Credit Card Quick

Credit Card Usage Declines for Online Shoppers

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It appears as if credit card users are less likely to shop online with their credit cards than ever before.

Many individuals, as a result of the poor economy and mounting debt, have chosen to put away their credit cards and instead shop online using different payment methods.

In fact, according to a recent study by Javelin, entitled “Online Retail payments Forecast 2010-2014,” e-commerce grew nearly 11 percent in 2009, while credit card purchases fell below online payment services (such as PayPal and Google Checkout) and gift cards.

Online Shopping Increasing

According to American consumers, nearly 63 percent of us shop online, and this number is expected to increase to 78 percent by 2014. So, it only makes sense that credit card usage will also increase along with it. But, this doesn’t appear to be the case. The question is: why?

Many individuals, with the best of intentions, have decided to use other forms of payment when shopping online. For individuals who have difficulty managing their finances, this may be the best option. But for everyone else, using a credit card to make an online purchase is still often their best bet.

Credit Card vs. Debit Cards

Using a credit card for online shopping is a much safer alternative to using debit cards; for example, if a computer thief snatches an individual’s debit card numbers they could drain their bank account. A credit card, on the other hand, is protected from unauthorized spending. Keep in mind that even if your debit card is protected from credit card thieves, it can still wreak havoc on your life and your finances if your bank account is drained and checks begin bouncing.

Other individuals are simply moving away from credit cards altogether because of the state of the economy over the last year. Although, again, this may be a good idea in general, many consumers should consider the fact that credit cards can provide proof of payment and can often act as a receipt.

In other words, it may be best to keep at least one credit card for online purchases so that you can protect yourself and shop without worry.

Your Rights under the new Credit Card Legislation

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You may be quite confused with the new CARD act. However, there are a number of benefits to this new credit card legislation that you should know about. Don’t let all of the language and confusing terms overwhelm you; just pay close attention to your credit card statement and educate yourself on all of the changes that are taking place, courtesy of the new credit card legislation.

• Your creditor can not raise the interest rate on your card unless you are more than 60 days past due. Even then, they must give you 45 days notice before they can raise your rate.
• Your creditor can no longer raise your interest rate because you were late on another bill. Before the credit card legislation went into effect, credit card companies could actually raise your interest rate if you were late on another payment, as they felt as if you were a greater credit risk.
• Your minimum monthly payment can change at the discretion of your creditor, so pay close attention to any changes regarding your credit card’s minimum payment.
• You must give your creditor permission to allow you to exceed your credit limit; otherwise, your credit card company cannot charge you an over-the-limit fee.
• Don’t expect to secure a credit card easily if you are under 21 years of age. Unless you can prove a steady income, expect to need a co-signer for your credit card if you are under 21.
• Your creditor must clearly outline how long it will take to pay off your credit card if you only continue to make the minimum payment. Many times, this type of disclosure can provide consumers with the knowledge to pay off their cards sooner than later.
• Your creditor must give you 45 days notice before they raise your interest rate. However, even with an increase in your interest rate, your creditor can only charge you the higher rate on future purchases, not on purchases made under your old interest rate.
• You still need to keep a close eye on your card’s fees and charges, as the new credit card legislation does not restrict how much creditors can charge for these fees.

New Credit Card Legislation Filled with Loopholes

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So you think you are fully protected now that the new Credit Card Accountability Responsibility and Disclosure Act of 2009 has taken effect.

Think again.

The new law, which essentially requires credit card companies to end unfair and deceptive practices, was enacted by Congress to be a savior to credit card-weary customers. However, the new laws have their share of loopholes; loopholes that credit card companies are quick to take advantage of.

In short, there is simply no law that can fully protect consumers from deceptive credit card practices.

• For example, the new law doesn’t prohibit credit card companies from charging outrageous fees. In fact, the law does not cap interest rates at all. Credit card companies are also permitted, under the law, to cancel a credit card at any time.
• Credit card companies are also permitted, under the new legislation, to impose new fees and even charge more for fees currently in place. In other words, your credit card company is still permitted to raise everything from cash advance to account transfer fees.

Although there are plenty of positive aspects of the current credit card legislation, unfortunately there are just as many negative aspects of which consumers need to be made aware.

• One of the new charges that credit card companies are imposing, likely as a result of the credit card legislation, is a credit card inactivity fee. This fee, which can be as much as $36 per year, is charged by the credit card companies when you don’t use your credit card enough.

Still, other credit card companies have begun charging their customers for everything from paper statements to foreign transactions.

• Did you also know that credit card companies can also charge a “minimum finance charge?” Yep, that means, regardless of how small your balance, your credit card company can charge you a minimum fee.
• Many credit card companies are also bringing back annual fees.

The bottom line is that it is up to you, the consumer, to continue to monitor you credit card statements very carefully and to always, always take the time to read the terms and conditions of your credit card.

New Places where you can use your Credit Card

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The convenience and practicality of credit cards has hit an all-time high; where once cash was king credit, cards have taken over. Let’s face it: credit cards are incredibly convenient and they eliminate the need to carry around cash.

With that said, here are some of the most unlikely of places you can now whip out your credit card:

• Courts and government offices – From paying fines to paying taxes, most federal offices and courts now accept credit cards as payment.
• Vending machines – Still digging in your pocket for change for the vending machine? You can finally put it away and use your credit card to purchase vending items instead.
• Churches – We used to throw cash into the church plate, but churches now accept credit card payments, thereby making the process of paying your monthly offering easier than ever.
• Salvation Army kettles – This year saw a truly remarkable sight – Salvation Army kettles accepting credit card donations! These specially designed credit card receptacles will help this nonprofit organization – and eventually many others – to accept donations when people don’t have cash on hand.
• Tolls and parking meters – You know the drill: you pull into a metered parking space, only to find that you are lacking the change to put in the parking meter. Newer parking meters, as well as toll booths, are now accepting credit card payments, thereby greatly reducing the amount of stress felt when you simply can’t find any spare quarters under your car seat.
• Fast food restaurants – You need a late-night snack or a quick family dinner and you’re short on cash. No problem: simply head to your local fast food restaurant and enjoy your fast dinner using your credit card. Many fast food restaurants now accept credit cards, even when you’re heading through the drive-through lane.

Although credit card usage has become more convenient than ever, it is still important to remain diligent when paying with a credit card. Only pay by credit card at trusted merchants and always check your credit card bill for incorrect charges.

Why the New Credit Card Legislation may not be all it’s Cracked up to be

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February 22^nd is the magic date when all of the credit card legislation that was passed through the Credit Card Accountability Responsibility and Disclosure Act (CARD) must go into effect. That means that all of the credit card companies must comply with the new terms set forth in the CARD Act.

Although these changes are designed to help consumers better manage their debt and to discourage credit card companies from operating under false pretenses, it doesn’t mean that you can forget about fees and hiked interest rates.

The bottom line is that you still must be a responsible consumer; it does not give you a free pass to spend as you like without consequences.

In addition, don’t assume that just because the government has reigned in the credit card companies on certain points doesn’t mean that they can’t then conjure up new traps in which to catch consumers.

The Fine Print

Most of us are conditioned to simply discard the legal mailings we receive from our credit card company about our credit card’s terms and conditions. However, we must begin to change our way of thinking because the credit card legislation doesn’t deny the right of the credit card company to raise interest rates or impose fees; it simply states that they must warn credit card customers ahead of time.

For example, your credit card company can raise your interest rate on future purchases at any time, but they must also give you a 45 day warning. If you fail to read this fine print in your contract, your credit card company could potentially raise your credit card’s interest rate and you will be none the wiser; that is, until your receive your first credit card statement with a large finance charge.

Fixed-Rate vs. Variable Rate

Another trick that credit card companies have up their sleeves is to turn fixed-rate credit card accounts into variable-rate accounts. This is because the credit card legislation only covers fixed-rate credit cards. In other words, the creditor is free to increase your credit card’s interest rate at any given time if it is a variable-rate account.

The bottom line is that we all have to become better advocates for ourselves and to make it a point to understand all of the terms and conditions associated with our credit cards.

Reasons Why You Should Not let Your Credit Card Become Inactive

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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.

Changes to your Credit Card in 2010

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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.

Credit Card Legislation Introduces an Era of Responsible Credit Card Usage

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This upcoming year may bring more than new credit card legislation; it may just bring about more responsible credit card usage among consumers.

Looking Back on 2009

We have learned a lot from the past year. From the housing market crash to the debacle that resulted from the near-collapse of the credit industry, 2009 was a year of shocking change. For those of us accustomed to spending wildly on everything from cars and houses to vacations and clothes, 2009 brought about a huge change.

No longer could we take out credit at will; in fact, many creditors pulled in the reigns and not only began denying credit to consumers, but also limiting their access to the credit that they already had.

Case in point: many consumers saw the interest rates on their credit cards soar and their credit limits cut in half. It was a desperate attempt at credit card companies to limit their losses amidst delinquent loans and abandoned credit card debt.

Many individuals were also shocked to see their credit card company change the terms, fees and conditions on their cards. Even those with the best credit scores saw changes to their credit cards. In fact, 2009 left everyone feeling much more financially vulnerable than they did just a year earlier.

Positive Changes for 2010

However, 2010 may be the year that responsible credit card usage and accountability take center stage. No longer will credit card consumers be able to blame credit card companies for unfair practices and sneaky tactics. In fact, credit card companies will be forced to lay all cards out on the table, thereby leaving no surprises for credit card consumers.

In other words, credit card companies must be more responsible, and credit card customers must also do their part and act more responsibly.

One of the biggest changes for 2010 is that only the most responsible credit card consumers will be offered credit. Everyone else must prove themselves by acting responsibly with their other types of credit if they expect to snag a credit card.

Make a Promise for a More Financially Secure Future

Make 2010 your year for more responsible credit card usage. Read and re-read your credit card’s terms and conditions and make it a point to understand all aspects of your credit card. You owe it yourself and you owe it to your credit score to act responsibly in 2010.

Credit Management among Consumers to Improve in 2010

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The latest numbers are in and it looks promising.

In fact, it looks as if credit management among consumers will continue to improve for 2010. Although unemployment continues to remain an obstacle for many consumers, credit card delinquencies will continue to decline in 2010, according to TransUnion.

Although many analysts predict that the rate of credit card delinquencies will slow down during the upcoming year, they will nevertheless decline, which is a good sign for creditors everywhere.

TransUnion expects 90-day credit card delinquencies to drop off nearly 1.04 percent by the end of 2010. Most of these credit card delinquencies will be seen through MasterCard and Visa. In contrast, the third quarter of 2009 saw a decrease of 1.1 percent in 90-day credit card delinquencies.

Delinquencies peaked to their highest rate in the third quarter of 2006, to 1.42 percent. TransUnion used statistics from nearly 27 million individual consumer credit reports. Also included in the study were mortgage rate delinquencies: since 2006, mortgage delinquency rates climbed to an average of 50 percent a year, to nearly 1.96 percent in the last quarter of 2006.

It is important to realize, however, that credit card delinquencies won’t really begin to see solid improvements until jobless rates begin to decline.

The Importance of Timely Payments

The decline in credit card delinquencies comes at a time when good credit is king. Paying your credit card bill on time, each and every month, can mean the difference between being able to secure other types of credit or being stuck without any chance of financing.

In order to be certain that your credit card company receives your timely credit card payment, considering signing up for an online bill payment system, either through your bank or credit card company website. It may also help to set up automatic monthly payments, if necessary, to eliminate the chance of missing a monthly payment.

The certainty of being able to secure credit is only accomplished by maintaining an excellent credit score; and to do that, you need to always pay your credit card bills – as well as any other monthly obligation or bill – on time, every month.

Have you Read your Credit Card Notice Lately?

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If you’ve recently received a notice from your credit card company and you haven’t read it, you may want to think about digging it out of the trash and taking a look at it.

Many credit card companies are beginning to send out notices to customers regarding changes in their accounts. Mainly due to the changes taking place because of the new credit card regulations, credit card companies have started sending out notices detailing changes in interest rates, fees and other terms and conditions.

For many credit card customers, these notices are little more than an inconvenience, filled with difficult-to-understand language that really doesn’t affect how they spend on their credit cards. But in reality, these notices can contain very important information that many greatly affect how credit card customers handle their credit card spending.

The federal Credit Card Accountability, Responsibility and Disclosure Act of 2009, which is set to take effect on February 22, 2010, includes sweeping restrictions on everything from interest rates to over-the-limit fees.

Changes to look out for:

• Annual Percentage Rate (APR)- Your card issuer can raise your interest rate, but can only do so if they give you at least 45 days notice of your rate increase. Many times, individuals do not take time to read their credit card notice, thereby catching them off guard when they notice that their rate has increased. It is therefore in your best interest to check your statement each and every month so you can be aware of any changes in your card’s APR.
• Minimum Payments – If you have different APR on different balances on the same card, your creditor is now required to apply any payments over the minimum payment to the highest rate APR. Now is the time to add more money to your credit card balance each month.
• Over-the-Limit Fees – Over-the-limit credit card fees are now being highly restricted by the new credit card legislation, which is good news for consumers. However, as a result, many creditors are therefore declining transactions that exceed your credit limit, so remain aware of your credit card balance at all times.