Credit Card Quick

Why Creditors are now Turning to Parents for Student Credit Cards

Credit Card Types

Getting a student credit card used to be as simple as turning the corner of any college campus. Creditors used to camp out and lure students in with special offers and free gifts.

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.

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.

How to Avoid the Pitfalls of Credit Card Debt

Credit Card Debt

Think of your credit card as an opportunity to prove your credit worthiness. Your credit card is your chance to build a strong credit history so that you can enjoy all of the benefits that come with a strong credit score.

Here are some tips for preventing the pitfalls of credit cards that so many consumers have found themselves in:

• Find the credit card that is right for you – Instead of choosing a card because of rewards or introductory rates, concentrate on the basics of the credit card, including the APR and the annual fee. Your ability to build a strong credit history relies on your ability to pay your card on time and pay it off in a reasonable amount of time. It is therefore imperative that you find a card with only the most competitive rate and terms.
• Understand your card’s terms and conditions – Your card’s terms and conditions are likely to change because of the new credit card legislation, so it is more important than ever to pay close attention to any and all changes relating to your credit card’s terms and conditions. It is ultimately up to you to understand your credit card and all of the rules and regulations that go along with it.
• Know your credit card’s APR and pay close attention to any changes –Always pay close attention to your credit card’s APR. In fact, it is a good idea to take note of the APR every time you receive your credit card statement. Although credit card companies must provide you with at least a 45 day notice of any changes to your card’s APR, you may miss this disclosure. It is therefore always a good idea to take note of your card’s APR.
• If your card isn’t working for you, don’t be reluctant to find another card that will work for you. You must remain in charge of your financial well being, and that includes taking charge of your credit card. If you don’t feel as if your credit card is giving you the most competitive rate and terms, then by all means find another card that will.

Why it may Pay to Stick with your Current Credit

Credit Card Types

For many of us, the great credit card balance transfer offers over the years have tempted us to transfer our credit card balances from card to card. However, given the dramatic shift in the credit card industry, what once was commonplace now becomes a liability.

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.

How to Cope with your Holiday Credit Card Bills

Credit Card Debt

You swear you wouldn’t do it, but here you are again, looking at your pile of holiday bills and grimacing at the thought of repaying your debts.

Don’t let your holiday bills bog you down all year long. Take care of them now so that you can begin enjoying a debt-free 2010.

The following tips will help you formulate a plan to pay off your holiday bills:

• Carefully review all of your credit card bills – Because there is likely a lot of activity on your credit cards from the holidays, you will want to thoroughly examine all of the charges on your credit card statements. It is not uncommon to spot errors, so the earlier you catch them, the better.
• Assemble all of your credit card statements and write down the balances, the minimum payment amounts and the interest rates on all of your cards – The general rule of thumb is to concentrate on the credit card with the highest interest rate first, so consider something like this: pay the minimum payment on all of your credit cards, with the exception of the credit card with the highest interest rate, as you will want to put as much money as possible onto this card until it is paid off. Then, do the same thing with the rest of your credit cards.
• If you have strong credit, consider consolidating all of your holiday credit card bills onto one, low-interest credit card. Pay close attention, though to the terms of the balance transfer offer, and check out the balance transfer fee.
• If you find yourself drowning in credit card debt, don’t wait to seek help. Instead, find a reputable, non-profit consumer credit counseling service. These organizations can help negotiate lower rates and more reasonable repayment terms, particularly if you are struggling to simply pay the minimum payments on your credit cards.

Start Small: Steps you can take to Today to Rebuild your Credit for Tomorrow

Credit Repair

The past year has been tough for many people, and that goes for their credit scores, too.

If you experienced the loss of a job or other financial mess over the past year and you are now eagerly looking forward to a brighter 2010 then you must begin to assess your credit score and work towards building it back up.

In order to repair your dinged-up credit score, you must begin at the beginning again. Unfortunately, creditors simply are not willing to extend credit anymore to those with poor credit scores. So, what does that mean for you?

That means that you must begin taking small – but very necessary – steps to repair your credit so that you can once again enjoy a strong credit score and all of the advantages that go along with it.

• Start with a secured credit card. Make a point to charge purchases on that card each and every month and pay them off in full each month.  A secured credit, although backed by your cash deposit, is a great way to begin proving your credit worthiness to creditors. Check out the terms and conditions of several secured credit cards, as annual fees and charges for these types of cards can vary greatly.
• Once you have developed a consistent payment history with your secured credit card, consider taking out a small retail credit card. Continue to pay on this card, each and every month, so that you can further build up your credit score.
• Once you have shown a strong payment history of at least 12 months, you can often begin applying for unsecured credit cards. However, if you are denied a credit card after this time period, don’t automatically start applying for more cards in hopes that you may get approved for one; too many credit inquiries will only further hurt your already low credit score.
• If your poor credit history is a result of irresponsible spending, consider heading to a credit consumer counseling service. These non-profit organizations are there to help you make better decisions and to start helping you to build a responsible approach towards credit cards.

The Advantages of Bi-Monthly Credit Card Payments

Introduction

We all know that a good credit score is highly important in today’s economy. It is therefore all the more important that we do what we can to maintain a great credit score. For some individuals, this may mean making bi-monthly credit card payments instead of monthly ones.

Making bi-monthly credit card payments (paying on your credit card twice a month, instead of once a month) may make the task of paying on your credit card a more easily manageable one. Smaller payments, for some individuals, are just easier to budget, and may allow them to pay more on their credit card than if they were paying once a month.

Why it may pay to make bi-monthly credit card payments –

• You can time your payments with your paycheck –  If you are paid every two weeks then a bi-monthly credit card payment plan may work out well for you. For individuals living paycheck to paycheck, paying on their credit cards, a little bit at each paycheck, allows them to better manage their money and get their credit cards paid each month.
• Paying bi-monthly may allow you to pay down your debt more quickly. For example, paying bi-monthly will allow you to make 26 smaller payments each year – or 13 payments instead of 12 – thereby allowing you to pay down your debt more quickly. You’d be surprised to find what one more payment can do to your balance!
• Bi-monthly payments may help you achieve a sense of satisfaction and gratification. Bi-monthly payments are just as much about your feelings as they are about your financial well being. In other words, you may end up feeling much more in control of your finances by paying bi-monthly, and you may end up feeling more accomplished and gratified.

For many individuals, bi-monthly payments simply help them achieve their financial goals, and allow them to better budge themselves, based on their bi-monthly paychecks.  In the end, achieving a balance with your credit card debt will help you tackle your debts and make them all the more easy to pay off.

Give bi-monthly payments a try – your FICO score will thank you for it!

0% Credit Cards: What’s the Catch?

Introduction

With all of the doom and gloom surrounding the credit card industry, a credit card boasting a 0% interest rate sure sounds good, doesn’t it?

But is there a catch to this impressive rate?

A so-called “free” credit card may not be free after all. You may have to pay a yearly membership fee; you may have to pay interest on charges that you carry from month to month; or your interest rate may only be promotional.

Good and Bad 0% Credit Cards

Whatever the catch, it is important to understand that all 0% interest rate credit cards are not created equal. There are some 0% interest rate credit cards that aren’t worth your time, but there are also others that are able to offer fairly attractive terms and conditions.

In order to qualify for a 0% credit card you must have excellent credit. Bottom line: there are no free rides when it comes to great interest rates. If you have paid your dues and maintained an excellent credit score then you may be eligible for some of the lowest interest rates going at any given time.

0% Promotional Rate Credit Cards

There are some 0% credit cards that offer this low rate for a promotional period of time. In other words, the 0% is not forever; just until the promotional rate ends, which is typically about six to 12 months. Although this may sound like a bum deal, the reality is that you could transfer a higher interest rate credit card onto a 0% promotional rate card and save hundreds of dollars in interest over a six month period.

Pay close attention to balance transfer fees and do the math: consider whether it will still benefit you financially to transfer your higher interest rate balances onto a 0% interest rate credit card after you pay the balance transfer fee.

Another common fee charged to individuals with low interest rate credit cards is an annual fee. Although you certainly should not have to pay an annual fee to have a credit card, paying a small annual fee may very well be worth your time if you are able to snag a super-low interest rate.

Finding a credit card with a 0% interest rate is possible; you just simply must realize that it may come with its share of terms and conditions. Often times, these terms and conditions are well worth it, so always weigh your options when shopping for a new credit card.

Credit Repair Companies: Why you shouldn’t have to Pay for Repairing your Credit

Credit Repair

The tough economic conditions this past year have left millions of consumers in financial straits. From the effects of the recession and credit industry to the tumbling housing market, credit card consumers across the country are finding it difficult to keep up with their credit card payments and are slowly destroying their credit in the process.

If you have been a victim of the economy and you are drowning in a sea of credit card debt, you may be tempted to contact one of those credit repair companies you often see advertising on television, radio and even on billboards. They often offer to repair your credit so that you can get approved for a car loan, a home loan or personal credit.

It may sound quite tempting, actually. The thought of paying a company to pull a quick fix on your credit may just solve a host of problems. But before you jump into the arms of one of these credit repair companies, there are a few things you should consider:

•  No one can legally remove information from your credit report. Regardless of what these companies may promise you, it is simply illegal to have any information removed – unless, of course, you find an error or discrepancy, in which case you must request an investigation by the appropriate credit bureau.

•  The only thing that will remove your bad credit rating is time – and responsible credit behavior.  Your negative credit card information can only be reported for seven years (bankruptcy is ten years). Unpaid judgments go back seven years, or until the statute of limitations ends.

•  Improving your credit score can only be accomplished one way: paying off your debt. In other words, instead of trying to hide from your creditors, contact them and set up a reasonable payment plan, if possible. You will feel relieved to end the stress of avoiding the creditor, and you will immediately begin repairing your credit.

•  If you choose to contact a credit repair company, make sure you receive the brochure, “Consumer Credit File Rights under State and Federal Law.” This brochure should clearly outline the company’s fees, as well as your rights and obligations.

•  Consider seeking help through a non-profit consumer credit counseling service, which is almost always free of charge.