Credit Card Quick

Credit Card Tips that will never Let you Down

Introduction

We are constantly bombarded with tips and hints for smart credit card use, but how can we distinguish between the helpful and not-so-helpful tips?

Although each financial situation is different, there are a key set of tips that will never guide you wrong and never let you down when it comes to managing your finances and your credit card debt:

• Pay on time – So this first tip may sound a bit obvious, it begs repeating: you must pay your credit card bills on time, each and every month, if you expect to enjoy a strong credit rating. Although you may think that your late payments are not such a big deal, understand that creditors and the credit reporting bureaus may not agree with you. If you have a difficult time paying your bill on time, consider setting up automatic bill payment through your credit card or your bank.
• Stay away from any type of “convenience” offered by your creditor – In particular, avoid at all costs cash advances, as they come with hefty fees and are looked down upon by the credit reporting agencies when it comes to your FICO score, and convenience checks, as there are almost always fees and other strings attached to them.
• If you don’t need it, don’t get it – Simply put, applying for a credit card merely to get rewards or other perks is a tricky situation in which to put yourself. In particular, be extra careful when it comes to retail credit cards, as they are notorious for offering attractive deals, while at the same time charging super-high interest rates. It also never hurts to take an inventory of your credit cards on an annual basis to ensure that they are still working for you.
• Be diligent when it comes to checking your credit card accounts and credit score. Don’t just pay your balance each month; take the time to look over your statement and double check all of the charges.  Order a copy of your credit report at least once a year, or more if you suspect foul play. It never pays to be too diligent!

The Three Most Common Myths about Credit Cards

Introduction

There are some credit card myths that, regardless of how many times they are debunked, still manage to enter the minds of many credit card customers.

The best line of defense when managing our credit card accounts is to become informed and educated consumers. In other words, don’t let misunderstanding and ignorance ruin your credit and cost you big in terms of higher interest rates and declined loans.

Here are the three most common myths about credit cards:

Myth 1: As long as I pay my card’s minimum balance my credit will be great – Many consumers think that as long as they continue to pay their minimum balance on their credit card that they will enjoy a great credit score. This may have been true just a couple years ago, but many consumers have learned the hard way that it just isn’t a good payment history that determines your FICO score. Another factor that contributes greatly to your FICO score is your debt-to-income ratio.  And if you have many cards that are either maxed or close to being maxed then your debt-to-income ratio becomes skewed, thereby making you a larger credit risk and lowering your FICO score.

Myth 2: The best way to get the lowest interest rate is to transfer my balances every time I get a balance transfer offer – Many of us have played the balance transfer game over the last few years. You know the drill: you accept a balance transfer offer with a low interest rate and transfer all of your higher interest rate balances to that card. Then, once the introductory period has ended and your interest rate has increased, you find another card to do the same thing. Doing this in today’s market may not be such a good idea, though, as your FICO score is directly related to how many credit card accounts you open during a given time and how many credit card accounts you have open during any given time period. In addition, if you close an account every time you open a new one, you don’t have the opportunity to log a payment history, which therefore also negatively affects your credit score.

Myth 3: The new credit card legislation will protect me from all sneaky credit card practices – Sure, the new credit card legislation has eliminated some of the sneaky practices commonly used by credit card companies in the past. However, don’t expect the legislation to protect you from every underhanded practice. The bottom line is that there are still creditors out there who will find a way to make money; and it is up to you remain aware of any changes to your credit card account.

Changes to your Credit Card in 2010

News

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.