Credit Card Quick

Credit Card Companies Gearing Up For Change

News

As the credit card act goes into effect, cardholders will want to pay close attention to the kind of card or cards they carry and how they might be affected by these new changes. Depending on what you have in your wallet, you might find yourself paying more, or in some cases, less. Either way, the new laws might affect you and you will certainly want to know about it. Some parts of the credit card act will make it more difficult to obtain certain kinds of credit cards, however, this could be a good thing. Credit card companies will no longer be able to extend credit haphazardly, and those who can’t afford the credit card won’t find themselves in the deep debt they knew they could not handle in the first place.

Student Credit Cards

Kiss those sign-up tables with enticing free perks goodbye! Apparently, free pizza just isn’t worth all that easy-to-acquire debt. Students under 21 will now have to prove that they have a source of income or have a parent willing to co-sign financial responsibility on the card. The future of student credit cards looks to be more along the lines of debit cards and prepaid cards as well as cards with higher interest rates and lower credit limits, teaching some lessons in financial responsibility and budgeting to a younger generation.

Rewards Programs

Credit card companies have already begun tightening the reigns when it comes to rewards programs, however, things are about to change even more. The days of generic spend a buck get a buck or a point look to be falling to the wayside. New programs will be specifically geared toward certain lifestyles and audiences, such as music downloads, sports fans, etc.

Low-Interest Rate Cards

Comparably, these cards will still carry a lower rate, however, the interest is about to go up by several points, so be prepared to pay more. People hoping to get a low interest rate card might find it even more difficult now, as the credit card companies don’t exactly find these to be their best products, at least from their viewpoint, as they just can’t charge much to make their own profits. Credit card companies will tighten the requirements even more, so these cards will be harder to come by.

Prepaid Cards/Gift Cards

As of August 2010, all fees will have to be disclosed before purchase, and you no longer have to worry about losing your money because a gift card expired so quickly. Expiration dates will now be fives years from the date of purchase.

Business Credit Cards

There are no changes in the credit card act that will have any effect on business cards. Consumer credit cards are the only ones included in the provision.

Gas Cards

As for the cards that are co-branded with an oil company logo, they will be offering more rewards and perks, however, you’ll make a few cents less per purchase and overall, the card is going to cost you more.

Debit Cards

Interesting changes are coming to debit cards. Banks will no longer be allowed to charge hefty overdraft fees. We might even begin to see more debit cards offering rewards and perks to the user. However, it may cost up to $30 to have a debit card if banks start charging an annual fee.

Balance Transfer Cards

The enticing offers will still be there, but expect to pay more as interest rates rise. While some companies might still offer incredible introductory terms, for the most part, you can expect to see shorter terms and fewer 0% introductory rates. Still, the rates will be decent. 7 to 9% is not bad in the overall scheme of interest rates.

Hook, Line and Sinker: Things the Credit Card Companies Won’t Tell You Upfront

Introduction

Hook, line and sinker. Yes, the credit card companies are trying to reel you in. More customers equals more money, and of course, they certainly like that. Who wouldn’t? Does this man you should steer clear of credit cards altogether? No. Absolutely not. Having a credit card or two in your possession can e very beneficial..

Credit card companies put enticing offers out there and don’t give you all the facts up front. That’s the way it goes with advertising. If you fail to read the fine print, you are ultimately responsible for the outcome.  The credit card company is not going to take any blame for you’re lack of knowledge about something just because they failed to tell you. Truth be told, it’s not their responsibility to tell you every little thing upfront. A smart and savvy consumer will read everything and be in the know before they ever use that little plastic card. Here’s a few things to watch out for that could make a difference in saving money or breaking the bank to pay off your card.

0% APR

0%? Not even close. This might apply to balance transfers only. You might get a card that allows 0% APR on both balance transfers and purchases. Either way, it is an introductory rate. There will be hidden fees for using the card for other things, like cash advances, and you payments will only be applied to our lower interest balances until they are paid off, leaving you with more debt to pay. To top it off, that 0% APR is literally only an introductory rate. After the first few months to one full year, you’re going to get slapped with a bill that might reflect interest rates of a caliber you were not expecting. Read and get to know the terms on such a card. Use it wisely to avoid a lot of debt. To avoid this eventuality altogether, look for a card offering a low fixed-rate APR. These do not change over time and will only change with your renegotiation or failure to pay.

The Universal Default

Thought your rate was secure with your card once you got it? Thought your subsequent debt with other creditors would make no difference? Think again. If you wind up with ad debt with another creditor and if affects your overall credit rating, paying your credit card ill in full and on time  might not make a whole lot of difference. You should still pay the bill, of course, but when the credit card company catches wind of any issues on your credit report (and they will!), this is their excuse to raise your rates. Even being a good customer to them does not change their view that you might now be a high-risk customer.

Paying the Minimum Balance

While this can be a life-saver in your time of need, don’t make it a habit. Some companies offer a minimum payment of as little as $10 per month. if you only pay this amount every month, you are not going to make much of a dent in your debt. On top of general card use, you’re going to have fees and interest that accrues every single month. Not only will it take you a very long time to pay off the debt, you will wind up paying a whole lot more in the long run. The minimum balance payment is great in a pinch, but it can also lead to more trouble than it is worth.

Rates and Terms

Don’t ever make the mistake of thinking that your rates and terms are set in stone and are thus unchangeable. Nothing could be further from the truth! Card companies can change their policy at their own whim and discretion, giving you little notice to prepare for said changes. However, you might be ale to work these things out in your own favor. Should the credit card company alert you of impending changes, try  taking advantage of term flexibility. If you have proven track record with the company and have been in good standing for a couple of years, call them and try to renegotiate the rate. It never hurts to ask!

Knowing these things in advance will, hopefully, help you to become a more educated and sophisticated credit card user; avoiding higher debt and reaping the benefits of plastic.

Credit Card Solicitation on the Rise

Choosing Credit Card

It’s the start of a new year, and things are looking up for credit card companies. With the worst of the credit crisis behind us, many credit card companies have once again begun soliciting customers for new credit cards. If you are a consumer with a good credit score, chances are you’ve begun seeing an increase in credit card offers each time you visit your mailbox.

And, according to Synovate, a company that tracks credit card solicitations, credit card companies are marketing more than ever before. For example, in the last quarter of 2009, 398 million credit offers were sent to consumers; that’s a 46 percent increase from the third quarter of 2009.

One of the reasons credit card experts give for the increase in credit card solicitations lies with the new credit card legislation. Many creditors, wary of what lied ahead just months ago, stopped sending credit card solicitation. However, now that the credit card legislation is enacted and it is clear what creditors can expect, many of them have therefore begun marketing hard to consumers with good credit.

So, the question is: will you take advantage of these credit card offers? Your answer to this question will depend on two factors:

• Your Current Credit Score – If you have good credit, then chances are you will be eligible for most of the credit card offers that come your way. If you have seen an increase in your current credit card’s rate or fees then it may be a good time to once again begin exploring your options. Many creditors are offering great terms and conditions now, so it may be in your best interest to see what they can offer you.
• Your Financial Status – If you are coming off of any type of financial difficulty, now may be the time to repair your credit and start fresh. However, if you still find yourself struggling to pay bills and make payments, now is definitely not the time to begin looking for a new credit card. Instead, take this time to get your finances in order; it doesn’t make any sense to incur more debt during this difficult time.

How a Creditor Determines your Credit Limit

Credit Score

Have you ever wondered why you have the credit limit that you do?

Whether you were approved for less – or more – than you thought, you should know that there is actually a formula that credit card companies use to determine your credit limit.

• The first thing a credit card company will do when you apply for a credit card is look at your credit score. Your credit score (often referred to as a FICO score) is a clear indication of how you have managed your debts in the past. The scoring used in a credit score also predicts your ability to repay loans in the future.
• Credit card companies, after they look at your credit score, will then look at your debt levels and your income. Your debt levels, also commonly referred to as a debt-to-income ratio, is a common reason why many people, although they may have a gleaming credit score, will have lower credit limits. It is the credit card company’s way of protecting credit card customers from more debt than they can financially handle.
• In addition to looking at all of the above factors, a credit card company will also examine your current outstanding credit, or the amount of credit on other loans and credit cards that you have open and available. For example, if a credit card company notices that you have another credit card, but that it is maxed out, this may raise a red flag that you are taking on more debt than you can handle; as a result, your credit limit may be significantly lower than your previous credit card.

Many times, your credit card company will automatically raise your credit limit if you have established a good track record of punctual payments. However, it is also important to point out that creditors are also able to lower your credit limit if you show a steady of history of late payments.

The best thing you can do maintain a good credit score and ensure that you are eligible for higher credit limits is to make your payments on time, each and every month, and to keep your spending in check and not top out your credit limit.

How to Protect yourself from the Credit Card Legislation Loopholes

Introduction

It is no secret that credit card companies are looking for ways to make money given the new credit card legislation. As a result, many credit card companies have found quite a few loopholes in the new legislation; loopholes that you may not be aware of and loopholes that can cost you big.

There are, however, a number of things you can do protect yourself, even given the loopholes being enacted by credit card companies:

• Look closely at your credit card statement each and every month and take note of any changes in your credit card’s terms and conditions. The CARD act requires that credit card companies must notify you 45 days in advance of any credit card changes, thereby providing you with the opportunity to find another credit card or close your account. Remember: credit card companies can charge all the fees they want, but in the end it is up to you as to whether you will accept these fees or not.
• Regardless of what you have been told in the past, if you don’t like the terms and conditions of your current credit card, cancel the account and find another one. The small hit you may take on your credit score due to a closed account will be minor, so get rid of the unwanted card and make a better choice. It is important to close any accounts that you no longer use, as you will likely incur inactivity fees as a result inactive accounts.
• To find the most competitive credit card, check out popular bank, credit card, and lending websites. These websites compare all of the latest credit cards, side by side, so can shop for a new credit card in one place. In addition, don’t forget to check out credit cards through your local credit union or bank; often times the interest rates charged by these local institutions are quite attractive and competitive.

It is important to remain in charge of your financial future, and the only way to accomplish this is to remain educated, informed and aware.

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.

Have you Read your Credit Card Notice Lately?

News

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.

Along with New Credit Card Laws comes Consumer Responsibility

News

The government has stepped in and curbed the fees, rates and tactics that credit card companies can throw at consumers. But where is the all-important consumer responsibility?

The new credit card legislation, set to go into effect in February, is laden with plenty of rules and regulations that credit card companies must follow. From restricting college students’ access to credit cards to changing rules regarding interest rake hikes and due dates, the law is designed to help consumers better manage their debt.

Recognizing Personal Responsibility

However, don’t expect the government (or the credit card companies) to take the place of your personal responsibility as a consumer. If the credit card company’s terms, conditions, rates and fees are now transparent then the responsibility lies solely on the consumer. In other words, there’s not much more the government can do to help you responsibly manage your money.

Credit card reform is only half of the equation; consumers must be other half.

The Importance of Learning from Past Mistakes

The credit crisis and subsequent recession has taught us all many lessons. Many consumers are now rethinking their once-impulse purchases; people are making budgets and sticking to them; and still many people are simply saving more and spending less.

If anything has come out of credit card reform is that everyone needs to be accountable for their actions. The bottom line is that it is ultimately your decision to spend or not to spend on your credit card. You have the final say and you – and only you – are left with the credit card bill at the end of the month.

For many consumers, this is a great time to reevaluate their needs, pay off their credit cards earlier than later, and simply take a good, hard look at their past spending habits so they can begin changing them for a better tomorrow.

Take this opportunity to review your credit card and spending decisions and make positive changes. Develop a realistic budget and stick to it; reevaluate your credit card needs and ditch the ones that simply are not working for you anymore; find a great credit card with competitive rates and excellent terms and conditions; and make a commitment to pay your card in full, every month, without exception.

Here’s to a healthier 2010!

How to Obtain a more Competitive Rate with your Current Creditor

Introduction

Everyone is struggling to survive this incredibly difficult economic time, and credit card companies are no exception.

Desperate to recover some of the losses experienced over the last year or two because of the meltdown of the credit sector and the subsequent fall of the housing market, many creditors began to employ less-than-upfront tactics to saddle consumers with more debt. As a result, the government enacted the new credit card legislation, which simply led to more underhanded credit card tactics before the law could be enacted.

You may have very well found yourself in the crosshairs of this credit card mess. If you received a statement or letter from your credit card company with news of an increasing interest rate, decreased credit limit or other changes to your card’s terms and conditions, you may be wondering what your options are, if any.

In particular, many credit card customers with great credit histories and strong credit scores have had their credit limits slashed or their interest rates increased. The question is: is there anything you can do to combat these new credit card tactics?

If you have consistently paid your bills on time and stayed within your credit limit then it is possible to convince your creditor to revert the changes to your account.

How to Achieve Success with your Credit Card Company Following a Hike in Interest Charges and Fees:

1. Contact your credit card company upon receiving news of your credit card’s terms and conditions and let them know that you are a valuable customer and that you want your card’s terms and conditions reverted back to their original status.
2. If the credit card company is not receptive to this request, let them know that you may be forced to cancel the card and instead accept a better offer from another credit card company.
3. If you don’t have any luck with a customer service representative, ask to speak to a supervisor.
4. If you don’t get anywhere with a supervisor, cancel the credit card. The creditor must then allow you to pay off the balance of the card at the original interest rate. However, it is best to secure another card before canceling your current one.

Should you put up with Credit Card Annual Fees?

Choosing Credit Card

Many credit card companies are getting quite creative when it comes to socking customers with fees. Case point: there are a few credit card companies that are now kicking around the idea of reinstating annual fees. During the height of the credit boom, most creditors threw annual fees out of the window. Now, however, they seem to be singing quite a different tune.

The question is: should you pay an annual fee for your credit card?

If you have good credit and you’ve proven yourself to be a good credit card customer, then absolutely not. As consumers, there are certain things that we will inevitability have to put up with, given the state of the economy and the pitiful state of the credit card industry. However, annual fees shouldn’t be one of them.

Who wants to pay their creditor for the privilege of spending their own money? I certainly don’t, and neither do most consumers.

Testing out Annual Fees

There are many reports that credit card companies are now in the process of “testing out” annual fees for their credit cards, which means that if enough consumers complain about this unnecessary fee then most companies will ditch their annual fees and leave them in the trash, where they need to remain.

Bank of America, for example, recently announced that it would start to “test” annual fees for its customers, and charge a select group of customers an annual fee of anywhere from $29 to $99, although it isn’t clear how they will decide which customers pay the lower fee and which customers will be charged the higher fee, and if there are any fees in between.

When you may not Have an Option

There is, perhaps, one occasion that you should simply pay the annual fee and quietly go on your way. If you have poor credit or have been unable to pay your credit card bills in a timely fashion then you probably don’t have a whole lot of options when it comes to annual fees. In other words, if you dispute your annual fee, your creditor may very well tell you that you must pay the fee or risk losing the card.

Your best bet, as a credit card customer, is to simply contact the creditor and request that the annual fee be removed from your account. Some companies will comply, particularly if you have proven yourself to be a good customer, while others will stick to their guns.