individuals, attractive balance transfer offers lure them into using a credit card, while many personal loans carry a much higher interest rate than many credit cards.

However, with the good comes the not-so-good – and that goes for credit cards, too.

There are a number of reasons why credit cards are much different than personal loans:

• Your monthly payment will vary – Many consumers choose personal loans over credit cards because the monthly payment is fixed. However, for individuals with responsible credit management, the difference in monthly payments for credit cards is quite manageable. If you are looking for a fixed payment that you can come to expect during the life of the loan then a personal loan is probably better for you.
• Your interest rate may vary – Unlike personal loans that typically feature fixed interest rates over the life of the loan, credit cards may have changing interest rates, which then may affect your monthly payment and the amount of interest you pay on your loan. For example, although you may secure a credit card at an attractive 0% interest rate, this rate will likely expire and then you will be left with a credit card balance that features a much higher interest rate.
• You won’t have a clear payoff date – Unlike personal loans, which have a set repayment period, your repayment period for a credit card may vary greatly, depending on the interest rate being charged by the credit card company and the monthly payment you make. Because of this, credit card loans often turn into long-term loans that take much longer to pay off than traditional personal loans. It is therefore important to come up with a reasonable game plan for the repayment of your credit card and stick to it.

The Blueprint Card from Chase

Choosing Credit Card

Can a credit card company really make your life easier? Well, Chase hopes to.

The Blueprint card from Chase features an all new set of credit card tools that are designed to help us all manage our money and make our lives easier.

A Different Approach

Although there are a slew of credit card companies that have taken to cutting credit limits and raising interest rates this past year, the Blueprint card is taking a bit of a different approach; attracting customers by helping them manage the often-demonized credit card.

And if there’s one thing that credit card customers need during this tough, economic time is relief and assistance.

Budget-Friendly Features

The Blueprint card offers a myriad of neat features that are designed to help customers stay on track and stay on budget. If you’re like most people, you simply can’t believe that a credit card company may actually help you manage our debt, instead of help you get into it. But the Blueprint card actually accomplishes this – and more!

The Blueprint card helps customers understand how they are spending their money and where they are spending it. It also provides a tool that helps them calculate various payment options, thereby giving them a clear picture of how long it will take them to pay off their balance at their current monthly payment.

In other words, it can provide you with a snapshot, of sorts, so that that you can also see how much you will be paying in finance charges, over time, on the balance of your card. Often times, it is this eye-opener that encourages people to see just how much their purchases are costing them.

Full Pay Option

A valuable feature of the Blueprint card is the “Full Pay,” which allows you to pick a category – anywhere from grocery stores and gas stations to restaurants and retail stores – and then save. The Blueprint card then divides and separates your expenses into their proper categories; any expenses that fall under your chosen category are exempt from interest charges, even if you fail to pay our balance in full each month.

Are Secured Credit Cards the Right Move for Subprime Borrowers?

Choosing Credit Card

We often hear from financial experts that a great first step when rebuilding your credit is to land a secured credit card. But is this really the case? Can secured credit cards really help to rebuild a not-so-stellar credit?

As it stands, there are more than 70 million Americans with credit scores low enough to qualify them as subprime borrowers. Because of this, many of these Americans will turn to subprime credit cards, also known as secured credit cards.

The Basics of Secured Credit Cards

Secured credit cards often come with very low limits and strict regulations regarding their use. For example, a secured credit card requires that the cardholder “secure” the card with cash. The cash that is secured for the card equals the card’s credit limit, thereby allowing the credit card company to cover the card’s credit limit in the event that the customer does not pay the bill. If the customer pays the bill, however, the cash is kept in a secure account and not used.

Subprime Credit Card Restrictions

There are some restrictions on secured credit cards as a result of the new federal credit card legislation, including placing a cap on the amount of fees that the credit card company can charge the cardholder in the first year (25 percent), but for the most part credit card issuers can continue to charge surprisingly high interest rates and fees.

Subprime Credit Cards still a Smart Financial Move

Even with the high interest rates and fees imposed by creditors, secured credit cards are still a smart move for individuals looking to improve their credit score. A recent study conducted by TransUnion and commissioned by Citizens for Equal Access to Credit followed 365,000 subprime borrowers over a two-year period and found that subprime credit cards were successful in helping consumers rebuild their credit.

In fact, during the study’s two-year period, 37 percent of subprime borrowers saw an increase in their credit score by using subprime credit cards. About one in five subprime cardholders saw an increase of more than 40 points to their credit score, which took many of them to near-prime, prime or even above-prime credit scores.

Prepaid Credit Card Usage Surges as Holidays Approach

Choosing Credit Card

Prepaid credit cards are gaining in popularity, and their usage is expected to hit an all-time high this holiday season.

Prepaid credit card usage has always increased during the holiday season, and this year looks like it will be no exception. However, in addition to giving gift cards as holiday gifts, many consumers are turning to them for holiday purchases.

Prepaid credit cards, which often come with the Visa, MasterCard, Discover or American Express symbol, enable consumers to spend without the inconvenience of high interest rates and ATM fees. In addition, many consumers, who are simply fed up with the rising interest rates due to the impending legislation of the Credit Card Act of 2009, are simply abandoning their credit cards in favor of a simpler alternative.

In other words, all of the consumers that don’t want to spend the better part of next year paying off bulging credit cards are finding simpler ways to pay for holiday purchases; enter prepaid credit cards.

They allow consumers to “load” the card with a specified amount of cash so that it can be used like a debit card. They offer control and flexibility, both of which are very attractive to consumers, especially during these difficult financial times.

Prepaid credit cards can also serve as gifts to children, friends and family members, as the consumer can give cash to a loved one in a convenient, handy form.

It is important to remember, however, that prepaid credit cards may also come with their share of charges and fees, so it is best to carefully read all of the card’s terms and conditions beforehand.

Advantage of Prepaid Credit Cards

• No interest charges
• No over-the-limit fees
• No credit checks
• No bank account required
• Accepted at all locations that traditional credit cards are accepted
• May also be used online or to pay bills
• Often issued by large banks, such as Citibank, Bank of America and Chase

Prepaid Credit Card Statistics

• The prepaid credit card industry is nearly 12 years old
• Nearly eight billion dollars was loaded onto prepaid credit cards in 2008, which was twice as much as 2007

Prepaid Cards: Are they really a Better Alternative to Credit Cards?

Choosing Credit Card

You may have heard quite a bit about prepaid cards as of late, as many consumers and financial experts are touting their convenience and practicality. In fact, because of the poor credit sector and the inability of many consumers to obtain credit, prepaid cards have surged in popularity.

Prepaid Cards: How they Work

The concept behind prepaid cards is quite simple: a consumer purchases the card from a retailer and loads it with money. The prepaid card, which may be partnered with Visa, MasterCard, Discover and American Express, can then be used as a consumer would use a debit or credit card; to purchase items through retailers or to pay bills online.

Prepaid credit cards require no credit check, and are quite simple to get and load with money. It is no wonder then, that in 2008 alone, consumers loaded nearly $8.7 billion on prepaid cards; that’s up about $4 billion from the year before.

Prepaid Cards Popular Among College Students, those with Poor Credit

For individuals who may not be able to secure a regular checking account, a prepaid card may be a practical alternative. Often times, parents use them as a cash source for their teenage or college-age children, while others with little to no credit use them as they would any other credit card.

Given the fact that the new credit card legislation, when it goes into effect in February, will further restrict the ability of college students to obtain credit, it only makes sense that prepaid cards will see a further increase in popularity.

Prepaid Card Fees to Watch for

It is important, amidst all of the advantages, to know that prepaid cards do come with activation fees, and most of them charge for ATM withdrawals. However, when considering the hefty fees charged by banks and creditors, many consumers are more than happy to pay these fees.

For consumers looking for a simple, practical way to pay bills and avoid credit card charges and bank overdraft fees, prepaid cards may be just what they’ve been searching for.

Cash versus Credit: Which is Best for Holiday Shopping?

Choosing Credit Card

We all want to watch our pennies and avoid overspending in today’s economy; and this is all the more evident when it comes to holiday shopping. Because of this, we may be inclined to keep the credit cards at home and use cash instead. But is this the best solution?

Perhaps not. Although the concept of only purchasing what you can afford to pay off within a month or two is an excellent idea, it may not be beneficial to pay for your holiday purchases with cash, and here’s why:

• Cash can be stolen – Yes, so can credit cards, but the biggest difference is that the answer to a stolen credit card is a simple phone call to your creditor to have the account frozen and the card replaced in a matter of days. Once cash is stolen, however, you can all but forget having it returned to you. In other words, a wallet full of cash may just be too risky.
• Cash can’t provide you with proof of purchase – If you lose a receipt and pay cash for the item, there is no evidence that you purchased it in the first place. However, a credit card statement is proof of your purchase, which may provide you with an extra insurance policy in case you lose a receipt. In addition, you may also have rights as a cardholder if you have a dispute with the retailer.
• Cash can’t offer you rewards – Many of today’s credit cards offer great rewards for doing what we do anyway: shop! So why not take advantage of these rewards programs and use your credit card to do your holiday shopping?
• Cash is often not convenient – Let’s face it: fumbling around in our purses and wallets for cash and loose change can be a bit of an inconvenience. A credit card transaction is therefore generally smoother and more convenient than a cash or check transaction.
• You can’t use cash online – There are many, great online deals to be had this holiday season, so it may pay to take advantage of them. However, you must have a credit card to complete most online transactions.