You may be receiving more credit card offers than ever, and many of those offers may come with a balance transfer offer. Although most of these balance transfer offers are quite advantageous, there may be a few things to consider before accepting a credit card offer with one of these balance transfer offers. In particular, pay close attention to balance transfer fees, as they can be tricky and often difficult to understand. Here’s what you need to watch for:

• High balance transfer rates – Balance transfer rates can vary widely from one card to the next, and some creditors charge as much as three to five percent in the form of balance transfer fees. The amount you will pay will depend on the amount you are transferring, as the balance transfer fee is a percentage of the transferred balance. It is important to remember that, most of the time, these fees are not negotiable. Sometimes individuals with excellent credit that threaten to use another card to transfer balances may have luck when it comes to negotiating the balance transfer fee rate.
• Keep in mind that there are generally no limits on balance transfer fees, so if your balances are high, expect your balance transfer fee to be high, too, which may cancel out any advantage you may get from transferring your balances to another credit card with a lower interest rate. It may be in your best interest to do the math and determine if the balance transfer fee or the higher interest rate on the other card makes more financial sense.
• Don’t expect balance transfer rates to hang around very long. In fact, many creditors have cut these introductory periods quite dramatically, from 12 months just a year ago to little more than six to nine months these days. Pay close attention to the card’s default rate once the promotional period has ended, as it could be just as high – or higher – than the interest rates on your current credit cards, thereby leaving you in a worse position than when you started.

It may be time to call it quits with your credit card if:

• Your interest rate continues to climb, regardless of your solid credit history. If you have proven yourself to be a loyal customer and have always paid your bills on time, yet your creditor doesn’t seem to recognize this, you may consider finding another card that better suits your excellent credit history and solid spending habits. However, if you’re not ready to call it quits just yet, try calling your creditor and requesting a decrease in your interest rate. Often times, creditors will accommodate your request if you have a solid history to back it up.
• Your rewards don’t fit with your lifestyle. If you are working hard to earn rewards, only to have a pocketful of rewards that don’t really mesh with your lifestyle or spending habits, it may be time to find another credit card with rewards that are better suited to you. What’s great about today’s rewards credit cards is that there are plenty from which to choose, so it’s quite easy to find a rewards card that rewards you for things that are of interest to you.
• Your credit card’s terms and conditions are as long as the last novel you read. The CARD Act has provided consumers with plenty of transparency regarding their credit cards. However, it has also resulted in exhaustively long terms and conditions that are as easy to read as twelfth grade algebra. Plus, you may be facing new changes to your account nearly every month, thereby requiring you to read and reread changes in order to stay abreast of your card’s terms. You may therefore choose another card with more straightforward terms and conditions. It is often best to avoid rewards programs and cash back programs in this case and opt instead for a competitive, fixed-interest-rate credit card.

You may have not thought about teaching your child about finances when shopping, but in reality this is the best time. Consider it on the job training! Real-life situations are often much easier for teens to grasp than lectures. And the easiest way to begin your first lesson money management is by teaching them about credit cards and the importance of responsible credit card use.

• Take your teen along as you spend – Show your teen the process of purchasing items with credit cards. Talk to them about staying within your spending limit and using a major credit card versus a store credit card.
• Examine your spending choices and reexamine whether they were responsible purchases – One of the biggest problems with credit cards for many people is that they are inclined to purchase more on credit cards than they would with cash. So, after you return home from shopping, talk to your teen about your purchases and examine whether they were responsible purchases or impulse purchases.
• Show your teen your credit card statement and talk about the advantages of paying the balance in full – One of the best ways to really give your teen a good understanding about credit cards is to show them your credit card bill. Show them the interest rate on the purchases you made the previous month, and help your teen calculate the amount in interest you will need to pay if you fail to pay off the purchase in full.
• Talk to your teen about spending habits and how they can affect their credit score – and ultimately their financial choices – for years to come – The teen years are incredibly formative as we know all to well, and that goes for money management and responsible spending. Talk to your teen about your finances and allow them to learn from you – and your mistakes!

On the Path to Rebuilding Credit

If your credit is already terrible, but you are absolutely serious about getting things under control, there are some steps you need to take. Start working out payment plans and paying down your debts. Work with a credit counselor or debt consolidator if you need to. Check your credit report to ensure that your progress is being accurately reflected and that no inaccurate information is appearing. Continue to pay your current bills that are not in default or arrears on time and in full every time they are due. This will go a long way in improving your credit report and might lift your score upward several points.

Once you have all this debt behind you, it is time to think about rebuilding your credit. If you want to be deemed credit worthy in the future, you need to get that score up and keep it up. There are several options to look into for rebuilding credit, however, you have to decide which ones are the right fit for you. You could buy a car from a place that offers financing, pay your payments on time and your credit score will be improved as your activity is re3ported over time. You could also go the rent-to-own route for furnishings and appliances, so long as the company reports your activity. You bank accounts are another good way to help build credit.

There are lots of other options out there, among them credit cards for those with bad credit. Should you do it?

The Credit Card Option

It is not a bad idea, per se, to open a credit card account and get your hands on a high interest card with a low credit limit in order to help rebuild your credit score. It can work and work well, if undertaken in a responsible manner. You will need to use the card wisely, ensuring that you not only pay the bill and pay it on time, but that you pay it in full, as this can make a bigger difference in your credit rating and your finances than a minimum payment.

Now, if you are suffering the low income or no income blues, this might not be the option for you at this time. When you’re back on top of your game, you might reconsider it. If you problem is poor spending habits or financial irresponsibility, you might want to get help to get this under control before you obtain a new credit card to rebuild your credit. If your credit has already gone down the drain, there is no use getting a new card that you can not or will not pay for. A card intended to rebuild your credit can not do it’s job if you don;t do yours. You’ll simply be left with more debt and an even lower credit score.

However, given the recent changes to certain credit card laws through the CARD Act, students can no longer just snag a credit card the day they turn 18. In fact, creditors are only granting credit cards to college students if they can prove they have a source of income sufficient enough to pay their bills.

Unless, of course, students get a co-signer; in particular, their parents need to co-sign for the credit card.

A New Approach

As always, creditors have found ways to get around challenges, and student credit cards are no exception. Creditors are now targeting parents of college students for student creditors. In fact, you can be certain that student credit cards will start coming your way if you have a college student under the age of 21.

Parents are now being targeted by creditors because creditors know that parents will be the ones to determine whether their children will receive a student credit card. In particular, many creditors are targeting parents who already have credit cards through a particular credit card company and asking them to take on an additional account in the name of their student.

This direct mail approach may be a highly successful endeavor for credit card companies, as they can avoid marketing to students but nevertheless get to them through their parents.

Should you help your Child get a Student Credit Card?

If you are a parent of a college student, you will want to strongly consider whether it is time for your child to possess a student credit card, as ultimately the student credit card will affect your credit score if payments are not made.

There is no time like the present to teach your child responsible credit card habits, regardless of whether they are college students or not. Take the time to talk to your child about the importance of building a strong credit history, as a student credit card will be able to allow your child to begin building his or her credit history, so that he or she can have a strong credit score by the time college graduation rolls around.

This new site (found at www.federalreserve.gov/creditcard), which is maintained by the Federal Reserve Board, has been launched to provide consumers with a basic guide to understanding the credit card industry.

Some of the useful features on this new website include:

• An Interactive Tools and Features section, which includes an area about learning more about a credit card offer you may have received. Located in an easy-to-open PDF file, this handy link allows you to better understand the terms and features of any credit card offer. Also located in this section is a guide to understanding your statement.

We think this section is particularly useful, as it breaks down all of the legal credit card terms into easily understandable language so that you can better navigate your monthly credit card statement.

Finally, the last section of this Interactive Tools and Features section is a Pay it Off calculator, which allows you get an estimate of how long it will take to pay off your credit card balance, given your interest rates and monthly payments.

• The Federal Reserve also has a great section on their website that allows credit card customers to watch their PSA; this video essentially teaches consumers how to navigate the credit card process and get the most out of their credit cards.
• The What you Need to Know: Credit Card Rules section is designed to educate and inform consumers on the new credit card legislation and how it can change the way your credit card company handles your credit card account.
• A small section called 5 Tips for… on the Federal Reserve website provides easy-to-follow steps for doing a number of things, such as “Improving your Credit Score” and “Getting the Most from your Credit Card.”
• The Federal Reserve credit card website also features additional sections that allow you to learn more about: options, interest rates, fees, lost or stolen credit card, billing errors, general complaints and managing your credit.

This holds true for many aspects of the credit card industry, including the length of time in which we keep our credit cards. Maintaining and developing a relationship with a trusted creditor is often worth much more than the short-terms savings you may experience from balance transfer offers or introductory offers.

Here are some of the reasons why it may pay to hold onto your current creditor:

• Best rates – It’s simply a fact that long-term customers get the best rates. Most credit card companies offer great interest rates to their valued customers because they have a credit history on which to draw from. In other words, if you have proven yourself to be a trustworthy customer, your credit card company will likely reward you with a competitive interest rate. You will likely also have more room to negotiate if you feel that you creditor could offer you a lower interest rate.
• Positive impact on credit score – Your FICO score, although determined using many factors, may be influenced by your history with the same creditor. In other words, you may have an excellent payment history, but another individual with the same history that has not switched credit cards every year or so will probably enjoy a higher FICO score in this area.
• Higher credit limit – Along with a better interest rate, you will likely enjoy a higher credit limit as a loyal customer. Many times, your creditor will gradually increase your credit limit as you prove your credit worthiness to them.
• Late payment forgiveness – Good customers who almost always pay their credit card bills on time will likely enjoy leniency from their credit card company if they slipped one month and paid their credit card bill after the due date. In fact, many credit card companies will remove late payment fees for loyal customers who failed to pay their credit card bill on time just once or twice.

You may think it is in your best interest to take out a small business credit card for your business, and that generally holds true, but there is an exception to this rule.

As more and more credit card companies put the brakes on consumer credit, there are a number of changes that have also taken place; in particular, there are many credit card companies that include personal liability clauses with their small business credit cards.

Personal Liability Clauses Increasing

A small business credit card that features a personal liability clause is something that you might want to steer clear of, mainly because it means that if you are unable to pay your credit card because your business didn’t succeed, you may be personally responsible for paying back that credit card debt.

In other words, the credit card company can come after you, the cardholder, to pay your business credit card. Most small business owners run their business so that the business’s assets and liabilities remain separate from their own, personal accounts. However, credit card companies, in an effort to recoup some of their losses due to the lousy credit market and equally lousy economy, have started attaching small business debt to the cardholders who own the businesses.

Your Small Business Card may be Linked to your Personal Assets

That essentially means that a creditor may now be able to come after your personal assets if you are unable to pay your small business debt.

Unfortunately, the new credit card legislation does not cover small businesses, leaving many small businesses on their own when it comes to fighting creditors.

It therefore pays to take the time to read the small print of your small business credit card. Ask questions if you don’t understand the card’s terms and conditions and, if the creditor has a personal liability clause in their card’s terms and conditions, consider looking for another small business credit card.

As with most everything else, there are positive angles and not-so-positive angles with change. Although the new credit card legislation was designed to help consumers and reign in on the questionable practices of the credit card industry, it has also created turmoil as creditors seek to find other ways to either make a profit or simply keep their losses to a minimum.

Creditors begin to make Changes

A perfect example of this is that many creditors are cutting back credit lines to less-than-stellar customers in an attempt to cut waste; and the easiest way to do that is to cut their credit lines, either by hacking their credit limits or by simply cutting them off for good.

In the past, creditors sought out nearly any type of customer, and did so with low interest rates, promotional rates, and even gifts and rebates. Times have certainly changed, though, and now creditors are scrambling to find these consumers and cut their chances of incurring debt and not paying it back. In other words, creditors must act because their hands are tied and their profits are dwindling.

What we can begin to Expect

Some of the actions from the credit card industry that we can expect to see include: cutting off all inactive accounts; cutting off subprime consumers; and reducing the credit lines for countless others.

Many industry experts believe that creditors may cut nearly $1.2 trillion worth of credit to consumers this year alone, and that by 2010 the number is expected to rise to $2.7 trillion.

For many of us, our credit cards serve as an everyday convenience, as well as a lifeline in case of emergency situations. It is therefore in our best interest to do what we can to keep the credit we already have, as to protect ourselves and our credit score.

But what is a small business credit card and how can it serve you as a small business owner?

• Online Tools – Small business credit cards often comes with a wealth of money management tools. These tools, often available online, help you, the small business owner, to track and organize expenses in an effort to maintain accurate records. The online tools offered by many credit card companies for their small business credit cards also enable you to monitor the spending of your employees should they need to make business-related purchases.
• Larger credit limit – Small business credit cards often come armed with a much higher credit limit than standard, personal credit cards. If you are starting your business and need assistance from time to time, then a larger credit limit is ideal for you. In addition, if your business requires that you make large purchases, then a higher credit limit will certainly come in handy.
• Separate from your personal accounts – A small business credit card is a practical alternative to using your personal credit card to make business purchases. In order to ensure accurate bookkeeping, it is important to keep your personal accounts separate from your business accounts; therefore a small business credit card may become very useful.

When searching for a small business credit card, remember that interest rates, credit limits and reward programs differ widely from one card to the next, as do the services they offer to small business owners. It is therefore important to take your time and compare small business credit cards to be sure that you have chosen the one that is best for you and your business.