Credit Card Quick

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.

Consumer Satisfaction Plummets as Creditors Raise Interest Rates, Cut Credit Limits

News

As if 2009 didn’t bring enough bad news: recent polls released by J.D. Power and Associates reveal that consumer satisfaction with credit cards fell sharply in 2009.

It’s no surprise, really, that consumers are frustrated with their credit cards, as many have been socked with outrageous fees and equally outrageous interest rates as creditors scramble to recoup some of their losses.

Highlights of the J.D. Power and Associates Poll (which was conducted in May and June by 9,000 credit card customers):

• Twenty percent of credit card holders saw an increase in their interest rates between 2008 and 2009.
• Eighteen percent of credit card holders were dissatisfied with fees on their credit cards, which was a 10 percent jump from just a year earlier.
• The customer satisfaction index fell to 703 (on a 1,000-point scale), which is the lowest since J.D. Power and McGraw-Hill began the customer index satisfaction survey in 2007.
• Credit card customer satisfaction comes in dead last among all financial services industries, including banking, insurance and investment services.
• One out of five customers experienced a rise in their interest rate over the past year.

It is clear from this recent survey that most consumers are simply fed up with the over-the-top rates and fees being charged by many credit card companies as of late. As the government put the squeeze on credit card companies, and as the recession took its hold, credit card companies started responding by slashing rewards for customers and raising rates.

And this doesn’t sit very well with customers, as to be expected.

American Express, which is the largest credit card company based on sales, was ranked first in the poll for customer satisfaction, followed by Discover Financial Services and JPMorgan Chase. Those ranked below the industry’s average included Citigroup, Bank of America and Capital One.

It is important to note that American Express, Bank of America, JPMorgan, Citigroup, Capital One and Discover make up about 80 percent of the industry in the United States.

The J.D. Power and Associates poll reviewed customer satisfaction based on many factors, including rewards, benefits, services, problem resolution, interaction, fees, rates, billing and payment processing.

The Debit Card/Credit Card Debate: Which one is Right for you?

Choosing Credit Card

Many Americans now use debit cards as an alternative to paying by check, cash or credit card. They certainly are a convenient way to for purchases, but are they the right form of payment all the time?

Well, this answer certainly is up for debate, although there are plenty of pros and cons, for both credit card and debit card use, which you should consider before making your next purchase:

Pros of Debit Cards

• Ideal for consumers who want to avoid credit card debt
• Usually no fees associated with debit card purchases
• Ideal for staying within your budget, as the money is withdrawn from your bank account
• Usually accepted where most credit cards are accepted
• No monthly bills or interest rates to worry about

Cons of Debit Cards

• You may face large insufficient fees through your bank if you overspend (this can be solved by linking your savings account to your checking account for overdraft protection)
• May not afford customers the same incentives and perks of credit cards (cash back rewards, rebates, etc.)
• May not offer the protection against fraud and defective goods and services that credit cards offer
• A thief may be able to drain your bank account before you notice fraud (although your debit card may be protected against fraud, it may take some time to receive your lost money)

Pros of Credit Cards

• No need to pay interest fees if you pay it off within the first billing cycle
• Typically accepted at most retailers
• Offers the luxury of buying now, paying later
• May prove extremely useful in emergency situations
• Offers different types of perks and incentives, such as cash back rebates and travel incentives
• Protects cardholders from fraudulent account activity or defective goods and services
• Positively affects your credit score, if used properly

Cons of Credit Cards

• Can negatively impact your credit score, if used improperly
• Charges interest fees if the balance is not paid in full each month
• Can cause you to overspend, or purchase items that you don’t need
• Can get you in over your head in debt, thereby negatively impacting your budget

How to Effectively Use your Credit Card (and not Let it Use You!)

Introduction

There are many consumers who have gotten themselves into a precarious position: they are slaves to their credit card. Sad, but true.

They failed to pay their bill on time, the credit card company raised their interest rates and slapped them with fees and charges, and now they are simply stuck paying a high balance on a credit card with a high interest rate. Plus, now that their credit is in the gutter, they have little chance of transferring the balance to another credit card with a more reasonable interest rate.

Unfortunately, this is not an uncommon occurrence. In fact, many consumers are stuck in this situation because of past mistakes or bad circumstances. With this in mind, it is important to understand that there are things you can do today to prevent this kind of nightmarish situation:

• Read and re-read your credit card’s terms and conditions.

Those loose little papers that come with your bill often provide important information that most consumers simply choose to discard instead of read. Your credit card’s terms and conditions – or, more importantly, changes to these terms and conditions – can have a big impact on the way you use your credit card or pay your credit card bill.

• Always, always, always pay your bill on time.

There is simply nothing more that needs to be said about this rule. All credit card holders should abide by this rule and use it as a mantra, whenever possible!

• Pay more than the minimum. Or better yet, pay it off each month, if possible.

Don’t squeak by each month by simply paying the minimum balance on your credit card. Make yourself a budget and find extra money to put towards your credit card bill. Even as little as $10 or $20 a month can make a huge difference in your balance over the long run!

• Call your credit card company and negotiate a better deal.

If you have been a loyal customer and have always maintained a good standing with the credit card company then you may be in the position to negotiate a better interest rate. If not, then it may be time to look for a better credit card.

The ABCs of Credit Card Ownership

Introduction

With credit card ownership comes a certain degree of responsibility. After all, your credit is on the line.

Making the decision to own a credit card and pay the monthly bill on time, without fail, is a decision which should not be taken lightly. A credit card can be a tremendous convenience, and it can certainly be a practical way to pay monthly expenses without dealing with cash and checks. However, it can also become overwhelming if you don’t approach credit card ownership with financial common sense.

With that said, there are the ABCs of credit card ownership that you should keep in mind should you decide to own a credit card:

• Always pay your bill – no exceptions! Treat your credit card bill just like you would you mortgage or car payment, as neglecting to do this could seriously impact your credit rating. One of the simplest ways to make sure your credit card bill is paid on time is to immediately pay it when you receive the bill. If you make a point to do this every month, then you won’t ever be caught in a situation where the credit card bill simply slipped your mind.
• Be aware of the credit card’s terms and fees. Many credit card owners fail to investigate all of the fees and terms associated with their credit card, and then are shocked to discover additional expenses each month. Remember: it is your responsibility to read and understand all of the fine print associated with your credit card.
• Consider credit card reward programs when choosing your credit card. Many of today’s credit cards include reward programs that offer great incentives on everything from hotels to airfare. Your job is to sort through the different types of credit cards and find the one that is best suited for you. For example, if you are a business traveler, you may want to consider a credit card that offers rewards in the form of free hotel stays. Of course, you should also take the credit card’s interest rate and associated fees in mind when choosing a reward credit card, but it is certainly worth your time to explore your options when considering which credit card is right for you.