Credit Cards Comparison: Apply and Compare Credit Cards with the Best

Hidden Information in Credit Card Applications

Admin — Wed, 01 Sep 2010 00:00:00 GMT

Understanding the true and thorough conditions regarding credit cards can involve a great deal of scrupulous reading. Most of the important information featured in credit card agreements are too often in fine print. Realistically, most people will not have the time nor patience to go through and scrutinize everything written on credit card applications.

A study by CardHub.com conducted in 2010 tried to determine what type of information are generally available in credit card agreements that are not in fine print. The study involved ten of the largest credit card issuers and try to determine the straight forwardness and transparency of their credit card applications. Researchers looked for vital information such as annual percentage rates (APR), rewards program information, and fees.

The study found Capital One, Bank of America, and Wells Fargo scored highest in clarity with regards to their credit card applications. Conversely, applications from U.S. Bank, USAA, and American Express scored the lowest.

What CardHub.com researchers had found to be lacking in most credit card applications is a detailed description of balance transfer fees. These fees tend to cost a considerable amount to consumers, but is most often neglected. Most consumers focus on the annual percentage rates of the card.

Most credit card issuers also fell short when describing, in detail, the conditions in regards to rewards programs. While many banks make it fairly clear on how a cardholder can earn points, they are less comprehensive in describing the worth of the points or miles.

A majority of credit card applications were unambiguous in regards to annual fees and regular or introductory annual percentage rates. Confusing and vague terms such as ""up to"" and ""as low as"" are used less often as well.

The study clearly indicate that consumers must still continue to actively analyze their credit card applications before applying for one. Although many improvements have been made, the sole intention to hide certain information from the consumer is still relevant.

How To Avoid Identity Theft

Admin — Wed, 01 Sep 2010 00:00:00 GMT

Identity theft is defined as being an act of having your personal and financial information stolen from you. Most often these crimes are computer related and is a growing issue throughout the world. A study conducted by the Poneman Institute in 2008 showed fifty five percent of Americans has been a victim of identity theft two or more times in the past two years. Another frightening statistic provided by Javelin Strategy and Research revealed that victims of these crimes increased an astounding twenty five percent in 2008. It is currently estimated that over 9.9 million people are affected by this growing phenomenon. Although the statistics may seem bleak, there are a number of steps consumers can follow to limit their chances of being a victim of identity theft.

Awareness is the first step in protecting yourself from potential thieves. Victims of identity theft will initially notice that they start getting letters or phone calls stating that their application for a credit card has been approved or rejected. Another obvious indicator that you've been a victim of identity theft is when you start getting calls from collection agencies demanding that you owe money.

Once you have discovered that you may have been a victim of identity theft, it is of the utmost importance that you confront it quickly. Doing so will greatly limit the amount of damage that can occur. President of IDWatchdog.com, Justin Yurek said, "" oftentimes thieves will use your credit card data to commit nonfinancial identity theft crimes which become much larger problems. As thieves begin to truly clone your identity, they can move from buying items in your name to committing crimes in your name, or obtaining employment benefits in your name, or obtaining medical services in your name. Unlike a thief fraudulently purchasing products in your name, there is no easy reversal for these crimes, and the consequences to the victim are much more severe.""

There are also preventive measures consumers can practice to prevent such thefts from occurring in the first place. ""To prevent identity theft, cardholders need to guard their cards and keep secret any identifying information about their accounts,"" says Scott Crawford, CEO of DebtGoal.com ""This includes shredding account statements and keeping account and personal information secret. Look through your statement carefully to identify transactions that you didn't initiate and take advantage of alerts that your credit institution offers. Many allow you to get alerts for abnormal transactions that can warn you to potential fraud on your account.""

When browsing websites always examine the URL and security certificate to make sure that the site is legitimate. The increased sophistication of phishing schemes makes this crucially important. Users should also avoid sending personal or financial information through emails or unsecured websites.

The final suggestion when dealing with identity theft is to contact the police as soon as you find out you have been a victim. Proceed to close all accounts you did not open. You may also use the Federal Trade Commission's website to file a complaint in regards to the specific crime. Once reported, the FTC will initiate an investigation to the matter. It is important to retain all documents provided to you by police officials and the FTC.

How to Protect Yourself from Identity Theft

Admin — Wed, 01 Sep 2010 00:00:00 GMT

Identity theft is a major problem that is growing at an alarming rate. Consumers are just in being concerned about the security of their personal information. Identity theft jeopardizes their bank accounts and credit scores. And in many cases, identity theft can cause extreme damages that can take a long time to recover from.

There are several things cardholders can do to reduce the chances of becoming a victim to identity theft. A more common and well known step includes shredding credit card offers that you get in the mail. These documents contain a great deal of personal information thieves can potentially use to take over your accounts. There are also other ways strengthen your security.

It is vitally important for consumers to know exactly where their important documents are stored. Passports, Social Security cards, or driver licenses should be stored and locked in a secure place.

Any expected mail from your credit card issuer or bank that is unaccountable should be immediately reported to the respective organization.

Carefully scrutinize and review all banking statements and credit card bills immediately. If you find any discrepancies, these findings should be reported without delay.

Consumers can also request a credit report from the three major issuers. One should review the reports carefully for mistakes or unrecognizable remarks. Any inconsistencies should be reported to the credit report bureaus as well.

If you decide to move from your current residence, be certain to have your remaining mail be forwarded to the new address. As a precautionary measure, request a credit report two to three months after the move to make certain the address is updated correctly.

Mail which contains credit card offers or documents with personal information should be shredded before being thrown away.

Keeping a list of all the contact phone numbers associated to your credit cards will also come in handy when you've lost your card.

If you have one, valuable financial documents should be kept in a safe deposit box at your bank.

Any emails which contain dubious links should be avoided at all times.

How to Advoid Putting Your Credit Card Information at Risk

Admin — Wed, 01 Sep 2010 00:00:00 GMT

Online dating services can be a great way to meet your future spouse, but participants may be putting their financial information in danger if proper precautions are not observed.

The excitement of potentially meeting a prospective mate can sometimes overshadow common sense and the scrutiny of legitimacy. A study conducted by ProtectMyID.com in regards to online dating showed that an astounding ten percent of participants sent their Social Security numbers or bank account information to their chat mates. It also showed that nearly half of the people involved in the study did not verify the authenticity of their online dating friends.

Although a majority of the people using online dating websites are truly looking for a partner, reports have shown that as much as thirty percent of its members are fake and insincere.

Online daters are more prone to fraud essentially because the internet is very good at obscuring the truth. Donna Andersen, of Egg Harbor Township commented, ""That you can't see someone is key. Sixty to 90 percent of human communication is nonverbal, so you're missing so much. You're at a severe disadvantage.""

Additionally, online dating requires the sharing of personal details which is essential in forming a close relationship. This same act which can help you better identify yourself to a potential partner can also put you at risk for fraud. ""Some questions seem innocent, like asking what your mother's name is or what your parents do for a living. They may ask for your home or work address to send you a gift"", says Paul Falzone CEO of eLove. Such seemingly innocent questions can provide identity thieves vital information for them to do their work.

Falzone continues to elaborate the ease in which con artists swindle money or information through online dating services. He describes a typical scenario to which thieves use, ""using stolen credit cards, he'll send jewelry, roses and claim he's traveling. Within a week, some tragic event happens, and he has no funds to return to the U.S. Because he has proven his wealth with the luxurious presents, he persuades his mark to send cash or credit card numbers so he can buy a plane ticket back home."" Unfortunately too often do people fall for this scam and never see the repayment of the money.

More frighteningly is when scammers delays their criminal intentions until they meet up with the person in real life. Identity theft expert and consultant for Intelius, Robert Siciliano said, ""inevitably, they start with the marriage thing. They tell me how much they miss me and think about me. Then they are in your home, rifling through your drawers, getting your account information.""

Although online dating companies are doing their part in protecting their customers, it is important for participants to use a bit of common sense and precautionary measures. Although scammers can be clever, it usually doesn't take long before suspected actions become apparent. If they ever proclaim that they need money or ask about anything related to your finances, simply block them from your profile and report their activity to the dating service.

How to Avoid Identity Theft for Students

Admin — Wed, 01 Sep 2010 00:00:00 GMT

Many college students are unaware of the fact that they are a prime target for credit card and identity theft. Experts have devised several tactics to help students better protect themselves from computer related or identity theft.

Locking your door. Remembering to lock your doors is the single most important way to avoid theft. Many student related issues can simply be avoided if the victim had remember to secure their dwellings properly.

Permanently and visibly mark your property. Marking your laptop or computer peripherals with a clear indicator of its owner can, many times, deter would be thefts from stealing the item.

Avoid the assumption that your desktop computer is safe. Desktop computers are just as likely to be stolen as portable laptop computers. Look to inexpensive tethering cables which are designed to anchor your desktop computer to a desk or other stationary objects.

Password Protection. Having a strong password setup in your computer or laptop will make it much more difficult for thieves to access your personal data if they were to be stolen. It is also important to change your passwords occasionally.

Be less conspicuous. Young individuals tend to be fairly open in social networking sites in regards to their personal data. Date of birth, Social Security number, credit card numbers, or other information can easily grant identity thieves access to your credit card or bank accounts. Students should be reluctant to send specific information through emails even if the requester seems legitimate. When in doubt of the circumstances, call the company or association directly to provide the needed information.

Keep adequate records of your belongings. In the instance that your computer or laptop is stolen, it is critical to provide a detailed description of the stolen property to police officials. Simply writing down the computer's manufacturer, model, color, and serial number can better assist law enforcement officers in the recovery of your stolen goods. Keeping such information on hand can also make it easier for you to file insurance claims for the items.

Tracking devices. There are certain products available that can help you track and locate the whereabouts of the stolen items. GPS tracking devices installed in your laptop are imperceptible and can help you give the exact coordinates to the computer.

Campus network security. Many students do not know that the colleges frequently provide security software or services to students free of charge. Before you decide on buying a specific computer protection software, check with the college's IT department to see if they have anything with similar functions. It is also important to make sure the software you do purchase is compatible with the college's network.

How to Pick the Right Frequent Flier Credit Card

Admin — Wed, 01 Sep 2010 00:00:00 GMT

With the growing abundance of airline credit card availability, it is sometimes difficult for consumers to choose one that best fits their needs. Today, credit card issuers are spending millions of dollars annually marketing their particular co-branded frequent flier credit cards. With the wealth of overwhelming information, consumers can find it difficult in deciding the card that they can reap the most benefits out of.

When deciding on a frequent flier credit card, it is important to consider what you plan on doing with all the frequent flier miles. Using your miles to visit distant relatives or to go on an exotic trip can require rewards programs from two distinct cards.

Most airline credit cards provided by both major and discount carriers, make it relatively easy to redeem rewards for domestic flights. Generic airline reward credit cards offered by Citi, Chase and Discover, provide frequent flier miles for airline tickets within the continental United States. Cards, such as the Chase Travel Plus Platinum Visa Card, allows you to earn one mile per purchase dollar which can be redeemed from any major airline.

If you want to use your miles for traveling overseas, different credit cards should be considered. Frequent flier credit cards associated to American, United or Continental will allow you to use your miles for trips to Europe, Asia, South America, Hawaii and the Caribbean. It is important for cardholders to know that traveling overseas with miles requires more points compared to domestic flights. Overseas flights typically require 45,000 to 60,000 miles for a single coach ticket. Programs provided by the major airlines are different, so it is important for the potential cardholder to compare them to see which one fits their best interests.

Programs for small businesses are less abundant so therefore it is easier to make a decision with business cards. Though less diverse, frequent flier rewards for business cards are just as rewarding. And since spending capacity for small businesses can be much greater than those for personal use, free travel can be earned significantly faster.

There is no single airline rewards credit card that fits the needs of all individuals. Essentially, the best airline credit card depends on how you want to use your frequent flier miles.

How to Pick the Right Credit Card for Your Business

Admin — Wed, 01 Sep 2010 00:00:00 GMT

Until recent times, small businesses were not ideally sought after by the credit card industry. These companies were considered high risk and were shown to fail at a startling rate. But during the late 1990s, small businesses have proved their potential and increase in profitability. As a result, the credit card industry has increased their interest in supplying products to small businesses. Today, credit card offers targeted toward these little enterprises are bountiful and varying.

Credit cards for small businesses offer some unique advantages over consumer credit cards. Primarily, small business credit cards help you track business expense independent of your personal expenses. Doing so will help you better organize and calculate the company’s budget. It also makes it easier to organize expenditures during tax time. Small business credit cards also allow business owners to issue credit cards to their employees as well as help build a credit history for their company. Special rewards incentives targeted towards small business owners can also help them save money.

Choosing a credit card for you business is not much different from choosing a credit card for personal use. First decide on a card with the lowest possible interest rate. If you plan to carry a balance from month to month, this is particularly important.

Also, find out all the associated fees charged by all cards of interest. Make sure the annual or miscellaneous fees associated to the card do not offset the provided perks and incentives.

Small business owners should also look for cards that have rewards programs the business can easily take advantage of. Most of today’s small business cards will have cash back rewards or discounts for air travel, shipping, copy and printing services, or computer hardware and software. If your business requires a lot of travel, you should choose a credit card that offers the best incentives in regards to air travel or lodging.

Another important characteristic to consider is if the credit card is widely accepted. Business owners who travel frequently would want to make sure their credit card is accepted when they are off on a business trip. Credit cards with a national ATM network that provides cash after hours or in airports may be an important aspect for business owners who travel frequently.

Fundamentally, there is not a single business credit card that fits every business’s needs. The best credit card for a small business owner is dependent on the distinct characteristics of their business.

How to Build Credit from Poor or No Credit History

Admin — Wed, 01 Sep 2010 00:00:00 GMT

With the recent recession, many are finding themselves with a poor credit score. The country’s record job losses, foreclosures and credit card defaults have been a huge contributing factor in the decline of consumer credit. But even with such circumstances, people still find it necessary to have a credit card for daily expenditures or emergency uses.

""We tend to think of money problems as a character flaw,"" says Geoff Williams, co-author of ""Living Well with Bad Credit."" ""But we've all found out in the past two years that money problems can happen to anyone.""

Many consumers with poor credit have given up on the idea of applying for a credit card. They simply presume that their applications will be rejected. These people should know that there are many credit options for those with less than perfect credit scores. Even though credit card lending practices have become increasingly strict, many banks or credit unions are willing to take the time to work with individuals in obtaining credit cards.

Those who have had their credit scores lowered due to loan defaults or miscellaneous reasons can increase their chances of obtaining a card by simply explaining the reasons behind your financial mistakes. Most credit report agencies will allow a 100 word statement explaining the origins of your low credit scores. ""Anyone who pulls your credit is supposed to take into account what you put in that statement,"" says Linda Sherry, a spokeswoman for San Francisco-based education and advocacy organization Consumer Action. If your credit card application is still rejected, there are still several options for you to obtain a credit card.

Those who cannot apply for a traditional credit card can try to apply for secured credit cards. These cards will require a security deposit that can equal or be slightly lower than the credit line provided by the lender. These cards are rarely rejected due to poor credit because you have already supplied the necessary funds to support the credit limit of the card. Although these are not as tempting as unsecured cards, it provides a very efficient way for consumers to rebuild their credit scores.

There are several things you should consider before applying for a secured credit card. Make sure you understand the necessary fees associated to such cards. Consumers should also know that not all secured credit card reports your activities to the credit bureaus. Since rebuilding credit is the primary reason behind using such cards, it is critical for applicants to look for this particular feature.

Another option for consumers with poor credit is subprime credit cards. These cards typically involve expensive upfront processing fees, so is recommended only as a card of last resort. Along with the high fees, subprime credit cards are also characterized with high interest rates. One Premier Bankcard of South Dakota even advertised a subprime credit card with a 79.9 percent APR. When applying for subprime cards, it is recommended that cardholders pay off balances each and every month.

If both options do not appeal to you, the obvious method is to wait and payoff all your standing debts while rebuilding your credit score. Doing so will give you the best options and interest rates when applying for a credit card.

How does Security Trusts Relate to Your Credit Card?

Admin — Wed, 01 Sep 2010 00:00:00 GMT

Estimates show that approximately twenty to fifty percent of all credit card accounts are sold into special trusts which are setup up by the major credit card banks.

It is most common for cardholders to not even know that their credit card accounts were sold. When their accounts are sold to special trusts, nothing will appear differently to the account holder. Their contacts and relations with the original card issuer remain basically unchanged. A call to customer service, from these cardholders, will be handled the same way as account holders of the initial issuing bank. The only difference is that all their monthly payments are directed to the trust instead of the bank. The payments are used to make principal and interest payments to investors.

Card issuers often combine together millions of card accounts. The balances for these card accounts are usually considered as assets to that bank. In some occasions, banks would sell these accounts to security trusts. Doing so will mean instant funds for the bank, instead of waiting years for those accounts to be paid off through monthly payments. Security trusts will then in turn sell the credit card receivables to large investors such as mutual funds, pension funds or other banks and insurance companies.

The capital received from security trusts are used by credit card issuers to distribute additional credit cards, keep interest rates low, and fund reward programs.

How to Manage Accumulated Reward Points

Admin — Wed, 01 Sep 2010 00:00:00 GMT

Fortunately, there are specific services out there that can help you keep track of your reward programs. Certain websites and smartphone applications can better allow you to take full advantage of these incentives. With the growing popularity of reward points, they are beginning to be more similar to currency, which should be monitored and assessed periodically. Todd Mera, co-founder of AwardWallet.com says, ""It's something that makes sense to keep track of and understand how much value you actually have in these kinds of rewards programs, setting goals for your points spending is difficult unless you know what you have.""

Most credit card issuers have websites where you can login and track your reward points. With an ID and password, you will be able to monitor point activities with the cards associated to that card company. Alternatively, there are website services that allow you to consolidate all your credit cards and track associated reward programs with a single ID and password. These reward trackers basically tell you all the reward points available to you while some provide specific services tailored to your needs and lifestyle. Reward trackers, such as AwardWallet.com, helps you keep tracking of expiring points. While others, such as Tripit Pro, is geared toward business travelers. Services, such as Points.com, focuses on providing information for you to better maximize the benefits from your points.

With todays busy consumer lifestyle, very few can find the time to evaluate how to spend their reward points to make best use of them. Points.com's president, Christopher Barnard says, ""There’s a large bulge in the middle of the bell curve that doesn't really know exactly how to maximize their participation."" He also added, ""they intellectually know there's more to be done and they could do more, and they're frustrated that they're missing out on opportunities. We offer services that assuage some of those fears.""

Although reward trackers may generally seem beneficial, not everyone finds a need for these types of services. The services only make sense if you take part in more than one rewards program. Sometimes, it makes more sense to be involved with a minimum number of rewards programs and devote your usage to those few cards. Other concern people may have with reward tracking services is security. Before signing up to one, make sure you are conformable sharing your IDs and passwords with a third party site. Although these reward tracking sites usually have a great deal of security measures, it is still something one should take into consideration.

The Proper Way to Use Credit Cards Overseas

Admin — Mon, 23 Aug 2010 00:00:00 GMT

In most instances, carrying an extensive amount of cash with you on extended overseas trips is vital. On the other hand, having a significant amount of cash with you is hardly ever a good idea in well populated areas. With is factor in mind, credit cards may be a good alternative for your purchasing needs while traveling to a different country. Besides the obvious security issues, many of today's credit cards also have excellent exchange rates and rewards incentives that can make using a credit card more attractive while taking a trip.
Despite the fact that credit cards are extremely convenient to use and will save you a bit of money in exchange rates, travelers should be aware of a few things before they begin their journeys.
If you are planning to use your credit cards extensively during a trip, you should apply for one that does not charge you a foreign exchange fee. Most credit cards will charge you two to three percent of the transaction for foreign exchange fees. Although the percentage may seem insignificant, the fee amount can really add up during your long trips. Capital One offers a great number of cards that do not charge foreign exchange fees.
When you have decided on a credit card to bring with you, you should learn to use it wisely once you are there. Issues with foreign transactions may be difficult to resolve, so you would need to know what to look for to avoid being swindled. One common ploy overseas merchants use is called Dynamic Currency Conversion. This is a service where the merchant offers to convert your transaction into U.S. dollars. While this seems beneficial, dynamic currency conversion offers should be avoided. The associated merchants will often charge highly inflated exchange rates and keep the differences for themselves. In most situations, the added expenses goes unnoticed because few will actually take the time to do the math.
Travelers should also be aware of the differences between foreign credit cards and the cards you have on hand. An example would be in Western Europe. There you would notice that their credit cards are dissimilar to the ones we use in the states. Credit cards in Western Europe uses a more advanced and secure chip technology on their credit cards versus the magnetic strips cards we use here.

Financial Obligations After Your Credit Cards Are Paid Off

Admin — Mon, 23 Aug 2010 00:00:00 GMT

With high interest credit card debts, it sometimes seems that paying off the balance should be the fundamental goal for cardholders. But in fact, there are a number of financial responsibilities one should work on even after the credit debt has been paid off. These financial matters should all be of importance to any consumer.
Emergency funds should take the utmost priority when trying to reach your goal of financial stability. The sole reason why many get into credit card debt in the first place is because the cardholders lack the preparation for the unknown. Building an emergency fund can allow individuals to deal with unexpected financial obligations without relying on loans or credit cards.

Besides Emergency funds, retirement funds should also take an important role in your financial planning. Social Security benefits are unpredictable. In fact, benefits are expected to fall twenty five percent in the next few decades. Putting a little money aside every month will allow you a financial buffer for when you reach retirement age. Having a bit of extra cash on hand will grant you a more relaxed lifestyle during those golden years.
With your credit card debt secured, you should also consider putting something aside for maintenance and upgrades. Having a fund set aside for miscellaneous items, such as change new tires on a car or upgrading your home furnace, may not be an absolute necessity, but is something beneficial to have around when needed.
Entertainment expenses might not seem to be of supreme importance when figuring out your financial plan, but having funds available for such occasions is also another step in being financially responsible. Entertainment funds do not have to involve an enormous amount of money. Simply having some spare change around for a pizza or movie can come extremely handy when the urge for it emerges.
Sooner or later, most individual will find a need to shop or purchase something. Impulse purchases are a fact of life, and everyone has fallen victim to them. A better way of dealing with this is to setup a shopping fund where you save up for the item or items you plan on buying.
Finally, one should consider setting up a vacation fund. Setting aside and saving up for a trip can keep you out of further credit card debt.

Banks Offering More Debit Cards

Admin — Mon, 23 Aug 2010 00:00:00 GMT

According to a Debit Issuer Study financed by PULSE, debit cards are growing in popularity. The study basically shows that more and more individuals are signing up for debit cards the same day when they open a bank account. According to statistics, thirty five percent of banks had offered instant debit cards with accounts in 2009. This was dramatically higher than the previous year at twenty eight percent.
The suggested reasoning behind the increase in availability of debit cards is that it provides better consumer satisfaction and security. Not long ago, it was customary for banks to mail debit cards to you in a couple of weeks instead of giving you one instantly. Banks have found that if they provided you one immediately, debit card holders were more likely to use them, therefore increasing the issuers profits.
The advantages of debit cards are fairly straight forward. With them, you would not have to carry as much cash around for your daily spending and expenditures. In addition, debit cards are ideal for those who do not qualify for unsecured credit cards. A debit card essentially works the same as a credit card, but the money is directly deducted from your bank account as oppose to credit cards.
A prepaid credit card is also very similar to a debit card. The difference is that with a prepaid card, you would need to put funds up front to pay for the transactions. A number of prepaid credit cards also allows you a credit line if you show that you are financially responsible. Prepaid cards are suitable for those with poor credit and want to re-establish their credit scores.
On the contrary, debit cards are available to anyone who has a bank account. There are certain stores that accept debit cards and not credit cards. You can also use your debit card to get bank deposits and cash withdrawals via an automated teller with a debit card after banking hours. But one should not the high fees connected with debit cards and their use with automated tellers that are outside the associated banks. It is important for cardholders to find out the fees that can be applied before they get or use a specific debit card.

When You Should Consider A Balance Transfer Credit Card

Admin — Mon, 23 Aug 2010 00:00:00 GMT

All too many consumers are finding that they are paying a great deal in interest on their credit cards even though they have limited their spending considerably. Their previous balances are coming back to haunt them with high interest rates and monthly payments. These customers often don't know that they do have other options in the form of balance transfer cards. These cards offer them the opportunity to transfer their high interest balances to one with little or no interest for a set time frame.
Balance transfer cards can be invaluable to some while seeming pointless to others. Discussed here would be situations where balance transfer cards will be beneficial to the consumer.
If you have things you want or need to purchase but are holding back because of the high interest on your current credit card, a balance transfer may be a good option. Also, if you are finding you never use the card or your current card has expired then essentially you have nothing to lose with obtaining a new one. When looking for a balance transfer card, the goal is to find one with zero interest on balance transfers for the longest period of time possible. Balance transfer cards usually have a six to eighteen month term with promotional interest to captivate new customers.
There are several things consumers should know before signing up for a balance transfer card. To begin with, customers should know that there is typically a fee charged for transferring a balance. The fee is usually dependant on the transfer amount being a few percent. Although it seems unwise to add to your debt, the lower or lack of interest will justify the transfer fee in very little time. Just be certain that the transfer fee doesn't put you over the limit of what you are able to pay.
You would also need to be absolutely sure you can make the minimum payments each month in a timely manner. Promotional zero interest offers are most likely terminated if you do not meet this requirement. If this happens, you may be left in the same or worst situation compared to before the balance transfer.
Finally, it is important to know that the promotional zero interests apply only to the balance transfer and not to any additional debt you acquire with the card. Using the card for further purchases or cash withdrawals is highly ill-advised.

Where You Live Can Dictate How Many Credit Cards You Have

Admin — Mon, 23 Aug 2010 00:00:00 GMT

Many are unaware of the fact that where you live can dictate what is in your wallet. A recent study has shown that, in general, Americans are using less and less credit cards for their daily purchases and transactions. But consumers who reside in more urban areas are less likely to give up their credit cards.

Due to the gloomy economy, American consumers' perspective towards credit cards and frivolous spending has altered. But how significant the change depends on where you are located, according to the new survey.

Based on data provided by Experian, whom tracks consumers credit reports and scores, the number of Americans opening new credit cards has declined approximately 26 percent compared to before the recession. Statistics from twenty major city areas showed consumers living in the area opened an average of three credit cards.

Phoenix Arizona had the fewest number of open cards, which figured to about 2.78 per person.

On the other end, New York residences opened the most number of cards. They were followed by Pittsburg, Boston, Philadelphia and Minneapolis respectively. Residences of this city all averaged more than three open cards per consumer.

Even though New Yorkers open the greatest number of cards, they do not carry the largest balances. The honor for this goes to Atlanta. Atlanta consumers carries an average monthly balance of over $6,700. Atlanta is followed by Columbus, Ohio; Minneapolis, Seattle and Detroit as have the highest average balance per consumer. According to the survey, San Francisco carried the lowest average at $5,300 per cardholder.

Study Shows Credit Card Applications Vague and Unclear

Admin — Mon, 16 Aug 2010 00:00:00 GMT

Reading the fine print on credit card applications are typically vital in making an educated choice. Important information such as introductory interest rates, details in reward incentive programs, and various fees are too often not typed in bold for consumers to effortlessly find. Even if you are able to find the information, many times they are written in such a vague language that it can be difficult to comprehend.

A study conducted by CardHub.com analyzed the online credit card applications supplied by a few of the major credit card providers to evaluate their completeness, clarity, and availability in critical information the consumer should know. The evaluation was conducted on the top ten credit card issuers based on outstanding balances. The provided applications were assessed on how unambiguous the information is based on the ease with which it can be discovered. Points were given to each card from the providers on the basis of how observable the information is within the page. Important information found in fine print text or which required customers click to a new page will see deductions in points.

Bank of America and Capital One cards were two of the highest ranked issuers based on the study. This essentially meant that their online applications were open and forthright. Customers for Capital One and Bank of America should be well aware of the terms and conditions of their cards. On the other hand, U.S. Bank received the lowest score. Conditions and important information for their products were hazy and complicated to understand. Key information for their cards also required multiple pages to browse before it is accessible.

A common downfall among all the credit cards were indistinct information in regards to non-cash reward programs. Most credit card providers do not clearly define the real worth of their points and miles associated to their rewards cards.

Significant Increase in Credit Card Transactions in First Quarter

Admin — Mon, 16 Aug 2010 00:00:00 GMT

The country of India saw an astonishing sixteen per cent increase in credit card transactions during the first fiscal quarter of this year. The fiscal figures are at Rs 16,947.86 crore.

This is significantly higher than it was two years ago. According to statistics provided by the Reserve Bank of India, credit card transactions during the same period in 2008 and 2009 were at around Rs 14,611.66 crore.

The increase in transactions cannot be attributed to a rise in credit card circulation within the country. The number of credit cards have decreased seventeen percent, from 2.28 (during the same period the previous year) to 1.89 as of June 30th.

In the mean time, debit card transactions throughout April and June had risen a shocking forty seven percent. During the same period the year before, debit card transactions were at Rs 5,480.62 crore. Currently, it is at Rs 8,064.50 crore.

Drastic increases in debit card circulation can be accredited to the increase in transactions. As of June 30th, the number of debit cards in the country has risen thirty one percent from 14.64 crore in 2008 and 2009 to the present day number of 19.19 crore.

Interest Rates for Credit Cards Fall Three Weeks Consecutively

Admin — Mon, 16 Aug 2010 00:00:00 GMT

According to CreditCards.com Weekly Credit Card Rate Report, new credit card interest rates fell for the third consecutive week in a roll. This is primarily due to Capital One's lowering in APR for one of their card offerings.

The current national median annual percentage rate dropped to 14.34 percent. Urging the decline, Capital One reduced the interest rate for its Venture One Rewards card to 13.9 percent from the previous 15.9 percent. Pam Girardo, spokeswoman for Capital One, attributed the adjustment to changing market conditions and growing competition.

Market analysts speculate the move as an effort to attract more low risk customers. Keith Davis, research analyst with Farr, Miller and Washington in D.C. said, "you've got everyone going after the prime and super prime customer and that's causing some price competition."

Even with the recent decline in interest rates, APRs are still generally higher compared to years before. The current downward trend cannot be attributed to the Federal Reserve. The Federal Reserve have declared plans to leave key lending rates untouched on Tuesday. They also suggested that due to the mediocre economy, federal funds rate will likely remain unchanged for an extended period of time. The federal funds rate directly impacts the nations prime rate so no significant variations of the prime rate is anticipated. A majority of credit cards offered to consumers are variable rate cards. The APRs are coupled to the prime rate so consumers can expect them to remain fairly constant for the time being. This is unless cardholders are not financially responsible with their accounts.

"It's pretty clear things have slowed dramatically, " Davis commented on the economy. For this reason, the Federal Reserve will most likely not raise rates in the near future. APRs should remain stable for cardholders. Davis added, "The only increase in pricing on the credit card side would be on customers that present more of a credit risk."

Study Evaluates Online Credit Card Applications

Admin — Mon, 16 Aug 2010 00:00:00 GMT

Often when looking for a new credit card, you would need to spend a significant amount of time reading the fine print. A new CardHub.com study shows that this is a necessity for some card providers.

The study basically examines the online applications provided by the top ten credit card companies and compares them for simplicity and straight forwardness. This is done by assessing the ease in locating certain critical information on the applications for up to two rewards and two non-rewards credit cards for each provider. Information on introductory and standard interest rates for purchases and balance transfers, annual fees and balance transfer fees, and how rewards are earned and redeemed are all central factors the researchers evaluate.

Points are given on how observable the information is portrayed and whether finding it involves clicking to a separate page or reading the fine print.

The results of the CardHub.com study concluded that Capital One and Bank of America, respectively, had the most straightforward online credit card applications. U.S. Bank was ranked the lowest by researchers. Applications from U.S. Bank were found to include difficult to find details about annual fees, interest rate information, and balance transfer fees.

A U.S. Bank spokeswoman responded to the report, "we believe that we have built a site that is easy to use and provides our customers clear and accurate information for them to make informed choices. U.S. Bank values feedback from consumers and members of the Web community, and will consider CardHub’s viewpoint in ongoing reviews of our Web channel.”

Another important conclusion derived from the study showed most credit card applications were generally clear and concise in regards to annual fees and reward incentives. However, most were vague in showing the cost of balance transfers.

For the moment, some applications choose to use vague terminology like "up to" or "as low as."

According to the study, applications also failed to clearly disclose how much rewards were worth. A CardHub.com researcher added, " it reinforces our opinion that cash back credit cards are the best type of rewards credit cards available.”

Halifax Easy Rate Credit Card Reviewed

Admin — Mon, 16 Aug 2010 00:00:00 GMT

A common trait shared among credit cards today is a high interest rate. On the average, credit card APR's are approximately 16.9%. For those in search of a card with lower rates, one can consider the Halifax easy rate credit card. The Halifax card is marketed at a significant lower than the median rate, at 10%. This can be very beneficial for those who will usually pay interest on their cards. The same 10% rate is applicable to both cash purchases and balance transfers.

Those who have a good credit score can even take advantage of their promoted APR of 6.9%. For those individuals who do not qualify for this lower rate, and APR of 10.9% and 12.9% is also available. This is still considerably lower than the national average APR.

Balance transfers for the Halifax easy rate credit card is also free of charge. Once the card is used for additional purchases, no interest will be charged if the balance is paid off in full every month. If you happen to be late in your payment or exceed your credit limit, the low APR will be reverted to the standard Halifax variable rate.

One should note that the cards lower 6.9% rate does not apply to cash advances. Cash advances for the Halifax easy rate credit card is at 27.95%. This card is not recommended for cash withdrawals because of its high APR.

Other charges and fees for the card seems standard. Late payments, over limits, and returned payments are each charged a fee of twelve pounds. Halifax's terms and conditions for the card also states that the card can be suspended due to late or over limit payments. A rate of 2.95% is charged for foreign commission fees.

The Halifax easy rate credit card is ideal for those who simply want a lower than average interest rate credit card. For those looking for a card for balance transfers, there are better alternatives available out there.

Government Law Brings Fairness to Credit Card Policies.

Admin — Wed, 11 Aug 2010 00:00:00 GMT

Credit card companies are rolling out a set of policy changes this month in response to growing government regulations forcing a greater deal of transparency in the way they do business. Due to the enactment of the Credit CARD Act of 2009, consumers will most likely benefit from the restrictions limiting credit card rates and fees and the increase in disclosures from their card provider. Chairman and co-founder of Credit.com, Adam Levin says, ""institutions are going to be forced to become more accountable to consumers.""

Though many remain optimistic of the bill, there are still some negative aspects consumers would need to contend to. The lost revenue caused by the bill will most likely be offset by credit card companies in the form of increased interest rates and higher or additional fees.

The Credit Card Accountability Responsibility and Disclosure (CARD) Act requires banks to provide more disclosures in their agreements. The CARD Act mandates card companies to provide their customers with 45 days advance notice before any modifications to their fees, interest rates, or other significant changes are made. Billing statements must now include a table that outlines how long it will take to pay off a balance if only the minimum payment is made each month. This information must also include the cost of total interest as well as estimate the monthly payment required to pay down a balance in three years. In addition, the CARD Act will warrant consumers a free credit score report if they are ever denied a credit card or mortgage.

The CARD Act has also placed some restrictions in regards to payments and fees. From the time of February, credit card issuers have been required to deliver your bill at least twenty one days before your payment is due, and due dates must remain the same day each month. Any payments received must also be applied to the balance with the highest interest rate. The automatic enrollment of overcharge programs has also been prohibited by the law. Beginning late August, late fees cannot be over the amount owed. Due to the CARD Act, inactivity fees will also be abolished and application fees and annual fees will be restricted.

Besides disclosures and fee restrictions, interest rates will also be regulated by the Credit CARD Act. No longer may credit card companies raise interest rates within the first twelve months an account is open. After the initial twelve months, they may raise your rates only on future purchases so all previous balances will be charged the same lower rates.

Study Shows Credit Cards Being the Reverse Robin Hoods of the Financial World

Admin — Wed, 11 Aug 2010 00:00:00 GMT

A new study conducted by Scott Schuh, Oz Shy, and Joana Stavins shows credit cards are essentially taking money from the poor and giving it to the wealthy.

The Public Policy Discussion Papers come at a time of revolutionary changes within the credit card industry. New laws governing credit card companies has forced them to rethink their current methods of fees, interest rates, and money collection. Most of these new regulations are aimed at consumer protection and the abolishment of immoral practices used by big banks and card issuers.

The study states that the average American household that uses cash for their expenditures basically gives $151 annually to those households that primarily uses credit cards. In the mean time, cash paying households are giving $1,482 a year to those who use credit cards. The study labels this phenomenon as "regressive transfer" and is principally in existence due to a lack of knowledge.

“The typical consumer is largely unaware of the full ramifications of paying for goods and services by credit card,” and is unaware how the fees merchants pay to offer payment by credit affects the setting of overall prices, the paper said.

The disadvantage of this system is that it simply increases purchase prices for those who you cash instead of credit cards. The study indicates the percentage of American households using credit cards remain at a steady seventy five percent. But because consumer spending has increased fifteen percent in the last twenty years, merchant fees have increased dramatically as well.

The imbalance is further complicated by the abundance of reward programs for credit card users. Those who tend to use case will not reap any benefits from these programs.

The research also showed no deliberate intentions from the credit card companies to penalize those who don't use their products. “We do not allege or imply that banks or credit card companies have designed or operated the credit card market intentionally to produce a regressive transfer from low-income to high-income households,” the paper said.

The ultimate solution to this problem stems from government regulations, implied the authors of the report. With more transparency in information in regards to merchant fees, consumers who pay cash may be more knowledgeable about its impact on them. Also, regulations allowing merchants to have separate pricing on cash or credit purchases can also even out the playing field. Most credit card companies are currently allowed to forbid this practice.

How to Put Your Store Credit Cards to Good Use

Admin — Wed, 11 Aug 2010 00:00:00 GMT

For those who love to shop, store credit cards can get you into a lot of trouble. Proprietary credit cards, which you can only use with the same company, typically carries appallingly high interest rates.

President of Financial Focus, LLC, Michael Kay comments, "typically the interest rates on store cards are horrendous." Store cards like those offered by Bloomindales, Neiman Marcus, Nordstrom has an APR well over twenty percent. High interest rates are not limited to luxury stores. Stores such as GAP and Macys are 22.99 percent and 24.50 percent respectively. According to CreditCards.com Credit Card Rate Report, most proprietary credit cards carry an APR well over the national average of 14.44 percent.

But they are not all bad. When used properly, store credit cards can have really good incentives. Here are some tips to better take advantage of your store credit cards.

The most important thing to know when signing up for a store credit card is to understand exactly what you are getting into. Todd Mark, vice president of Consumer Credit Counseling Service of Greater Dallas suggests, "if you didn't go out with the intention of 'I'm looking to open a credit card today,' don't impulsively do that." Before you fall for the salesperson's attractive offers to get a new credit card, ask them the specifics. Knowing the cards APR, annual fees, zero percent interest period, etc. will give you a better outlook on the situation.

Many store cards will offer you heavy discounts with your first purchase. In many cases, it is more beneficial to the consumer if they find ones that offer continuous savings rather than one big discount with a single transaction. For example, store cards offered by Gap, Banana Republic or Old Navy gives you ten percent off on Tuesdays at all three stores. You should also compare the incentives with your regular credit card to see if the store cards is actually worth getting.

The most important thing you need to do with store branded credit cards is to pay off the complete balances every month. If you are unable to do so, you should consider not using the card. In most instances, the high APRs associated to store credit cards will offset all the discounts and rewards you can get with the purchases.

Finally, you should fight all temptations given to you by store employees when they offer you attractive incentives for signing up for the card. Kay comments, "there's plenty of point-of-sale incentives that make the shopper likely to make bad decisions." He also adds that most store employees get bonuses for signing people up for their store's credit cards. It is always important to know the specifics of the card before making the right financial decision.

Why Store Credit Cards May Not Be The Best Option

Admin — Wed, 11 Aug 2010 00:00:00 GMT

Almost every large clothing and department stores today offer self branded credit cards to their customers. Most promises significant discounts on the first purchase or interest free credit for a predetermined amount of time to persuade customers to sign up for the store card. No matter how tempting the offers may seem, consumers should be aware of the usual high fees and interest rates associated with many of these cards. Some disadvantages of store credit cards, or private label cards, will be discussed here.

The first thing one should consider when taking up an attractive offer from these private label cards is that the incentives usually comes with the same conditions found with regular credit cards. For example, the promised discounts or interest free deals typically are only applicable if you make all the payments in a timely fashion. If a payment is late, the cost of the offers may be reinstated back into your card again, thereby eliminating the initial advantage of signing up for the card. In reference to the periodical interest free offers, the full charge interest charges will be put back on your bill if you don't pay off the full balance within the given time frame.

Another thing consumers should be cautious about is the high fees or interest rates usually associated to store branded credit cards. Interest rates for these cards are frequently several percent higher than regular bank issued cards. If you are the few American consumers who pay off their full balances on time every month, this may not be an issue. Even if you are one of these individuals, store credit cards will generally have a lower credit limit than traditional cards, which range from a few hundred to a few thousand dollars. In brief, even financially responsible consumers will see very little advantage with private label cards over the traditional bank issued credit cards.

Lastly, signing up for any new credit card will negatively impact your credit score. Although the effect is typically minor, knowing this may be very important to some. Since a credit rating can greatly impact your chances of employment, renting an apartment, or obtaining a loan, one should deeply consider if the offers given justifies the unfavorable effect on your credit score. Lower credit scores can also mean higher interest rates on mortgages or loans.

Before taking up an offer, one should carefully consider two things. Are the incentives worth the it? And do you really need another credit card?

Cell Phones Will Not Replace Your Credit Card

Admin — Wed, 11 Aug 2010 00:00:00 GMT

In the not so distant future, you may be able to make purchases by simply waving your cell phone in front of a payment terminal. This may eliminate the need of carrying a wallet entirely.

Although you can marvel at the technological spectacle, much of the policies associated with the modern day credit cards should remain the same. Aaron MacPherson, IDC Financial Insights practice director for payments and security said, "Visa and MasterCard are so universal at this point that the barriers to entry for any new payment system are almost insurmountable." Consequently the interest charges, fees, and markups associated to credit card consumers will continue on smart phones.

Card companies usually charge merchants interchange fees with every credit card transaction. These fees are approximately three percent of the purchase price. These costs are typically passed on to the consumer in the form of higher prices. Unfortunately, using smart phones to replace credit cards will not eliminate these practices.

With a hopeful perspective, the switch from plastic cards to phones might seem to be a good opportunity from other companies to step in and undercut the three percent rate. Since using a cell phone simplifies the transaction greatly, it seems unjustifiable for credit card companies to charge such a large amount on very little effort. But besides the effort required for credit transactions, there remains a fundamental cost of running a business. For this reason, the middle men that may overtake the credit card company's responsibility may still have to charge a certain percentage for transactions with a phone.

So in reality, if phones were to replace plastic, consumers will have to deal with more middle men and their subsequent fees and charges. In addition, the larger credit card companies carry a significant advantage in the industry. With their overriding size and experience, their speed, reliability, and security will most likely be unmatched.

“People tend to underestimate the network effect: A payment system is exponentially more valuable the more people participate in it,” said MacPherson, adding that competing with Visa and MasterCard is nearly impossible, “unless you can find a niche that the card companies are not serving, like PayPal did with eBay. Even PayPal, now, is usually just a conduit for a card or a checking account.”

Avoid Paying Common Fees

Admin — Wed, 11 Aug 2010 00:00:00 GMT

Even as some fees are necessary for credit card companies and banks to make a profit, many of the reasoning behind the fees can be ludicrous. Although many of today’s consumers recognize this, many do not take advantage of the loopholes available for them to avoid these fees. Here are some of the fees consumers can avoid paying with minimal effort.

In recent times, many banks are beginning to charge account holders an account fee. Many are seeing $15 monthly fees for simply having a checking or savings account with these banks. Other banks require a minimum balance to the account if you want to avoid or have a discounted account fee. Fortunately, the internet has created a lot of competition among banks. If you don’t like paying for the account fees for your current bank, you can simply shop around for ones that do not charge this fee. If you are satisfied with your current bank and would not like to change banks, you can simply contact them to see if they are willing to forgo or discount the fee. If you are a long-time customer, they are usually willing to negotiate rather than lose you as a customer.

Transfer fees for overdraft protection are also a very common fee people can avoid. Credit cards or savings accounts are typically connected to a user’s checking account. If any of these accounts are overdrawn, the bank might automatically transfer funds from a different account to avoid a bounced transaction. Bounced transactions are usually charged $35 and are a great source of profit for banks. Transfer fees range from $10 to $20 per transaction and are also a very profitable source of revenue for banks. A good way to avoid transfer fees is to keep track of your current balances. Many banks provide services that automatically notify you via email or text messages in the event your account falls below a certain amount. Other online services such as Mint.com can better help you track your spending and available finances.

Due to recent government regulations on the credit card industry, card issuers are finding new ways to compensate for revenue losses. Reward reinstatement fees are one of these changes. Rewards credit cardholders are now punished for late payments by having their reward points for that month taken away from them. The rewards points can be reinstated by paying a fee that ranges from $15 to $30. To avoid paying this fee, the solution is fairly straight forward; pay your bills on time. Automatic payments can be established online to help you avoid late charges. Paying close attention to your due date and taking precaution to mail out your payments on time can also avoid late payments. If you have already lost your points, figure out if the lost points are actually worth the cost of the reinstatement fee.

Besides credit card companies, airlines are also trying to make up for lost profits. Luggage and plane fees are charged for checked luggage, pillows, and even headphones. Luggage fees can range from $15 to $45 for the first bag and $25 to $35 for additional bags. Certain airlines like Southwest Airlines and JetBlue do not charge luggage fees. If your travel requires a different airline, try to limit your baggage. Certain rewards clubs or frequent flier rewards can also offer you discounted or waived luggage fees. You can also consider mailing your luggage through a postal service in advance for longer trips.

Will Capping Credit Card Fees Benefit Consumers?

Admin — Wed, 11 Aug 2010 00:00:00 GMT

According to a report from the Boston Federal Reserve Bank, credit cards have a tendency to help the wealthy and be detrimental to the underprivileged. The study basically showed that households earning more than $150,000 a year earned an average of $756 in cash back and incentives for using credit cards. On the contrary, those earning $20,000 annually paid an average of twenty three dollars a year in fees.

One of the primary reasons for this discrepancy is the credit card fees charged to retailers. Interchange fees are usually compensated by the price of the goods sold. And because the poor are more likely to use cash for their purchases, they are essentially paying for the credit card fees without reaping the benefits and rewards of using a credit card. Once more, wealthy consumers are twenty percent more likely to get credit card incentives from banks compared to lower income buyers.

Since Congress has already passed legislation that will limit these interchange fees for debit cards, there are arguments from both sides debating the advantages of doing the same for credit cards.

The report's co-authors Oz Shy, Scott Schuh, and Joanna Stavins commented, “Eliminating the merchant fee and credit card rewards (together) would increase consumer welfare.” Neither the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act nor the recent financial overhaul bill, signed into law the previous week, accomplishes this.

Not everyone is as optimistic about a proposal to cap credit card merchant fees. “You would still not see a reduction in prices, retailers would most likely pocket that money because it would be extra money for them,” says Bill Hardekopf, CEO of LowCards.com, an online credit-card site for consumers based in Birmingham, Ala. “It might help retailers significantly, but wouldn’t help consumers very much.” Also, Mr. Hardekopf does not believe the rewards programs are fundamentally funded by interchange fees.

Prepaid Credit and Debit Cards Impact On Your Credit Score

Admin — Wed, 11 Aug 2010 00:00:00 GMT

When looking at card advertisements, the promise of no overdraft fees, over limit fees, interest charges, or penalty fees can look very tempting. Often such claims are given to prepaid debit or credit card offers. But in reality, these claims are merely stating the obvious. These are the primary traits of a prepaid card and are not specific to any card issuer.

Other claims, such as ‘certain approval’ or ‘no credit check’ are also obvious aspects of prepaid credit and debit cards. Since prepaid cards require you to have the specific finances available, it is sometimes difficult to call it a credit card. You are not essentially borrowing any money from the banks, but labeling it as a credit card is more attractive to a society at large.

Prepaid cards are also sometimes tempting to consumers who have had credit problems. Most prepaid card issuers do not report to the credit bureaus. Because you are basically spending money you already have, there is really nothing to report. However there are some prepaid cards available that can help build your credit. This feature is sometimes very useful for those who want to start building credit but cannot do so by conventional ways.

It is estimated that a quarter of Americans have never used credit. These individuals usually pay for their monthly expenditures in a timely fashion without anything negative being recorded on their credit scores. But these consumers also have nothing positive to note on their credit as well. Without a credit history, it can be very difficult for these individuals to obtain a loan or apply for a mortgage. Having no credit can be just as unbeneficial as having bad credit.

Prepaid cards that report to the credit bureaus usually report any activity to PCBR. Card holders will typically establish an online bill paying system linked to the prepaid card. Prompt payments of bills will be recorded with PCBR. The FICO recognized bureau can help those who have difficulty obtaining credit.

Some cards that provide this service are the Eufora, Ready Debit Visa, and Account Now prepaid cards. Consumers should be aware that, besides some exceptions, the majority of prepaid cards will not report anything to the credit bureaus. If your soul purpose is to establish or rebuild credit, a secured card would be a much better option.

Safer Online Shopping with Prepaid Cards

Admin — Wed, 04 Aug 2010 00:00:00 GMT

Having your credit card stolen or dealing with fraudulent transactions can be a pain and time consuming. Though most credit card issuers offer zero liability policies in regards to fraudulent card activity, the effort it takes to contend with the issue is very inconvenient and time consuming. A good way to avoid this mishap is to use prepaid debit cards while shopping online.

According to Symantec, a web security firm, selling stolen card information online is all too common. A security theft report showed that credit card information was the most frequently advertised item for auction on underground economy servers. This accounts for an astonishing twenty eight percent of all goods and services advertised on the internet and is a 17 percent increase from before.

Buyers of this information pay an average range of $1 to $30 per card number. The factors dictating the end cost of this information is the type of card given, the country of origin, and the amount of available personal information which is included along with the card number. Other information sold within the underground economy includes bank accounts which makes up twenty four percent of the advertised goods. Each account is priced around $10 to $125.

The Federal Trade Commission confirms that identity theft is the fastest growing form of fraud in the U.S. While credit card fraud is the most common form of identity theft.

Using a debit card is an easy way of avoiding all the security risks. Most prepaid debit cards carry the same zero liability protection as regular credit or debit cards. Contrary to regular debit cards, which are linked directly to your checking account, with prepaid debit cards, only the amount of money you deposit the account can be lost or stolen. Additionally, you can have multiple prepaid debit cards and assign specific uses for each of them.

The drawback to using prepaid cards is the monthly and usage fees associated to them. Although this is so, there are a great deal of prepaid debit cards out there that have extremely low fees. The amount of fees you would need to pay might seem insignificant compared to the problems associated to stolen credit cards.

Visa Reports Better Than Expected Earnings

Admin — Wed, 04 Aug 2010 00:00:00 GMT

Visa Inc is the world's largest credit card processing network. On Wednesday, they've reported quarterly profits exceeding analysts' expectations. But due to stringent government regulations limiting processing fees, future profit estimates are less bright.

Visa's Chief Financial Officer believes we are in the midst of a economic recovery and the probability of another recessions is low. Visa's shares increased slightly after posting its earnings results.

Based in San Francisco, Visa estimated a 23 percent increase in revenue from a year before. Increases in travel and consumer spending with their debit and credit cards are the fundamental reasons for Visa's revenue increase. Visa's revenue is estimated to being approximately $2.0 billion.

But Visa predicts troubled waters ahead. With the implementation of the Dodd Frank law, the company's profits can be severely reduced due to caps in debit processing fees. The law "will reshape the U.S. debit landscape," Chief Executive Joseph Saunders told analysts on a conference call on Wednesday.

Visa is number one in the U.S. debit processing market and may be impacted by the law more deeply than its rival MasterCard Inc. Saunders denied releasing actual numbers on the projected impact of the regulations. The Federal Reserve still needs to finalize the method to which these interchange fees will be limited.

After the signing of the law last week, Saunders said, "our business should not begin to feel the effects of the legislation until this time next year, I expect the impact will be modest and contained to our fourth fiscal quarter."

Investors were less optimistic, fearing the new law would open the door to more destructive regulations of interchange fees. Many merchants have welcomed the new law limited the fees, which they pay to banks every time a credit transaction is made.

News of Visa's hopeful earnings may actually backfire on them. Show good earnings in a lackluster economy might give lawmakers a justifiable cause for implementing even firmer restrictions to the industry.

Besides hopeful earnings, Visa also reported a 13 percent growth in payment volume in the quarter ended in March compared from a year earlier. Cross border volume growth was 17 percent for the quarter ended in June. This is a good indication that consumers are spending more money on travel.

Overall, Visa remains cautious in its predictions. "Overall, our view is that we are in recovery. What we're seeing on balance suggests ... (a) lower probability of a double dip than what we might have suspected a quarter ago," Chief Financial Officer Byron Pollitt said. "But we also believe that the recovery is going to be protracted."

Jump In Consumer Card Spending Increased Visa Profits

Admin — Wed, 04 Aug 2010 00:00:00 GMT

Visa Inc. posted earnings surpassing Wall Street estimates for the fiscal third-quarter. Visa Inc. is the world's largest payment processing network and has reported better than expected earnings for the last ten consecutive quarters. This is primarily due to an increase in consumer spending with credit cards.

Visa had reported a net income of $716 million for the three months ending in June 30, or 97 cents a share. This is slightly lower than the $729 million earned a year earlier. But this still outperformed early estimates predicting earnings of approximately 93 cents a share.

The forecast for next year's performance is less optimistic. With the Federal Reserve implementing new credit card regulations aimed at Visa and MasterCard, Chief Executive Officer at Visa, Joseph W. Saunders, will have his work cut out for him. The new regulations will limit interchange fees, which is a huge source of the company's profits.

Saunders commented, "while it is too early to fully and accurately gauge the impact of the legislation, Visa has demonstrated an ability to manage our business through periods of change."

Both Visa and MasterCard determines the interchange rates which in turn is passed over to card issuers such as Bank of America Corp, Citigroup Inc., and JPMorgan Chase & Co. The new legislations is expected to reduce annual interchange fee earnings to Bank of America by as much as $2.3 billion.

An analyst with Moody's Investors Services, Stephen Sohn said, "banks could seek to renegotiate their contracts with Visa and MasterCard to share the economic pain associated with lower interchange fees, which would potentially threaten a major revenue stream."

These contracts are the largest source of revenue for Visa and MasterCard. They account for 46 percent of the net revenue for Visa. This equates to approximately $3.17 billion. Interchange contracts for MasterCard make up 47 percent, or $2.38 billion, of their profit.

Visa reported the number of transactions rocketed 14 percent to 11.7 billion.

“The global shift from cash and checks to digital currency is a powerful force that continues unabated, providing tangible benefits to consumers, merchants, and governments worldwide,” Saunders said.

That trend may mitigate the cost of the legislation, Sohn said.

Mixed Reviews on Federal Credit Card Agreement Database

Admin — Wed, 04 Aug 2010 00:00:00 GMT

With the development of the Credit CARD Act of 2009, many consumer advocates were ecstatic of the idea of creating a database for credit card agreements. Many were overjoyed with the promise for consumers to be able to instantaneously view their own credit card contracts and compare them to terms of prior applications.

However, with the database now established and already running for a few months, opinions of the established system is lukewarm at best.

Although experts concede that the vast amount of information available is impressive, many are less reluctant to believe the information will benefit a majority of consumers. Some believe the shear amount of information will overwhelm most consumers making the database beneficial to only advocacy groups.

Linda Sherry, director of national priorities for Consumer Action states, "it's perhaps not that useful for the average person who wants to compare credit cards." "As a researcher, it's wonderful to have all this data in one place," she adds.

Chi Chi Wu, staff attorney for the Boston-based National Consumer Law Center, agrees. "I don't think it's meant to be a tool for comparison shopping," she says. "This is probably more useful for advocates and researchers, or if someone can't find their card agreement."

There are some aspects of the database which they've done well. The layout generally makes it obvious on what you're able to do and how you go about doing it. The associated site layout is apparent and organized. Files are openly available in both text and PDF format, allowing easy access and search capabilities. The site also makes it possible to search your credit card company's regulator, making it easy to file complaints if necessary.

One of the major drawbacks of the database is its labeling of the information. Credit card agreements are organized by issuer name. And since most issuers will have numerous card agreements, it is difficult for consumers to find the agreement relating to their card. Other problems include text files which contain strange characters and peculiar formatting. But experts speculate that this issue can be easily resolved with a simple filter prior to posting.

Where to Hide Your Credit Cards

Admin — Wed, 04 Aug 2010 00:00:00 GMT

According to statistics from Experian, the average American consumer has more than ten credit cards in his or her possession at any one time. Most do not carry all the cards with them and usually leaves some at home where they are prone to theft.

Alexis A. Moore of Survivors in Action comments, "Consumers often leave one or two cards at home to avoid a bulging wallet or the temptation of using them on an impulse purchase."

"There's a trick to keeping the cards you're not carrying safe from prying eyes and would-be identity thieves," says Joel Ohman, an identity theft expert. "If you don't keep your credit cards in a locked, fireproof safe, forgo places like medicine cabinets, the freezer and your underwear drawer. Experienced criminals know those common hiding spots for valuables," he adds.

Listed are some of the suggested places on where to store or hide your credit cards at home.

A clever and effective way to store your credit cards is in a mislabeled envelope. Simply obtain a shipping envelope from your local post office or FedEx station, place all your unused credit cards in it, and label the envelope with something less appealing to thieves.

Placing stored credit cards underneath drawers is also another way to mislead unsuspecting burglars. Thieves might usually rummage through the contents or your drawers but will rarely look underneath them. Again, place your credit cards in an envelope and simply tape them underneath a selected drawer.

Credit cards that you don't use as often can simply be placed in a shoebox near the back of a closet. You can also tape the cards to the soles of a pair of shoes you rarely wear. Just take caution in remembering not to donate the particular shoes to charity. Again, labeling the shoe box with something benign is always a good way to remember where you've hid them.

Some security experts also suggest storing your credit cards in books. You can insert one or all of them between the jacket cover and the cover flap of your favorite book. Just take note that if you do decide to store your cards in multiple books, there is a good chance you would forget where you've placed them.

Yet another elegant approach to storing your credit cards is within your picture frames. Credit cards can easily be hidden behind a picture in a photo frame. This method is beneficial because you would have fairly easy access to them if you ever decide to use the card.

Chase Adjustments - Source of Interest Rate Increase

Admin — Wed, 04 Aug 2010 00:00:00 GMT

The median interest rate on new card offers increased slightly this week due to Chase's change on its Slate card offer.

Chase increased its Slate card offer from a variable 11.24 percent and 22.25 percent to 13.24 percent and 22.24 percent. The change triggered an increase in the national APR average to 14.44 percent. The change follows a growing trend for credit card companies to increase rates to offset recent revenue losses.

The Federal Reserve has stated, "reporting on credit standards continued to note that lending standards remain restrictive." In general, banks have increased interest rates and constrained lending practices to safeguard themselves from possible revenue losses.

On a brighter note, new earning reports for credit card companies have shown a decline in credit card payment delinquencies. In a report by CardWeb.com, payment delinquencies for credit cards decreased to 4.66 percent with major card issuers. CardWeb.com said, "Overall card delinquencies fell more than half of one percent to 3.88 percent from 4.39 percent of all accounts, which is below the 15-year average (3.93 percent)."

Market analysts speculate that the worst for the credit card companies are over. Even with concerns about a double-dip recession, rates for uncollectable loans are not expected to increase as dramatically as it did in the early onslaught of the recession. "The negative consequences of a double dip would not be significant for credit card charge-offs because even if the unemployment rate increased to 14 percent from 10 percent, credit card charge-offs would peak at around 10 percent," Moody's writes. "This result contrasts with the long-observed correlation between the unemployment rate and credit card charge-offs."

Historically, statistics have shown that unemployment rates are a determining factor in revenue loses for banks. This is simply due to the fact that borrowers are unable to pay their loans without a steady income. But due to tighter lending policies, improved quality of card portfolios, and reduced household debt levels a double-dip recession may not be as impactful.

Undisclosed Default Rates from Bank of America

Admin — Wed, 04 Aug 2010 00:00:00 GMT

Even with growing government regulations restricting the immoral practices of credit card companies, many Bank of America customers will find it difficult to know the actual cost of their loans.

Bank of America has decided to stop disclosing default rates in its credit card agreements. Default rates are usually higher interest rates that credit cardholders can expect to pay if they are late in their payments or in violation of the credit card terms. Although this is in direct defiance of the Credit CARD Act of 2009, Bank of America has continued with this course of action.

This concealment of information can be unbeneficial to cardholders. In the current state of economy, consumers need to be growingly aware of their financial obligations. Nick Bourke, director of the Pew Safe Credit Cards Project said, "When people are seriously distressed, it's important that they have a sense of what their rights are and what they can expect to pay." He also added that the practice of nondisclosure is "a troubling new penalty rate trend ... that is undermining the transparency of the market."

Bank of America's justification of their actions is that they simply don't have a specific default rate. Bank of America spokeswoman, Betty Riess says, "because we review accounts individually, we don't have a set penalty rate." She continued to clarify that any late payments or violation of terms will prompt an account review for the particular cardholder. If a decision is made to increase a customer's annual percentage rate, "we provide the customer with advance notice of a penalty rate increase and clearly state what the new rate will be -- and the customer has the opportunity to opt-out and close the account." She also adds, "we also disclose in the 'clarity commitment' each customer receives and in our terms and conditions posted online that, if an account becomes 60 days or more past due, we may increase the interest rate."

The ambiguity comes with the limit to which to APR can be increased for cardholders who are in violation of their conditions. Since there are no limits governing bank-issued credit card APRs, the extent to which these rates can be increased are without constraint. Data have shown that some APRs can be as high as 30 percent.

While the Federal Reserve has not commented on Bank of America's actions as being in violation of any regulations, they did emphasize the Truth in Lending Act which mandates the disclosure of any default rates. According to the Federal Reserve, " the amount of any late payment fee and any penalty APR that could be triggered by a late payment must be disclosed in close proximity to the due date."

There is a growing concern for this trend of nondisclosure. Consumer advocates argue that cardholders are missing a vital piece of information when making financial decisions based on their credit cards. Nick Bourke, director of the Pew Safe Credit Cards Project commented, "it's unusual from where I sit to see an issuer no longer disclosing a maximum rate."

Currently, Bank of America's lack of disclosure are not seen among the other major banks. "It's not the norm. We haven't been seeing other banks follow suit," Bourke says. "But of course, Bank of America is such a large player that it's pretty significant when you see them doing that."

Reward Trackers and Reward Points

Admin — Mon, 02 Aug 2010 00:00:00 GMT

Credit card incentives and rewards programs are attractive commodities when choosing a card. But keeping track of all the reward programs can be tricky. A 2009 study by Colloquy, shows the median U.S. household belongs to 14 loyalty programs, while only actively paying attention to six. In many cases, reward points can expire. This will eliminate all the advantages of having a rewards card.

Fortunately, there are specific services out there that can help you keep track of your reward programs. Certain websites and smartphone applications can better allow you to take full advantage of these incentives. With the growing popularity of reward points, they are beginning to be more similar to currency, which should be monitored and assessed periodically. Todd Mera, co-founder of AwardWallet.com says, "It's something that makes sense to keep track of and understand how much value you actually have in these kinds of rewards programs, setting goals for your points spending is difficult unless you know what you have."

Most credit card issuers have websites where you can login and track your reward points. With an ID and password, you will be able to monitor point activities with the cards associated to that card company. Alternatively, there are website services that allow you to consolidate all your credit cards and track associated reward programs with a single ID and password. These reward trackers basically tell you all the reward points available to you while some provide specific services tailored to your needs and lifestyle. Reward trackers, such as AwardWallet.com, helps you keep tracking of expiring points. While others, such as Tripit Pro, is geared toward business travelers. Services, such as Points.com, focuses on providing information for you to better maximize the benefits from your points.

With today's busy consumer lifestyle, very few can find the time to evaluate how to spend their reward points to make best use of them. Points.com's president, Christopher Barnard says, "there's a large bulge in the middle of the bell curve that doesn't really know exactly how to maximize their participation." He also added, "they intellectually know there's more to be done and they could do more, and they're frustrated that they're missing out on opportunities. We offer services that assuage some of those fears."

Although reward trackers may generally seem beneficial, not everyone finds a need for these types of services. The services only make sense if you take part in more than one rewards program. Sometimes, it makes more sense to be involved with a minimum number of rewards programs and devote your usage to those few cards. Other concerns people may have with reward tracking services is security. Before signing up to one, make sure you are conformable sharing your IDs and passwords with a third party site. Although these reward tracking sites usually have a great deal of security measures, it is still something one should take into consideration.

Denied a Credit Card Because Your Credit Score is Too High?

Admin — Mon, 02 Aug 2010 00:00:00 GMT

Many do not know that in rare circumstances, having a high credit score might give you difficulty in obtaining a loan. Here are some of the reasons why.

As bizarre as it may sound, credit card companies may deny excellent credit customers simply because they may not be as profitable as cardholders with poor or mediocre credit. A good example of this would be the Gander Mountain Company's lawsuit against World Financial Network Bank in June 2010. The lawsuit was brought upon when World Financial denied all credit cards to Gander Mountain customers. Most of these customers had FICO scores as high as 800. World Financial explained their actions by simply suggesting that they were not earning a profit from these account holders.

Credit card companies profit from consumers in three primary ways. These are the interest payments on accounts that carry standing balances, the penalty fees obtained when customers do not pay their bills on time and interchange fees. So if customers always pays off their balances every month and are never late in their payments, credit card issuers will find it difficult to reap justifiable profits. These are usually characteristic traits of people with an excellent credit score. Although credit card companies can still make a profit from high credit score customers through interchange fees, card holders with lower credit scores tend to be more profitable. Mike Simkovic, associate professor of law at Seton Hall Law School commented, "These people are more likely to carry balances and incur fees. Given that some of these customers may be paying 30 percent interest, along with penalties and fees, they can end up owing twice their initial balances in just a few years."

Given these circumstances, it is not surprising to find credit card companies not primarily targeting good credit customers. Lawless said, "there's evidence to suggest that the card companies have not encouraged people who pay on time." Recent studies have shown that consumers with a poor credit score had more credit cards with balances, compared to consumers with a high credit score. Not all credit card issuers will be as obvious as the actions of World Financial, while most companies will just not pursue these high credit score customers.

This is not to say lower credit score consumers are better off. The advantages of having a high credit score far outweighs the potential disadvantages.

Credit Card Fees You May Have Not Known Existed

Admin — Mon, 02 Aug 2010 00:00:00 GMT

With growing government regulations limiting the revenue practices of the credit card industry, many companies are looking for newer more innovative sources of revenue. This revenue is usually generated by a host of new fees to cardholders. Many of which you did not know existed. Duncan Douglass, a partner with law firm Alston & Bird LLP who specialized in cases with the credit card industry said, "There are a lot of things going on from the lowering of credit limits to switching from fixed to variable interest rates that are going that rub consumers the wrong way. These are adjustments from credit card issuers that are being made to reflect the new market reality." He also adds, " And everything hasn't shaken out yet. I think it'll be interesting to see a year from now what the fee landscape looks like, because the industry is continuing to adjust to the Credit CARD Act and Federal Reserve rules."

Some of the fees you need to be cautious about are listed here.

Foreign transaction fees
Foreign transaction fees are charged whenever a transaction involves a foreign bank. Any goods and services purchased from an organization outside of the United States will be hit with his fee. Depending on the card issuer, these fees can range from one to three percent of the total transaction. You don't necessarily have to be out of the country to get hit by foreign transaction fees. The fee can be applied to any purchases that is related to a foreign company or has associations with a foreign bank.

Reward redemption fees
Many credit card companies charge a fee for redeeming rewards such as airline miles. Some carriers wave the fees if you book your trip online and not over the phone or ticket counter. These fees can range from $20 to $50, depending on the carrier.

Activity fees
One of the regulations of the Credit CARD Act involves the prohibition of inactivity fees. Inactivity fees are charged when a cardholder does not use the card. To get around this, credit card issuers have created an Activity fee. Activity fees are charged when the cardholder does not use the specific card over a certain dollar amount in a given time period. For example, Citi cards charge a $60 fee if you don't have transactions through the card totaling more than $2,400. Depending on the credit card issuer, the fees can range from $50 - $100 annually.

Reward recovery fees
Some credit card companies, like American Express, removes customers' reward points if they are late in their monthly payments. If any of these customers wants their points reinstated, they would have to pay a reward recovery fee. While many charge as much as $29 to have the rewards restored, some won't even give you the opportunity.

Paper statement fee
Some banks are charging you a fee for their monthly paper statements. These are usually $1 a month, but Bank of America is starting to charge its customers $9 a month for paper statements.

Payment protection fees
Payment protection fees involves an optional program that suspends any finance charges if you are unemployed, ill, or have some qualifying difficulties that will inhibit you from paying off the monthly balances. The amount of the fee is dictated by how much you spend and can be fairly expensive.

Is Buying a Home Possible with Bad Credit?

Admin — Mon, 02 Aug 2010 00:00:00 GMT

Not too long ago, it was often easy for a person with mediocre credit to get a mortgage loan. There was simply a large variety of mortgage loan products available to anyone who is interested. Unfortunately, things have changed and the chances of obtaining a mortgage with a less than perfect credit score is far lower. But with the proper documentation and a bit of cash, getting a mortgage loan is far from impossible.
Previously, it was possible to get a mortgage even without any money down. Those days are long gone, says Elizabeth Blakeslee, associate broker with Coldwell Banker Residential Brokerage in Washington, D.C. "You also don't hear about the no-documentation loans anymore, and self-employed people must supply more documentation of their actual taxable income," she commented.
Banks are growingly less lenient on bad credit history. But some lenders may take you into consideration for a loan if you can show them your economic dilemmas are behind you. Those who have been trough bankruptcy would have to show a great deal more documentation than those who have good credit. These people should also expect to pay higher mortgage rates if they are approved for the loan.
Getting a home loan is also much simpler if you qualify for certain government-backed programs. Veterans and military personnel can apply for a VA loan which is backed by the U.S. Department of Veterans Affairs. Another type of loan you should look into is a FHA loan. Backed by the Federal Housing Administration, FHA loans usually don't have a minimum credit score requirement and requires only a 3.5 percent down payment. Stricter FHA regulations requires those with a credit score below 580 need to put down 10 percent. Another requirement of a FHA loan is a mortgage insurance premium of 2.25 percent of the total mortgage amount.
There are many considerations before a lender would give you a mortgage loan even if you have a good credit score. Employment history, cash reserves and down payment are all important factors. Finding a local lender would better assist you in understanding your financial strengths and weaknesses. Blakeslee commented, "you want someone who's a known quantity who you can talk to, who can look at your situation, your marketplace and advise you what you need to be able to do to buy a home in that marketplace."
Another alternative you should look into is the rent-to-own option. Brendon Desimone, a Realtor with San Francisco-based Paragon Real Estate Group said this option in growing in popularity. "If you have sellers who can't sell their house because the market's not as good as it used to be, they might entertain an option to rent to own because maybe they'll get their price but it's going to take them a year or two to do it," DeSimone says. "In return, the buyer gets a year or two to fix their credit. It could be a win-win."

Considerations Before Getting a Cash Advance

Admin — Wed, 28 Jul 2010 00:00:00 GMT

Cash advances using a credit card can be extremely convenient to use, but comes with a steep price. With the gloomy economy, many cardholders are shying away from cash advances. Financial experts say that this might not be a bad thing, since cash advances are best suited for emergency use only. Financially, cash advances is a bad idea. "That's your highest-risk money, when someone's using their credit card as an ATM," says Mark Berg, president of Timothy Financial Counsel, a Wheaton, Ill.-based financial planning firm.

Every time you make a cash advance, you are essentially initiating a loan with your credit card provider. Although the procedure is very convenient, you are paying for the ease through high fees and compounded interest rates. While some cards offer low introductory rates, it can give cardholders a false sense of security. Heidi Albert, president of School2Life.com commented, " They say, 'They wouldn't have given me the money if they thought I couldn't pay it back."

During these times of economic hardship, it is not unexpected that cash advances are being used less and less. Compared to the first quarter of 2009, cash advances usage has fallen 35.6 percent in 2010. There are a number of reasons responsible for the decline. One of the primary reason is the high interests rates associated to cash advances, which can range from 1 percent to 7 percent higher than the card's usual rate. Another reason is the steep fees applied to cash advances on top of the already high interest rate, which is usually $10 to $20. Taking a cash advance also surrenders the interest free grace period provided with all the ordinary purchases using a credit card. Normally, interest is charged as soon as the cash is withdrawn.

With its many obvious disadvantages, cash advances are suitable for certain occasions. If you are looking for a short-term loan, cash advances might be a good choice. Also, in cases of dire emergencies, getting a cash advance might be your only choice. Even with these circumstances, cardholders should think twice before getting a cash advance. This method of obtaining cash quickly should be left as an option of last resort.

There are several considerations before contemplating a cash advance with your credit card issuer. Consider if you will be able to pay off the balance within a month. Is there an alternative course of action for your current dilemma? Do you really need to make this particular cash purchase? Does the need of this cash advance signify that you should get financial assistance or carry out lifestyle changes? These are all questions one should consider before committing to a cash advance.

Building Credit

Admin — Wed, 28 Jul 2010 00:00:00 GMT

Personal credit would not be necessary in an ideal world. In a perfect consumer environment, everyone would have plenty of time to acquire enough finances for all their personal needs and wants. Credit cards would be used for the sole purpose of earning cash back rewards and incentives and no interest will be charged. Having a credit score would be deemed unnecessary.

Regrettably, we do not live in an ideal world. More often than most, people will find it necessary to get a loan in order to purchase a car or a house. Primarily, a borrower's credit history dictates the interest rate offered to them by the banks. A credit history is also used as reference when someone is looking for a job or a place to rent. Today, a person's credit score and history is reviewed almost indefinitely when making major financial decisions.

There are a number of ways a person can begin building up their credit score.

To start building your credit, one should first open a checking and savings account. Simply go to your local or preferred bank and open a checking account. With the checking account established, you can then open a high-yield online savings account. Having and maintaining multiple bank accounts is a good way to show yourself as being financially secure.

Using a credit card is also another way to build up your credit. During the initial 6 months period, try to use your available credit cards and pay off all monthly balances in full. This is a great way to start off with a good credit score. If you never had a credit card, you may have to apply for a secured credit card. A secured credit card requires a certain amount of collateral for you to open an account. Try to find a qualifying credit card without any annual fees. Also, be certain that the credit card you do choose actually reports your credit activity to the three credit reporting bureaus.

To maintain a good credit score, it is critical that you pay all your bills in a prompt manner. Delinquencies in your gas or telephone bills can be reported to the credit reporting bureaus, hence lowering your credit score.

Initiating an installment loan is another way to improve your credit score. It has been shown that people with the best credit scores have a diverse assortment of loans and credit types. You can apply for a small loan with a short term from your local bank. Just make sure that you pay each installment in full and on time.

Finally, when trying to build credit, it is important to check your credit reports periodically. The law mandates that each of the three major credit reporting bureaus provide one free credit report to each individual. That basically means you can get three credit reports a year without paying for them. Look for any discrepancies in the credit reports. If any inaccuracies are found, contact the credit bureau immediately to have the information changed or updated.

First Data Shows Low Consumer Card Spending in June

Admin — Wed, 28 Jul 2010 00:00:00 GMT

A study conducted by First Data Corp, a leading international card processor, shows that consumers' participation in the market is still lack luster. The report showed that spending through debit and credit cards are still fairly week in June.

First Data is responsible for card processing services for approximately a third of the credit and debit card providers in the country. First Data's statistics shows that income from card interchange fees for credit unions has been slumped for some time now.

In a survey report issued in July, First Data wrote, "Consumers remained cautious in June with dollar volume growth of 6.8% (6.7% excluding Gasoline Stations) compared to May’s growth of 9.2% (8.2% excluding Gasoline Stations).”

“Transaction growth was 7.3% (7.2% excluding Gasoline Stations), a decline from May’s growth of 8.4% (8.1% excluding Gasoline Stations)." For the third successive month, spending growth has declined. This is most likely due to the still high unemployment rate, an increase in personal savings, and the ending of specific government stimulus programs.

First Data indicated, "Average tickets decreased -0.5% (unchanged excluding Gasoline Stations) in June after posting positive year-over-year growth for four consecutive months. The biggest drivers of lower average tickets were Food Services and Drinking Places (including Restaurants/QSR), Retailers and Services merchants."

New Chase Credit Card Designed for Frequent Travelers

Admin — Wed, 28 Jul 2010 00:00:00 GMT

A new credit card product was announced today by Chase Card Services in collaboration with InterContinental Hotels Group (IHG). IHG is the world's largest hotel company in reference to the number of rooms. The Priority Club Select Visa Card is targeted towards frequent travelers.

The significance of the Priority Club Select Visa Card was that it was purposely created using suggestions from consumers through a private online community which includes members of the IHG's loyalty program. With the assistance of Comunispace, an online forum was created where consumers can give direct input in the type of features and incentives they would like to see with the credit card.

Vice President of Guest Marketing and Alliances, Lincoln Barrett, said, "" We're constantly looking for ways to enhance member benefits of our hotel loyalty rewards program."" ""Leveraging conversations through our private online community, ultimately delivered a product that will get our members to their travel rewards even faster than ever before and we know they'll find significant value in that.""

With the input from Priority Club members, the Chase Priority Club Select Visa Card includes such features as a free hotel night certificate and a 10 percent rewards rebate program. Earning rewards and redeeming them are also less complicated and easier to obtain for frequent travelers. Senior vice president at Chase Card Services, Tony Glover, said, ""Our goal was to create a card that delivers the strongest possible value to Priority Club members."" ""Customers are our best resource, so we listened to them. Their candid feedback helped solidify and prioritize features and benefits. The end result is the new Priority Club Select Visa Card - by delivering exceptional value, our intent is for this new card to be first-in-wallet for our customers.""

At its initial launch, the Priority Club Select Visa offers 30,000 bonus points and no annual fee for the first year. Other key features of the card includes an annual free night certificate, reward points when you use the card, a Gold Elite status for the life of the card, earn points for everyday purchases, and zero foreign transaction fees.

U.S. Federal Appeals Court Reinstates Captial One Lawsuit

Admin — Wed, 28 Jul 2010 00:00:00 GMT

On Wednesday, the U.S. federal appeals court reinstated a lawsuit accusing Capital One Financial Corp of increasing interest rates on their credit cards while not clearly stating its ability to do so in their terms and conditions statement. The 9th U.S. Circuit Court of Appeals in San Francisco indicated that Capital One was not “clear and conspicuous” with disclosures which would indicate an interest rate increase from a fixed 6.99 percent to 15.9 percent.

Judge Betty Fletcher wrote, “It is not 'clear and conspicuous' to describe an APR as 'fixed' when the creditor has reserved the right to change the APR for any reason.” She also said the disclosures by Capital one were not “reasonably understandable” and “readily noticeable” to cardholders.

The initial claims were brought up by Raquel Rubio who suggested that Capital One was in violation of the Truth in Lending Act and a California unfair competition law. Rubio’s lawyer, Behram Parekh commented, “Consumers were being misled by having the word 'fixed' in their agreements, when the card company could change the terms at will.” Behram also added, “This is a very significant victory, and is a significant issue for a card industry defending other lawsuits like this.”

A Los Angeles resident, Rubio had requested a class-action status on behalf of other cardholders.

A statement issued by Capital One said, “We disagree with this latest opinion and we will continue to defend ourselves in court.”

Rubio had accepted a balance transfer offer from Capital One in February 2004. The credit card offered a conditional 6.99 percent rate as long as Rubio did not miss a payment, exceed her credit limit, or had a payment returned. In smaller type, the agreement also said the terms were “subject to change.” An amended cardholder agreement sent to Rubio one month later showed that Capital One could “amend or change any part” of her agreement “at any time.” Rubio’s interest rate was increased in August 2007 even though she had not miss payments, exceeded her credit limit, nor had a payment returned.

Credit Card APR Fall For the First Time in Two Months

Admin — Wed, 28 Jul 2010 00:00:00 GMT

According to CreditCards.com’s Weekly Rate Report, credit card interest rates declined last week for the first time in two months. The fall was primarily attributed to Citi’s adjustment of their annual percentage rates on two of their products. Citi’s changes slightly decreased the national median APR to 14.42 percent. This change marks a break from the recent upward rate trend. APRs have escalated six out of nine times in the past nine weeks.

One of Citi’s changes included shifting their Citi Forward card from a fixed APR of 14.24 percent to a variable rate of 12.99 percent to 19.99 percent. The credit card issuer also modified APR ranges on their mtvU Platinum Select Visa Card for College Students. The range was changed slightly from 12.99 percent and 20.24 percent to 12.99 percent and 19.99 percent. This change did not impact the national average rates.

As a direct consequence of the Credit CARD Act, Citi has announced a drop in credit card revenues in North America for two consecutive quarters. Citi was also hit with a reduction in credit card use, lower average card loans, and fewer accounts. In contrast, card payment delinquencies reduced as cardholders become more financially responsible.

The drops in late payments were also seen with other major banks as well. Wells Fargo reported fewer losses through delinquent payments. In a company press release, chief credit and risk officer Mike Loughlin said, “We also saw improvement in early indicators of credit quality, with improved 30 day delinquencies in many portfolios, including business direct, credit card, home equity, student lending and Wells Fargo Home Mortgage.”

Bank’s lending standards remain strict in an attempt to prevent further loss. This results in higher costs for borrowers.

You May Be Throwing Money Away

Admin — Wed, 28 Jul 2010 00:00:00 GMT

Credit card rewards can be a beneficial commodity. If you don’t have or use a rewards card and pay off your monthly balances regularly, you are essentially throwing money away. Cash back cards can be extremely rewarding given that the rewards fits your lifestyle.

Given that a credit fits your spending patterns, such as expenses in regards to groceries, gas, and drugstores, you can earn up to $4,500 every three years by using a cash back card. Websites that does credit card comparisons can help you calculate your estimated savings. A majority of cash back cards offers one percent back on general purchases. One should search for cards with a high cash back percentage on purchases that fits your lifestyle. Some cards can offer up to five percent back on clothing, movies, and travel. Others can offer the same percentage on gas and groceries.

Being cautious about carrying a credit card debt and not carrying a balance, a cash back credit card makes a lot of sense. Because of the cash back percentages you will get in return, you should use the card as much as possible in order to reap the most benefits. Some property management companies even let you pay your rent with a credit card. Assuming the cash back program fits your lifestyle, the cash back money can really add up. Just charge whatever you normally would spend on your cash back card and you would get a percentage of that spending in return.

Due the gloomy economy, many credit card issuers have modified their rewards program. It might be advisable for you to review the rewards program on your current cash back card to see if there were any changes. Compare your current program to other cards available to see which ones are more beneficial.

When looking for a new card, you might want to stay away for gold cards. Gold cards typically have a higher interest rate and most people will find it difficult to take advantage of the provided services. Gold cards used to be more of a prestigious symbol which can mean very little today. It is more important to find a card with a point program that better fits your life.

Certain websites allow you to compare credit card reward programs. Simply input your spending habits and levels, and the websites will give you recommendations on credit cards that fits your needs.

Pew Charitable Trusts Report Shows CARD Act is Working

Admin — Wed, 28 Jul 2010 00:00:00 GMT

Pew Charitable Trusts have indicated that 12 of the largest U.S. banks have amended online credit card offers based on standards of current legislation governing the practices of the credit card issuers.

The Philadelphia based nonprofit organization have shown that these banks have ceased the increase of interest rates on existing balances and the practice of applying payments to balances with the lowest interest rates. The study involved 450 different cards and compared the terms and conditions for the cards offered in March 2010 and July 2009.

The changes are the direct result of the passing of the Credit Card Accountability Responsibility and Disclosure act. Limiting rate increases and requiring banks to apply payments to higher rate balances are some of the key focuses of the bill. Many of the rules took effect in February 22. Others, such as eliminating unwarranted late payment fees, will take effect on August 22.

Direct of Pew’s Safe Credit Cards Project, Nick Bourke said, “The good news is the market is much more transparent now and lots of the practices deemed harmful to consumers have gone away.” “There are still challenges.”

On the downside, the report has also shown that penalty rates for missed payments remains fairly high. The average penalty rate increased one percent to 29.99 percent. Many card issuers remain secretive in releasing their penalty rates and disclosing the probable reasons for rate increases. Nor do many indicate the methods to which a credit card interest rate can be lowered to its original APR.

Bank of American spokeswoman, Betty Riess commented, “We review customers who are 60 days past due on a case-by case-basis to determine if it is appropriate to re-price the account.” “We don’t have an automatic trigger.” She also added, “Customers are notified if their rate will increase and what it will be, and they have the opportunity to opt out and close the account.”

Fees associated with cash advances and balance transfers also increased 1 percent from 3 percent. Credit cards with an annual fee fell slightly from 15 percent in July 2009 to 14 percent. The average annual fee for these cards increased from $50 to $59.

Bourke commented, “The challenge will continue to be maintaining the transparency that the card legislation was all about as the market evolves.”

New Record High on Americans with Low Credit Scores

Admin — Wed, 28 Jul 2010 00:00:00 GMT

New FICO Inc. figure shows that an astonishing 43.4 million Americans have a credit score below 599. People in this bracket are considered financially risky and would have a difficult time getting credit cards, various loans, or mortgages. Due to consumers’ dependence on debt to feed their spending, their limited access to credit is a major reason why the economy is slow to recover. Ritch Workman, a Melbourne, Fla., mortgage broker commented, “I don't get paid for loan applications, I get paid for closings.” “I have plenty of business, but I'm struggling to stay open.”

These figures from FICO were based on consumer credit reports as of April of this year. The reports showed a 2.4 million increase in the number of Americans who are categorized as have a low credit score. Previously, only 15 percent of consumers fell below 599 in their scores. Currently, this figure has escalated to 25.5 percent.

It is highly expected for this percentage to grow. It usually takes several months for certain financial mistakes to drive down a credit score. The Labor Department has estimated about 26 million people are unemployed, and millions are facing foreclosure. It generally takes years before a person can restore a bad credit score.

Optimistically, the number of consumers with high credit scores has also increased recently. Those with a score above 800 are considered high. This increase in numbers shows that the recession has made many consumers more financially responsible by cutting their spending and lowering their debt. These people make up for 17.9 percent of all American consumers, which is a somewhat higher than the historical average of 13 percent.

Moderate credit consumers decreased slightly from 12 percent in 2008 to 11.9 percent. This is still significantly lower than the historical average of 15 percent. Those with scores between 650 and 699 are considered moderate. Those in this group are of key focus by many. It is usually this category of consumers who would find it necessary to borrow money but is finding it increasingly difficult to do so due to tighter credit standards from lenders.

Consumers Still Confused About New Credit Card Rules

Admin — Wed, 28 Jul 2010 00:00:00 GMT

Applying for a credit card usually involves a host of personal information you may not want to hand over to just any credit card company. You would want to be absolutely sure a particular credit card is right for you before filling out the application. Unfortunately, even with the enactment of the Credit CARD Act in February 2010, information about the credit card is still fairly vague.

The Credit Card Act was passed to create a set of guidelines for the credit card issuers. This piece of legislations includes certain restrictions that prohibit credit card companies to increase the interest rates on existing accounts. What the Credit Card Act fails to do is impose regulatory measures which would clarify credit card terms and conditions on credit card applications. A recent CardHub.com Penalty APR Study rated 6 of the top 10 issuers poorly on the clarity of their credit card applications. Most of them listed vague or misleading information in their terms and conditions. What is more startling is that the Sample Statement issued by the Federal Reserve’s Consumer’s Guide was just as vague.

What many of the applications leave out is a clear explanation on how the interest rate of a credit card can be increased. Information on how to reduce your interest rate and consumer’s protection from interest rate increases in the first 12 months of their account is also missing.

There are two fundamental rules of the Credit CARD Act that you should understand even though they may not be clearly written on your credit card applications. These rules apply to all credit card issuers.

Primarily, the Credit CARD Act disallows any interest rate increase on your existing balance, unless you are at least 60 days late in making a minimum payment. In addition, your increased interest rate must be reduced to its initial percentage after six successive months of payments which are on time.

Secondly, the Credit CARD Act requires credit card companies to send you written notice of any rate increase 45 days in advance. This higher rate can only be applied to transactions made 14 days after they have sent the notice. This will give you plenty of time to context the increases or not use the card. All previous balances must be based on the initial lower rate.

Without changes in the current format of the credit card companies’ disclosures, trying to comprehend their fine print is fairly pointless. Just understand that the Credit CARD Act protects you from interest rate increases through the two methods listed above.

Preventing Credit Card Fraud by Checking Your Statements

Admin — Wed, 21 Jul 2010 00:00:00 GMT

A small unrecognized credit card transaction on your statement might not raise a great deal of concern. But one should address these transactions immediately. Those few dollars can add up to a significant amount in a global scale.

According to the Federal Trade Commission, a recent international credit card fraud scheme swindled over one million customers totaling more than $10 million since 2006. The scam went undetected for a long amount of time primarily because the false charge amounts were very minute (ranging from 20 cents to $10 per transaction).

The stolen funds went to bank accounts located in Cyprus, Kyrgyzstan, and Bulgaria. Money mules were used to wired the money overseas. The accomplices are still nowhere to be found, but much of the assets of the associated dummy companies were frozen last month. This international scam is a good example why consumers need to be alert in regards to transaction discrepancies no matter how small the amount.

FTC spokesman Frank Dorman commented, "Just because it's on the bill doesn't mean it's legitimate." " Consumers should check every single item on their bill before they write a check to their credit card company."

In the recent Federal Trade Commission case, over 100 fraudulent merchant names where used which were supplemented by toll-free numbers that were mostly disconnected. It is reported that approximately 1,000 people filed claims for these fraudulent charges, but this is still a miniscule sum compared to the total number of people who were targeted. Given the small dollar amount of the charges, many didn't see a point in disputing the charges.

There are some steps cardholders can take to prevent credit card fraud. It is important for credit card users to keep their purchase receipts and to reconcile them when the statements are received. If several people use the same card, require all the authorized users to keep the receipts in a central location. Consumers should take the time to compare their receipts and the actual amounts charged. If an illegitimate charge is found, contact your credit card company immediately. Also, if the merchant of the suspected transaction cannot be found or located, file a complaint with the FTC.

New ATM Shims Steal Credit Card Information

Admin — Wed, 21 Jul 2010 00:00:00 GMT

The act of shimming is intended to steal your credit card number, PIN, and other information as you swipe your card through card readers such as an ATM machine. It is the latest method used by thieves to obtain your credit card information. In reference to Diebold, " The criminal act of card skimming results in the loss of billions of dollars annually for financial institutions and card holders. Card skimming threatens consumer confidence not only in the ATM channel, but in the financial institutions that own compromised ATMs as well."

Shimming involves inserting a very slim bendable circuit board through a reader's card slot that will adhere to the internal contacts that read the card data. The shims are usually inserted by using a "carrier card" that possesses the shim, is introduced to the card slot and fastens in place of the card reader's contacts. The carrier card is then removed while the shim remains undetectable from the outside of the machine.

It is important to understand that these attacks does require technological marvels. The required shims needs to be exceptionally thin and flexible. For the shims to be effective, it must be less than 0.1mm to fit inside the slots while still allowing the cards to be inserted unnoticeably. To get a better understanding of how thin 0.1mm is, a credit card is 0.76mm thick, a grain of salt is .5mm, and a human hair is approximately 0.18mm. Along with its minute thickness, the shim must also be semi-flexible in order to be effective. Creating one is definitely a challenging engineering feat.

It is only with the latest breakthroughs in microchip fabrication can these shims be now made by credit card thieves. But even with these advances in microchips, it is still a huge challenge in designing these devices. Unfortunately, it seems that these criminals has already been successful. Effective shims are already seen being used in certain parts of Europe.

The primary reason why shims work is that most countries do not encrypt the information going into the ATM machines. If data encryption chips are located on both credit cards and ATM machines, it would be a good deal more difficult for thieves to decipher the data and collect your credit card information.

The practice of skimming is nothing new. They have been around for as long as ATM machines. The problem is that the sophistication in this method is increasing exponentially. This forces manufacturers of Pin entry devices to constantly update their systems in order to prevent these shim attacks. Diebold has released five new anti-skimming protection levels for its ATM devices on June 1st 2010. Unfortunately, these tactics will not likely prevent the latest shims from being effective.

Eliminating Internet Credit Card Fraud by Reporting It

Admin — Wed, 21 Jul 2010 00:00:00 GMT

A credit card basically allows its users to purchase goods and services based upon the cardholder's promise to pay for these items. A company that issues the credit card financially funds the consumer to make these purchases from merchants. Credit cards are a very practical and useful form of payment. It is a convenient way for consumers to get a short-term loan without the hassle of calculating balances remaining before each purchase. This is relevant as long as the cardholder does not exceed the maximum credit line for the credit card.

A majority of credit cards also offers significant rewards and incentives for using it on daily purchases. Extended or improved product warranty, complimentary loss or damage coverage, and reward points which can be redeemed for products, travel, and cash are all features available with today's credit cards. Ultimately, a credit cards major benefit is that it eliminates the need for consumers to carry cash or use cumbersome checks to acquire their needed goods and services. Ironically, its convenience also makes it extremely susceptible to crime.

Credit card fraud is a term defined by a theft or fraud committed by using a credit card or any comparable payment instrument as a fraudulent method of funds in a transaction. Credit card frauds may be committed to gain merchandise or services without paying for it, or to acquire unauthorized finances from a particular account. Identity theft is also a big part of credit card fraud. According to the Federal Trade Commission, instances of identity theft increased an astonishing 21 percent in 2008. Oddly, even with the rise in instances of identity theft, credit card fraud has gradually and consistently decreased in the last six years.

Credit card fraud can sometimes be beyond our control and unavoidable. But there are steps you can take to make it more difficult for cyber criminals to obtain your credit card information and minimize your chances of being swindled.

If you discover that your credit card is lost, stolen, or the secured information has been compromised, contact your credit card provider immediately. Many credit cards have a toll-free phone number listed on the back of the card specifically for such emergencies. Once the fraud has been reported, the cardholder will have no further responsibilities in regards to the unauthorized charges. Once the fraud has been reported, you may be requested to sign a declaration that the transactions where indeed not made by you.

Lowering Your Credit Card Interest Rate

Admin — Wed, 21 Jul 2010 00:00:00 GMT

A lower interest rate allows you to pay off your credit card debt more rapidly and saves you a considerable amount of money in interest payments. There are several proven methods in decreasing your interest rate percentages. Some of these methods will be discussed briefly in this report.

The more obvious method is to find an available credit card with a reasonably low interest rate, and transfer your standing balances to the new card. Shop around and see what is available out there. You don't have to sign up for those cards immediately. But understanding your options and available offers can give you some bargaining chips in negotiating rates from your existing credit card provider. Be diligent when negotiating. You may be denied at first, but you should try and try again. Your credit card company would not benefit by losing you as a customer.

If the offers are still not acceptable after negotiations, you can consider transferring your balance to the lowest interest rate credit card you can find and qualify for. Before making a final choice, you should carefully read the conditional fine prints, consider the additional costs, and the duration of the promotional interest rates. Many promotional transfer offers last until you pay off the debt completely. These cards would be an excellent option for those who have a large balance and expects a long period before the balance can be paid off.

A debt consolidation loan is another option one should consider. This option combines your existing credit card and unsecured debt into a single loan. This method may provide you with a lower interest rate, but one should be cautious of the risks and consequences. Collateral is often required when signing up for a debt consolidation loan. Not making payments for this loan can result in that collateral being taken away from you. Unsecured loans, which do not require collateral, are available but usually comes with much higher interest rates.

Today, many are considering a debt management plan to pay off their standing debts. There are companies and organizations out there that provide credit counseling services. These companies help you negotiate deals with your credit card provider in order to lower your interest rates. These services are usually offered to people who are having trouble making the minimum payments on their credit cards. It is important that you check with your state government and the Better Business Bureau to see if these companies are approved and trustworthy.

Finally, the most surefire way to lower your interest rates is to improve your credit score. Although improving your score may not be easy and may require a length of time, it is possible to improve your score within several months. Being diligent in paying your monthly credit card payments, paying more than your minimum payment, and not maxing out your credit cards are all ways in which you can quickly improve your credit score. Check your credit reports regularly to see if there are incorrect information. If so, contact the agency to make sure that information is updated or corrected. A high credit score means less financial risk for your credit card company. With less risk usually comes a lower interest rate.

Credit Card Reform Puts a Dent in Discover Profits

Admin — Mon, 19 Jul 2010 00:00:00 GMT

Chief Executive of Discover Financial Services David Nelms said that the new credit card rules restricting late fees will reduce their earnings by $80 to $90 million a year.

Effective August 22, the Federal Reserve will limit credit card late fees to being no more than $25. $35 can be charged if the cardholder is late on one of their last six payments.

Discover’s More card currently charges $19 for balances under $250 and $39 on balances higher than $250.

Even with this news, Discover had reported a 14 percent profit increase in the second quarter. The increase was primarily due to lower delinquency rates and smaller set-asides for bad loans.

It is expected that Discover will increase their marketing efforts in the second half of the year to the highest levels since 2008. “Everyone pulled back marketing at the end of '08 through now,” Nelms commented. "We didn't pull back as far as others but we pulled back, and now we're feeling confident enough to go back to more normal levels of marketing."

Discover has shown growing interest in expanding its student loan business. Discover card spending has increased 6 percent from the previous year and is primarily attributed to customers with high credit scores.

Nelms said, “We have a large number of customers who are not underwater with their house and are now feeling more confident spending money again.” “They're feeling a little more confident about the economy.”

Discover Bank, which does business online and over the phone, is also looking promising for Discover.

When the company became public in 2007, many feared it will be difficult for Discover to remain an independent company. Speculation that Discover might be bought caused their stocks to rise a few weeks before.

In regards to Discover’s stock, Nelms said, ”I think it's likely Discover will remain independent because of its unique focus, and direct banking and payments that are working well.” He also added, “Long term, the question is can we deliver the most value independently, relative to not being independent, and right now the answer is yes; we can deliver the most value by delivering profit margins better than would-be acquirers”

Details Regarding Your Credit Card Statement

Admin — Mon, 19 Jul 2010 00:00:00 GMT

Recent congressional passing of the CARD Act requires that credit card companies be a bit more concise in their billing statements. Changes should have already been implemented on your current bills. Some of the required changes are listed below.

Some of the most important information can be found in the “account information” section of your billing statement. Here you will see when the payment is due, how much is the owing balance, and how much you are paying in interest. It is recommended that you schedule a payment as soon as you receive the statement to avoid late penalties.

One of the requirements of the CARD Act is that credit card companies are now mandated to show how long it will take you to fulfill a balance by paying just the minimum payments. There should be charts that show you this as well as information that tells you how much you would need to pay in order to pay off the loan within three years. It will also show you the interest fees saved by doing so.

The Annual Percentage Rate (APR) should be clearly labeled on your credit card statement. The APR figure must be clearly noted before you open an account and will not change without proper notification.

All statements are required to explain, in detail, the consequences of being late in your payments. Late payments are usually detrimental to the cardholder. Doing so will trigger extra fees, raise interest rates for at least a six month period, and will ultimately lower your credit score.

It is also now required that credit card companies make your bill due date consistent every month. The due date must be listed clearly on your bills.

Another change due to the CARD Act is the elimination of mandatory over-limit fees. Cardholders must opt-in to this service, which allows charges over your credit limit. This service usually involves additional fees. If you don’t opt in to over-limit services, purchases that exceed the limit will simply be declined.

It is usually recommended and important that you read the billing statement in its entirety. Look through the statement to see if every charge is recognized and legitimate. If you find an unauthorized transaction, report it immediately regardless of the amount. Many identity thieves begin by making a few small transactions to test the accounts. Many bills will include merchant phone numbers which will help you verify the charge in question.

Cardholders Pay More Even When Competition Rises

Admin — Mon, 19 Jul 2010 00:00:00 GMT

There is growing competition among Israel’s credit card companies to lend money to its clients. Although the offers are abundant, their practices have not generally improved terms for borrowers.

Leumi Card has recently issued letters inviting their customers to take out personalized loans. The initial offers and conditions for the loan seem tempting. Customers can choose when to start repaying and how much payment they want to send out per month. The letters also made it very convenient to start the loan process.

Unfortunately, all these loan offers charge an interest rate above the prime rate. The prime rate is simply calculated by add 1.5% to the interest rate of the Bank of Israel. Bank of Israel interest is currently 1.5% which means the prime rate is 3%. During the recent global economic crisis, interest rates were lowered in order to stimulate the local economy. Bank of Israel interest hit as low as 0.5% which is a historic low.

As the interest rates fell due to the economic downfall, loans based on the prime interest rate fell as well. On the contrary, loans from credit card companies rose. Interest rates for these loans are even higher than before. During 2006, the difference between the Leumi Card loan rates and the prime rate was 2.87%. Three years later, this figure had risen to 8.43%.

A primary reason for the rise in interest rates for loans with credit cards companies is its increase in popularity. The increases in high risk borrowers, who were unable to obtain a loan through a bank, are forced to turn to credit card companies to acquire the needed finances. And with high financial risks usually comes high interest rates.

Another reason is the lack of competition. Card companies provide the loans primarily to their card holders. They felt that there was little reason to make their interest rates more attractive.

It is evident that credit card companies, like Israel’s, are not in competition with the banks. This fact is apparent given the vast differences in interest rates. According to Bank of Israel statistics, the median unlinked loan interest rate at the bank is currently 4.86%. Most local credit card companies raised their average interest rate on loans at the end of 2009. CAL has the highest spread above the prime rate at 9.48%

Recent changes with credit cards, banks and stores

Admin — Mon, 19 Jul 2010 00:00:00 GMT

New legislations in financial reforms seek to provide a great deal of benefits to the average American consumer. The planned creation of the Consumer Financial Protection Bureau has the sole purpose of protecting consumer interests from immoral lending practices and hidden credit card fees. Pamela Banks, senior policy counsel for Consumers Union, states, “The bill gives consumers a fighting chance. “The idea of a consumer watchdog was deemed dead on arrival last fall, but the prediction turned to be completely, blissfully wrong.” Some of the anticipated changes will be discussed in this article.

Cash Discounts

With the enactment of the new law, retailers will be able to offer cash discounts. Retailers will welcome this change because they often prefer cash purchases because of the absence of “interchange” fees required by credit card merchants. These fees are processing fees necessary for accepting such payments as American Express, Discover, Visa and MasterCard. The legislation offers a advantage to businesses by allowing them to offer discounts to those who pay cash.

Credit Card Minimum and Maximum Purchases

In the past, signs posted by retailers that require a minimum purchase amount for using a credit card were in violation to merchant agreements with Visa or MasterCard. Under the new reforms, this restriction is ultimately left to the decision of the retailer. Due to both fixed costs and a percentage of the total purchase amount with interchange fees, it was difficult for stores to make a profit on smaller purchases. The legislation still limits the retailers to set the minimum amount to no more than $10 without violating merchant agreements.

The new government legislation also allows governments and colleges to set a maximum for credit card payments. This might be disadvantageous to cardholders, since many parents prefer to use a credit card for tuitions in order to reap the benefits of cash rewards from credit cards.

Credit Scores

Given the new regulations, credit card companies are mandated to provide the credit scores to those who are denied credit. Ed Mierzwinski, director of the consumer program at U.S. PIRG, the federation of state Public Interest Research Groups, said; “Now people who are denied credit or employment can get their score immediately.” "They don't even have toast for it."

Reduced Retail Prices

Because the new law will eventually mean lower debit card fees to retailers, it is expected the savings will be passed on to consumers.

Credit Cards to Change Again in Light of New Reform Bill

Admin — Mon, 19 Jul 2010 00:00:00 GMT

Due to unforeseen difficulties, lawmakers prepare to send a cooperative financial reform bill to President Obama. Some of the major regulations of this bill will be discussed in this article.

Credit Card Minimum Purchases

Signs, posted by vendors, requiring a minimum purchase for credit cards are technically a violation of their merchant agreements. With the acceptance of this new bill, merchants can make their own policies in regards to minimum purchases using credit cards.

Stores can now provide Cash Discounts.

Merchants normally have to pay transaction fees for accepting credit card payments. These fees are based on industry risk factors and can be as high as five percent of the total purchase amount. The new reform bill will allow stores to offer a cash discount, essentially offering dual pricing options. This practice was conventional at gas stations years ago and will be revived with the passage of this new legislation.

Limit on Merchant Service Fees

With the enactment of this bill, the Federal Reserve will also have more authority in limiting the merchant service transaction fees. Although this is beneficial to most retailers, banks are predicted to cut back on credit card incentives to offset the losses. The cap in transaction fees is only applicable to larger banks with more than $10 billion in assets.

Although the bill’s intentions seem agreeable to many consumers and retailers, there might be some unwelcomed consequences. Tighter consumer credit lines and a sudden shift in the use of cash instead of credit cards, can lead to banks reducing their offerings to cardholders.

Three Good Credit Card Options

Admin — Mon, 19 Jul 2010 00:00:00 GMT

Although credit card alternatives are available, plastic is still the most practical option for many. Cash back incentives, travel rewards, annual fees, and point bonuses are all important features when choosing a credit card that is most appropriate for an individual. Some credit cards can be more appealing than others. We will discuss a few of the better options available today.

Bank of America offers the BankAmericard Cash Rewards Visa Signature Card with no annual fees. It carries a variable APR which is dependent on your credit score. For that reason, you could get a low interest rate without paying additional fees, assuming you have a good credit history. The cash back incentives of the BankAmericard is also a worthy feature. It is based on cash back over points which are applied directly to your credit card balance. For the initial six months, a three percent cash back rate is given to purchases on drugstores, grocery, and gas. After the preliminary promotion is over, one percent cash back is applied to all purchases. Basically, the BankAmericard provides a generally low APR with one percent cash back on all purchases with no annual fees.

The TD Easy Rewards Visa Credit Card from TD Bank also carries no annual fees. The rewards program for this card is also very flexible having unlimited point accumulation, an absence of blackout periods, and no expiration dates for reward points. The TD Visa is a good alternative for young adults or individuals who don’t use their credit cards that often. Similar to the Bank of America card, interest rate on the TD Visa is determined by your credit score. Unlike the Bank of America card, the rates are not variable and are separated into three rates (11.24%, 16.24%, or 21.24%). One reward point is given for every dollar spent using the card. These points can be used to redeem incentives on travel, gift cards, or products from specified merchants.

Chase Bank offers the Chase Freedom 5% Cash Back Card which has significantly higher rewards incentives than the previous two credit cards. The Chase Freedom card provides five percent cash back on purchases in home improvements, hotels, airline tickets, department stores, and gas. However, the card does carry rather high transaction fees for cash advances and balance transfers. Interest rates for the card also vary between annual rates, balance transfers, and cash advances. It is important for you to carefully read the terms and conditions for this card before considering it.

Consumer Protection with New Credit Card Legislation

Admin — Mon, 12 Jul 2010 00:00:00 GMT

Effective July 2010, a set of new government regulations, designed to protect consumers from high credit card interest rates, will take effect. The legislation will include a great many number of credit card reforms but primarily prohibits credit card companies from unjustly increasing interest rates for existing customers.

The new rules were approved by the Office of Thrift Supervision Thursday morning. The National Credit Union and Federal Reserve will probably act on them later today. The amendments implemented by this reform is one of the most significant changes to the credit card industry in decades.

The thrift agency's director, John Reich, commented, "the rules will enhance public confidence in financial institutions and establish a level playing field for institutions that want to do business fairly without suffering competitive disadvantages.”

The propositions received a great deal of attention from the public. The Federal Reserve had received over 65,000 public comments when the rules were initially deliberated. The new regulations prohibits such lender practices as applying customer payments to balances with lower interest rates if they have balances with different rates. Although the rules are more often than not advantageous to consumers, some speculators believe that they will make it more difficult for people with bad credit to get credit cards.

Another monumental change from these regulations is that it mandates a 45 days' notice, to cardholders, before any terms and conditions changes can be made to the account. Prior rules states that credit card companies are only required to give 15 days' notice before making any changes to the account.

According to a study by the law firm Morrison & Foerster, these changes would cost the banks over $10 billion a year in interest payments.

ABA President and Chief Executive Edward Yingling commented, "while the new rules are designed to increase protections for consumers, the Fed itself has recognized that they may result in increased costs for most card users and reduced credit availability, particularly for consumers with lower credit scores or limited credit history.” He also added, "with the uncertainty facing our financial system, it’s absolutely vital for policymakers to understand the full impact of these regulations on consumers and the economy before judging their success or further restricting the marketplace.”

Many cardholders felt it was unreasonable for card companies to increase their interest rates because they have made late payments. Others that do make their payments promptly have also reported an increase in their rates because the card issuer needed to offset losses from non-paying customers.

Approximately $850 billion of credit card debt is held by the American consumer, according to a Consumer Federation estimate.

Federal Trade Commission Focuses on Cleanout of Micropayment Credit Card Scam

Admin — Mon, 12 Jul 2010 00:00:00 GMT

The FTC has focused their efforts on cracking down an international micropayment scam. The scam involves stealing minute amounts from cardholders and adds up to almost $10 million stolen.

A group of international cyber mobs had setup fake merchant accounts in order to steal small amounts of money (sometimes pennies) from cardholders. The micro-payments were then sent to counterfeit organizations created by the scammers. The Federal Trade Commission had shut down a number of these fraudulent accounts.

The con artists typically made only one transaction per credit or debit card. The amounts stolen ranged from $0.25 to $9 per transaction. Much of these thefts went unreported because cardholders were reluctant to dispute such seemingly insignificant amounts.

Over a period of four years, the scammers charged an approximate $9.5 million from a total of 1.35 million affected credit and debit cards. Of those transactions, only a mere ten percent were reported or disputed.

Another contributing factor to the success of the scam were the faked organizations to which the money was channeled. The attackers named the companies after legitimate businesses and where backed by real federal tax ID numbers. The organizations were also given believable websites with phone numbers and virtual office addresses. This deceived credit card processors to allow the false merchants to access the cardholders' accounts.

According to documents from the U.S. District Court for the Northern District of Illinois, the thieves also hired money mules to transfer money from one place to another. The money mules initiated various bank accounts and over 100 phony LLCs. These accounts and illegitimate businesses were used as a temporary repository for the stolen money. The stolen cash was then again transferred to accounts in Eastern Europe. The accounts resided in countries like Cyprus, Estonia, Bulgaria, and Lithuania.

The ultimate instigators of the scam is still unknown. But the Federal Trade Commission has acknowledged some of the money mules.

Airline Credit Cards Incentives to Entice New Customers

Admin — Mon, 12 Jul 2010 00:00:00 GMT

Airline branded credit cards are conjuring up new and creative ways to try to captivate new customers. The Detroit News reported, "The ever-changing world of airline fares and fees is getting a little more confusing -- but maybe a lot cheaper -- thanks to the newest travel perk: free baggage check with an airline's credit card."

Many airlines are starting to wave checked bag fees if you choose to use their credit cards when booking a flight. Both Delta and Continental airlines have implemented this policy for their cardholders. Bag fees can range from $25 per bag. With this offer, up to nine people traveling on the cardholder's reservation can take advantage of this deal.

"It sounds like a good deal, but there's a catch: another fee. In the case of Continental, it's the $85 annual fee for the OnePass Plus card, and for Delta it's $95 for the Gold Skymiles card," posted the News.

CEO of LowCards.com, Bill Hardekopf, stated, " card issuers are raising more money by getting annual fees, and they're using the rewards as an add-on to justify the fee."

Though fliers can swiftly gain back that fee by simply taking advantage of the free bag fee offer in as little as two round trip flights, many people may not need this incentive. Some frequent fliers are already exempted from checked bag fees through other programs. "If you don't travel with luggage often enough -- maybe once every other year -- it's cheaper for one or two travelers to pay the baggage fees instead of shelling out for annual credit card memberships," reported the News.

It is expected that these unique perks will increase as airlines struggles to win the hearts of the consumers. Carriers are seeking to build up customer loyalty and gain more customers.

Does Visa or MasterCard have the lower APR?

Admin — Mon, 12 Jul 2010 00:00:00 GMT

The answer to this question is not as straight forward as one may think. There are many different factors which determines whether a particular personal credit card it best suited for an individual. Is the card principally for a student? Is it a rewards card, a secured card, etc? What is the purpose of the card? All these questions are decisive in making the right decision.

Credit worthiness also plays a key role in determining a cards APR. Those with a less than perfect credit history will see much higher APRs for both VISA or MasterCard versus a person with an excellent credit score. Assuming two applicants have the same credit history, APRs for both MasterCard and Visa should be indistinguishable.

Instead of determining whether MasterCard or Visa provides the lower APR, it is more important to determine the overall intent of the card, and whether that particular card provides the best conditions for that purpose.

It is also important to know that both Visa and MasterCard do not actually issue credit cards. They are basically the payment processors. The bank that issues the card is responsible for determining the APR based on the criteria listed above.

Police arrest 178 in global credit card scam

Admin — Mon, 12 Jul 2010 00:00:00 GMT

A worldwide credit card scam has lead to the arrest of 178 people by European and US authorities. The scam is projected to cost over 20 million Euros.

Spanish police reported on Tuesday that police officials have detained 178 people in the United States and Europe. The 178 are suspects of a scam which allegedly replicated credit cards for use internationally. The value of the scam is projected to be worth 20 million Euros.

The arrests were contributed to an extensive two year investigation in fourteen different countries. The investigation was initially set off in Spain where local police have recovered 5,000 cloned cards, 120,000 stolen credit card numbers, dismantled six replication labs, and arrested 76 people.

Police raids principally took place in Germany, France, Ireland, Romania, Italy, and the United States. Suspects in Greece, Hungary, Sweden, Australia, and Finland has also been apprehended. Those arrested are also suspected of blackmail, robbery, sex trafficking , and money laundering.

Credit Card Defaults Drop in May

Admin — Mon, 05 Jul 2010 00:00:00 GMT

According to a recent study conducted by Standard & Poor’s and Experian, defaults on credit cards and home loans declined in May.

The extensive report from the two organizations showed that defaults on credit cards are at 8.88 percent in May. This is a marginal decrease from 9.1 percent in April. Charge offs on these credit card accounts decreased 8 percent when compared to May of 2009.

In addition, defaults on first and second mortgage loans fell compared to April rates. First mortgage loans fell 7.2 percent, while second mortgage loans fell by 2.9 percent.

Chairman and managing director for the S&P Index Committee, David Blitzer, suggested that this is a good sign. The decrease in defaults signifies an increase in financial responsibility from consumers. In light of the recession, a growing number of people are trying to reduce their debt levels.

David also commented, “Data from the Federal Reserve confirm a general pull back from many forms of debt. This is part of what may be a long-term process of re-establishing consumer financial stability.”

The Federal Reserve point out that overall consumer credit has increased at a yearly rate of 0.5 percent in April. Conversely, revolving credit has fallen 12 percent.

Credit Card Debt Outnumbers Mortgage Debt

Admin — Mon, 05 Jul 2010 00:00:00 GMT

A report from the Melbourne Institute indicates that credit card debt has outgrown mortgage debt as being the most prominent type of debt in Australia. This is the first time this has happened since November 2006.

The report found 33.9 percent of Australian households had mortgage debt in the June quarter, while 36.6 percent had credit card debt.

Edda Clause, a researcher at the Melbourne Institute, thinks this is a cause for concern.

Edda commented, “I would think this is not a good thing because interest rates on credit cards would tend to be quite high."

But Edda Clause also suggested that financial conditions within Australian households are improving in general during the first three months of this year.

During the March quarter, 46 percent of households are saving their income while currently the figure is at 49 percent.

"Savings rates increased quite dramatically during the global financial crisis, consistent with people suddenly saving because they were afraid they might lose their job," she said.

"But we're still below conditions like pre-crisis levels."

The Melbourne Institute’s study also shows a five point increase in the financial conditions index from 33.7 in June.

Federal Reserve Rules Limits Card Fees

Admin — Mon, 05 Jul 2010 00:00:00 GMT

On Tuesday, new rules accepted by the Federal Reserve seek to protect cardholders from unreasonable late and penalty fees. The new regulations are in direct response to congressional and public outrage over some unethical practices by the credit card industry.

Effective August 22, these new rules will limit late fees to being no more than $25. It will also prohibit charging penalty fees that are higher than the dollar amount associated to the infraction. Multiple penalty fees for a single late payment are also not allowed. Inactivity fees for not using the credit card are also banned.

"Consumers will finally be protected from the worst credit-card issuer abuses," said Rep. Carolyn Maloney (D., N.Y.), a major advocate for the changes.

The new FED regulations also require the industry to reevaluate interest rates imposed on their customers since 2009. Many credit card companies increased the interest rates drastically, during the beginning of the year, in anticipation to these new reforms. The new rules strive to protect customers from unfair interest rate increases.

"The new rules require that late payment and other penalty fees be assessed in a way that is fairer and generally less costly for consumers," said Fed Governor Elizabeth Duke, the central bank's point person on the rules. "Card issuers must also reevaluate recent interest rate increases, and, if appropriate, reduce the rate," she added.

The American Bankers Association said the industry intended to "work quickly and diligently" to execute the new provisions.

Laws in Congress overhauling the nation's general financial regulatory structure could reduce the Federal Reserve's powers over consumer protections.

A bill, passed in the Senate, would create a regulatory agency inside the Fed, but Chairman Ben S. Bernanke would have no power over it. A House-passed bill would set up a separate agency devoted to consumer protection and would remove the Fed of some of its consumer oversight.

New Debit-Card Fee Regulations Effective July 1

Admin — Mon, 05 Jul 2010 00:00:00 GMT

Recent government regulations will require credit card issuers to obtain customer’s approval before charging fees to cover overdrafts as the result of ATM withdrawals and debit-card transactions. This fee is known as courtesy-bounce protection and is usually automatically included with the card unless customers choose not to do so.

According to a Federal Deposit Insurance Corp (FDIC) report, this service costs $10 to $38 per transaction. It is a common practice for credit card companies to deduct the largest purchases first to drive the account balance below zero so they can charge overdraft fees.

With the new FDIC approved regulations, financial institutions can not charge fees for this type of service unless the consumers opt in to them in advance. The regulations will be implemented July 1 for new accounts and August 15 for existing ones. These same changes also apply to ATM transactions. Customers who don’t participate in this service will have their transactions denied if they don’t have sufficient funds to make the withdrawals, unless the associated bank decides to honor the transaction without implementing a fee. The new rules, known as Regulation E, do not apply to paper check transactions or recurring payments made by debit cards.

The Regulation E changes are projected to affect 25 percent of consumers who overdraw their accounts at least once a year. These same people can avoid overdraft situations by simply keeping adequate records of their accounts. This can be easily accomplished online or with text message services provided by most credit card issuers.

Implementation of these new rules are also expected to affect the 75 percent of people who never overdraw their accounts as card issuers seek to offset revenues lost by these new regulations. These impacts will take the form of increased fees.

A majority of banks have already begun recruiting customers to opt in to their courtesy bounce services to minimize the impact on their revenue.

A regional president for Wells Fargo in San Francisco, Michael Billeci, said, “We have reached out to customers in a variety of ways, through statement inserts, online messaging, in-store communications and people are receptive to opting in.”

Credit Card Thief Sought by Overland Park Police

Admin — Mon, 05 Jul 2010 00:00:00 GMT

A thief in Overland Park is wanted by the police for entering office buildings with a boy and stealing credit cards or computers.

In the vicinity of Metcalf Avenue and College Boulevard, six thefts have been reported in May which is believed to be associated to the same man. A boy, who is believed to be approximately from 10 to 14 years old, accompanied the man in two of the six thefts.

The suspect was caught on surveillance footage attempting to use one of the stolen credit cards from an office suite.

The suspect is a man approximately five- feet-six-inches to five-feet-eight-inches tall, has bad teeth, and tattoos on his forearms. The boy is reported to have blond hair and has a lanky physique. A gold colored Chevrolet Trailblazer with a missing left rear hubcap and wires hanging out of the rear may be involved in the thefts. A burgundy extended cab GMC truck was also reported at the crime scenes.

If anyone has any additional information on the thefts or the suspects, you are encouraged to call the Overland Park police at 913-344-8750 or the Tips Hotline at 816-474-8477.

Swipe Fees Costs Retailers

Admin — Mon, 05 Jul 2010 00:00:00 GMT

Many consumers do not know that every time a credit card transaction is made, the retailer is charged a “swipe fee” to process the transaction.

Since 2001, swipe fees have almost tripled even though the costs of making the transactions have actually declined. The fees now show little correlation to the actual expense of processing the credit card transactions.

A long overdue congressional bill promises to regulate these fees, hopefully making them a bit more reasonable. The average swipe fee for a credit card transaction is approximately 2 percent of the total dollar amount for the transaction. In 2009, swipe fees added up to a whopping $48 billion. Besides the large amount, the fees can be inconsistent. This makes it challenging for retailers to price goods and services.

Ron Ruman, speaking on behalf of Congressman Paul Kanjorski, said, “Some people are being charged more than others.” He also added, “It's difficult to know what the charges are coming down the line.”

Many businesses are seeking for reforms which will place limits on debit card fees, not unlike the Durbin Amendment. The Durbin Amendment was a financial overhaul package, which has passed the Senate with bipartisan support and is now being debated on in Congress.

Ruman said, “We're asking for a proposal ... that would allow the Federal Reserve to come in and work with the credit card companies and retail groups to set reasonable limits on the fees charged for debit card use."

The amendment was not included in the House approved version, and both bills must be reconciled before being sent to President Barack Obama. Kanjorski is on the House-Senate conference committee working on the negotiations.

Barb Green, owner of Blue Mountain Ski Resort, commented, “Being a small business, these fees really hit us hard. If these fees were reasonable, we could consider hiring more staff, but this is holding us back. It's a stealth tax consumers don't see, but it hurts local businesses a lot."

Capital One Charge-off Rates Decrease

Admin — Wed, 30 Jun 2010 00:00:00 GMT

Customers of Capital One Financial Corp. are getting more prompt in making their monthly credit card payments in May. For two consecutive months, delinquent payments to Capital One decreased.

In a Securities and exchange Commission filing, Capitol One reported their net charge-offs in May to being $436.2 million. This is 9.48 percent of its domestic balances and was lowered from $451.7 million in April.

It is routine to write off card balances as soon as they are 9 months delinquent. It is assumed that after 9 months, the balances are uncollectible.

In the recent year, the credit card industry has written off a record amount of debt as consumers continues to struggle in this gloomy economy. According to the Federal Reserve, in the first quarter of the year, charge-off rate had risen from 10 percent from 9.5 percent. In 2007, before the recession, the charge-off rate was estimated at 3.8 percent.

There are growing signs that cardholders are getting better at paying off their debt. Capital One has reported that the number of 30 days past due payments has fallen to 4.8 percent in May. Their rate for international card accounts also dropped to 8.2 percent, from 8.6 percent in April. Conversely, Capital One's write off rate for auto loans had risen from 1.75 percent in April to 1.86 percent in May. This is a .62 percent increase. Shares of Capital One went up $1.28, or 3.2 percent, to $41.74.

Credit Card Debt Write-Offs Fall Slightly in May

Admin — Wed, 30 Jun 2010 00:00:00 GMT

Citigroup Inc., has the highest rate of credit card balance write-offs for nonpayment in the industry. But this figured dropped slightly in May.

It is reported that Citi charged off 11.16 percent of balances this month. This is down from 11.55 percent in May and 11.23 in April.

Citi's rivals reported somewhat lower charge-off rates. Credit card issuers like Capital One, JPMorgan Chase, and Discover reported rates between 8.92 percent and 9.48 percent.

It is customary for credit card companies to write off standing balances after they are 180 days past due. Past 180 days, it is assumed the money due will not be paid.

In the recent year, the credit card industry has written off a record amount of debt as consumers continues to struggle in this gloomy economy. According to the Federal Reserve, in the first quarter of the year, charge-off rate had risen from 10 percent from 9.5 percent. In 2007, before the recession, the charge-off rate was estimated at 3.8 percent.

There are growing signs that cardholders are getting better at paying off their debt. Citi has reported that the number of 30 days past due payments has fallen to 8.42 percent in May. This is lower than the 9.02 and 9.14 percent figure in April and March respectively. Other card companies are reporting figures between 4.2 percent and 4 percent. Shares of Citigroup went up 8 cents, or 2 percent, to $3.96.

How to Resolve Credit Card Debts

Admin — Wed, 30 Jun 2010 00:00:00 GMT

The accumulation of credit card debt can make it extremely difficult to pay the minimum monthly payments associated to a large debt amount. The situation is a too familiar one for many cardholders. A lost of a job or sudden medical expenses can easily put someone into great financial misery. But there are options for those in this situation.

One course of action is to contact your credit card provider to set up a settlement plan for your debt. Negotiations can be conducted by yourself or you may hire someone for consultation and negotiate for you. If you do decide to go at it alone, you would probably have to call the credit card company a number of times before an agreement can be reached. The ultimate goal is to decrease your monthly payments into an amount that is more manageable. By reaching an agreement, you can avoid the consequences of not being able to make your monthly payments.

Being intimidated by your debt situation is not uncommon. Those with a serious debt can seek consultation from credit counseling services. There are certain credit counselors that are certified by the government. These services can help you manage your finances and even set up a debt management plan. Filing for bankruptcy is also a good alternative for some. Some of the government endorsed counseling services can be found at www.usdoj.gov/ust.

As a final resort, bankruptcy should also be considered in resolving credit card debt. Though one should be cautioned about the consequences of declaring bankruptcy. Filing for bankruptcy will devastate your credit score, forcing you to pay for a great deal of your expenditures with cash. Your credit score may also be reviewed when you apply for a job. There are basically two types of personal bankruptcy filings. Chapter 13 Bankruptcy requires a lawyer and that you get credit counseling six months before the filing. With Chapter 13, you are able to keep your personal property but is required to setup a repayment plan for your debt. On the other hand, Chapter 7 Bankruptcy will require you to relinquish all personal property. In any case, legal counseling is highly advised.

So as you can see, there are a number of options for you to settle credit card debts. Once you have decided the most appropriate course of action for your situation, chances are you will feel more relieved about the debt dilemma.

Study Shows A Greater Number of Cardholders are Prompt in Their Payments

Admin — Wed, 30 Jun 2010 00:00:00 GMT

Regardless of a sluggish economy, cardholders seems to be improving the managing of their debt.

In the last concurrent five months, many credit card companies reported that the delinquency rate of their card accounts have fallen. According to a report issued by Reuters, American Express had the lowest delinquency rate of all the other card issuers. American Express reported just 2.9 percent of their overall accounts are more than 30 days late. This is a 0.2 point decrease compared to April.

On the contrary, Bank of America bears the highest delinquency rate of all the other banks. At 6.39 percent, this is still a 0.34 percent decline from the previous month. JP Morgan, Discover, Citigroup, and Capital one all reported approximately the same figures.

Discover was the only provider of the six companies reporting higher charge off rates. These losses are likely to be caused by high national unemployment, according to Reuters.

An expert at Reuters commented, ""I don't think the trends suggest that we're seeing incredible improvement out there - we've still got very high unemployment - but they do suggest that things are slowly and steadily getting better."

Such write-offs are speculated to being the major reason for the drop in credit card debt. Currently, the aggregate credit card debt in the U.S. is estimated to being approximately $838 billion.

Late fee penalties reduced

Admin — Wed, 30 Jun 2010 00:00:00 GMT

New regulations employed by the Federal Reserve attempts to manage credit card late fees and interest rate increases.

A great number of credit cardholders find themselves overwhelmed when trying to keep up with their payments. This has led the Federal Reserve to implement new policies to reevaluate their late penalty practices.

The Credit Card Accountability, Responsibility, and Disclosure Act (CARD) is responsible for a majority of these financial reforms. Effective in August of this year, several conventions of this act is hoped to provide consumers with the much needed financial protection.

One of the major details of the CARD act is the capping of late charges. The Federal Reserve has put a ceiling on the amount of money a credit card company can charge a customer for missing a payment to $25. This is down from the $39 which is the usual late charge penalty for most banks. Also, the late fee may not be over the minimum monthly payment owed.

Other debit card penalty fees are also under the scrutiny of the CARD act. The Federal Reserve have enacted a regulation to prohibit credit card issuers from charging over limit penalties that are higher than the amount to which it was over.

Under the CARD act, consumers can not be charge penalties multiple times for the same transaction. If a cardholder has a late payment for a particular month, the banks can only penalize you once for that single infraction.

Besides late fee related issues, the Federal Reserve has also implemented regulations which focuses on interest rate hikes and inactivity fees. It is now mandatory for banks to re-evaluate any interest rate increases every six months. Credit card companies are also barred from charging any inactivity fees if the consumer decides not the use their cards.

The goal of the Federal Reserve and the CARD act is to limit credit card companies from mistreating consumers for their own financial gain. It is not a reason for card holders to ignore their financial responsibilities, since opening a credit card account is still a contractual obligation. It is still strongly advisable for card holders to make prompt payments and keep their balances in control.

Car Rental Insurance and Credit Cards

Admin — Wed, 30 Jun 2010 00:00:00 GMT

It is usually mandatory for representatives at car rentals to offer you optional insurance for the car. What many do not know is that this service can actually be redundant and unnecessary. In many cases, paying for your rental with a credit card will already provide the insurance need.

Rental car insurance provides coverage for any damage to the rental car due to theft or an accident. The insurance is intended to supplement your primary insurance policy. If you are not covered by an insurance policy, your credit card company may become your primary insurer.

A credit cards insurance coverage can be implemented by simply using the designated card to pay for the rental. When the representative at the rental company explains to you about their optional collision insurance, simply refuse the offer. It is not necessary to contact your credit card company unless there was actually an accident or the rental car was stolen.

If you were involved in an collision or the car was indeed stolen, you will need to provide your credit card issuer with a written claim and submit it to them as soon as possible.

Initiating your insurance through your credit card is fairly simple, but it is important for one to read the fine print in regards to the provided policy.

To start with, it is critical to read the terms and conditions of your policy. Various credit card issuers differ in their policies, and it is important for you to know the situations the insurance can be applied to. Whether the card is for personal or business use is also an important bit of information.

Some credit cards places restrictions on what type of vehicle you can rent. Antique vehicles, recreational vehicles, sports cars, and cars over a certain value are usually not covered by the credit card insurance.

The driver of the vehicle is also an important factor. The credit card holder must be the primary renter for the vehicle. If someone else had an accident while driving the rental car, your credit card's insurance may or may not cover the incident.

It may also be important to find out the locations of coverage. Some credit card companies have only a limited range of countries to which their insurance is applicable. Incidents beyond a certain area may not be covered by the policy.

There may also be a fixed time limit to which the insurance is effective. Many cards will have a 30 day limit in coverage. Any rentals beyond 30 days will not be covered by the credit card.

Finally, read the coverage limitations for your credit card insurance policy. Most rental insurance will cover collision or theft but may not cover personal injury or liability. The amount of money covered may also vary from card to card. Some credit card companies may also charge certain fees if the insurance is ever applied to a rental. Most cards will also not cover drunk driving incidents.

Modified Card Offers Lowers Interest Rates

Admin — Mon, 28 Jun 2010 00:00:00 GMT

The median average interest rate lowered to 14.42 percent this week as banks continuingly alter the rates on a number of their card offers. Chase and PartnersFirst lead the pack in adjusting annual percentage rates (APRs) and primarily contributed to the decline.

Chase decreased the bottom end of the Slate card’s APR range. They also contradictorily increased the interest rates on their Priority Club Rewards Visa card. Chase did not comment on the reasoning behind the changes, but is most likely the result of a slow economic recovery and increased government regulations on the credit card industry. The most prominent government legislation affecting banks would be the Credit CARD Act, which prohibits interest rate hikes on existing customers.

PartnersFirst took a slightly different route in APR modifications. They changed their Golf Magazine Rewards Visa card by adding two additional pricing levels to its original single rate APR. Chief Executive of PartnersFirst, Hal Erskine, commented, “We're reacting to competition -- primarily trying to get a lower rate out there for our higher credit quality customers.” Although this may be true, it also allows PartnersFirst to charger higher interest rates to consumers with a less than perfect credit history.

Both the actions of PartnersFirst and Chase contributed to the overall drop in interest rates for new card offers.

The slumped economy and implementation of the CARD Act is speculated to being the primary reason for increasing APRs in recent months. Credit card issuers are very precautious about setting credit limits beyond a customer’s financial means.

The latest decline in APRs might be a good sign that the economy is recovering. In March, retail sales increased 1.6 percent. This is the greatest gain in four months, according to government data. Consumer confidence seems to be on the rise.

However, it is uncertain consumers are using their credit cards to make a majority of these purchases. Studies have also shown a decrease in credit card use as cash and debit cards seem to be more popular than before.

Debit Cards Preferred Over Credit Cards

Admin — Mon, 28 Jun 2010 00:00:00 GMT

It is a growing trend for consumers to migrate towards the use of debit cards as oppose to credit cards. Credit cards are plagued with high interest rates and can easily put cardholders into unwelcomed debt. Carrying cash around can be cumbersome and inconvenient. Debit cards provide consumers with a good alternative to cash and credit cards. There are a number of reasons why many people are choosing debit cards over credit cards.

Debit cards are fundamentally the same as checks, but is a lot more handy to carry around and use. Similar to checks, debit cards are coupled directly to your bank account and any purchases made using a debit cards is automatically deducted from your account. It is no longer necessary to take the time to write checks or go to the bank to withdraw cash if you have a debit card. Furthermore, debit cards can be used almost anywhere. On the contrary, some establishments may not accept checks as payment. These characteristics of debit cards make them attractive options for travel expenditures.

Using a debit card is very similar to using a credit card. The major difference is, with credit cards, you are essentially instigating a loan with every purchase you make. With debit cards, you are basically making a purchase with finances you already have. Gone are the interest rates and late charges associated with credit cards. And because you are only spending within your economic means, using a debit card is a much more financially responsible way of making purchases.

There are certain characteristics one should be aware of before switching over to a debit card. Debit cardholders should be very conscious and keep adequate records of their finances. Spending beyond what you have with a debit card can result in overdraft fees. Secondly, some banks do charge fees for using a debit card. One should try to look for debit cards which do not have these fees.

There are also rare instances where debit cards are not accepted or would not be the best choice to use. An example would be gas stations. Since, the final dollar value at the pump is unknown until you actually finish filling the car with gas, a debit card would put a hold on your account for a fixed dollar amount. It may take several days before the actual charge is reflected on your debit card account.

Car rentals can also be tricky with a debit card. Some car rentals do not accept debit cards or may conduct a credit check before approving a car rental.

Credit Card Transaction Fees Cost Consumers $48 Billion Annually

Admin — Mon, 28 Jun 2010 00:00:00 GMT

Today, a credit or debit card is an integral part of our daily lives. It's convenience, small size, and occasional cash-back incentives, makes it an essential tool for our every day expenditures.

Unfortunately, most do not know that using a credit or debit card for our daily spending comes with a significant drawback. Transaction fees, charged by credit card companies, can cost consumers an astonishing $48 billion annually. There is a growing number of government legislation trying to limit the amount the banks can charge the consumers.

Visa and MasterCard are the primary credit and debit card institutions. Visa accounts for 47 percent of the credit card market in 2008, while MasterCard holds 35 percent worldwide. Both Visa and MasterCard relies on individual banks to issue the credit cards but the actual transactions and transaction fees are regulated by both firms. The two firm's primary focus is to maximize revenue for the issuing banks and not to provide consumers with lower rates.

To generate revenue, credit card companies charge an "interchange fee" for every transaction or purchase made using a credit or debit card. This fee is deducted from the total purchase amount and then the merchant receives the deducted total. This directly translates to higher retail prices and is ultimately paid for by the consumer.

The use of interchange fees is nothing revolutionary or controversial. But what many people don't know is that the United States has the least amount of regulations towards this matter. Many other countries has a well established method for consumer protection and transparency against credit card company practices. Though there is currently an antitrust class action lawsuit against these credit card firms, a verdict is quit a distance away and its' ultimate advantage to consumers is murky at best. Recent government regulations restricting credit card companies can also be easily dodged or manipulated.

A more clear-cut approach is needed to tackle this matter. Primarily, Congress should acknowledge that debit cards are no more that plastic checks. The Federal Reserve and Congress should work together on forbidding banks to charge a fee on each issued check. This constraint should then be carried over to debit cards.

In addition, there should be strict regulation on the fees charged for credit cards. Interchange fees should be limited to the actual cost of conducting the transaction plus a sensible profit. Doing so would save merchants billions of dollars annually. A saving that will ultimately be passed on to the consumers.

The proof of the effectiveness of these actions is by example. Legislations, such as the ones described above, are already in effect in Australia. The Reserve Bank of Australia estimated that approximately $1 billion was saved annually with the system in works for more than five years.

The advantages of this systems is fairly obvious. Besides improving the fairness of the system, the money saved on consumers will provide a sizeable economic stimulus during a time of recession.

Interest Rates Slide Due to Bank Reforms on Bad Credit

Admin — Wed, 23 Jun 2010 00:00:00 GMT

CreditCards.com weekly credit card rate report conveyed a reduction in APRs this week. The drop is due to modifications in credit card offers.

The median average APR on new credit card offers retreated to 14.44 percent this week. The decline can primarily be attributed to Credit Ones' termination of some of their high interest rate cards. Doing so caused a general lowering of the national average interest rate on new card offers.

The Credit One Visa Silver card had the highest APR of any card available, with a rate of 29.9 percent. The card was replaced with the Credit One Visa Platinum, which has a considerably lower APR of 23.9 percent. Both the Silver and Platinum cards are targeted towards people with bad credit.

On the average, subprime APRs have increased significantly during the last six months. Credit card issuers have increased interest rates due to difficult economic situations and the implementation of the Credit CARD Act. New restrictions executed by the CARD Act limits the increase in interest rates on existing cardholders.

Anuj Shahani, of Synovate's financial services group, commented, "we would expect most bad credit issuers to offer a higher APR (to make up from lost revenue from other streams). While Credit One's actions seems to oppose the norm, they have also executed changes that are unfavorable to credit cardholders.

Credit One has committed changes to the fee structures on their credit cards. The removal of its grace period, means that card holders will begin paying interest for their spending as soon as the purchase is made. This change also applies to cash advances on all Credit One cards. The CARD Act actually limits the time frame of grace periods to being at least 21 days, but mentions nothing about not giving a grace period at all.

On the average, consumers are paying nearly twice as much interest on credit cards as they were six months ago. But credit card issuers do realize the consequences of subjecting their customers with higher interest rates. First Premier's release of a 79.9 percent APR offer, late last year, was heavily scrutinized by the media. In addition, Citi's raising of APRs on a majority of their cards also resulted in a large number of their customers closing their acccounts. Shahani added, "It also prompted Rep. Louise Slaughter, chairman of the House Rule committee, to suggest legislation that would cap credit card interest rates at 16 percent. Some issuers, aware of the potential backlash and special attention now being paid to extreme APRs, may choose to lower their APR rather than deal with the consequences."

Changes in Credit Card Offers Cause Interest Rate Hike

Admin — Wed, 23 Jun 2010 00:00:00 GMT

Domestic median interest rates of new credit card offers rose to 14.70 percent this week, according to a weekly credit card rate report conducted by CreditCards.com. The increase is the result of changes made by the credit card issuers in a continuing effort to adjust to the changing market.

One of the major cause is the general increase in annual percentage rate (APR). Banks continue to find it necessary to increase rates to compensate revenue lost due to growing government regulations and a challenging economic setting.

The eBayMasterCard is a good example of card offerings effected by this growing trend in higher APRs. Last week, they've decided to increase their rates from a range of 19.99 percent to 23.99 percent, to a flat rate of 26.99 percent. Another culprit is the removal of some low interest cards by various banks which lowered the national average.

Credit card companies have justified their increase in APRs as a proper response to a difficult economy and the Credit CARD Act, which imposes tough regulations on banks and limits the increase of APRs for existing credit cards.

The Federal Reserve commented, " Bank lending was still contracting and interest rates on many bank loans had risen further in recent months."

The hike in interest rates were expected by credit card holders. The average consumer is already accustomed to paying a higher rate if they decide to make purchases using their credit cards. Interest payment on a revolving debt is almost twice that of interest paid per month six months before.

Card Issuers Test New Card Offers

Admin — Sun, 20 Jun 2010 00:00:00 GMT

The national average interest rate on new credit card offers declined for the week due to changes implemented by credit card companies to contend with a slow economy.

Due to more stringent government regulations and a lackluster economy, credit card issuers are evaluating new card offers in an act to make the best of a gloomy situation. The changes implemented resulted in lower interest rates for new credit cards (14.42 percent). Chase and PartnersFirst showed the most significant changes by drastically adjusting their annual percentage rates on their cards.

Chase decided to increase rates for their Priority Club Rewards Visa card while lowering it for the Slate card. Chase has declined to announce the reasoning behind the changes. Although Chase's motives are unknown, other banks have revealed the changes implemented by the Credit CARD Act and economic challenges as the primary reasons for the changes.

On the other hand, PartnersFirst modified their offerings a bit differently. Their Golf Magazine Rewards Visa card was changed from a specific APR to a rate program which consists of three levels. Hal Erskine, chief executive of PartnersFirst commented, "We're reacting to competition -- primarily trying to get a lower rate out there for our higher credit quality customers." Obviously, the change to an APR range system also allows them to instigate higher interest rates to consumers with a less than perfect credit history.

The changes in credit card interest rates, along with the exclusion of some terminated cards, drove the national average rate lower. According to CreditCards.com's interest rate data, a consumer who has a card balance of $5,000 will have to pay $6,427 to pay off the balance, assuming they would pay $150 per month given the current average interest rate.

Due to the recession, card issuers are more precautious in lending money to consumers. This, in combination of the Credit CARD Act, drove APRs higher in recent months. But more currently, there seems to be more signs that the weak economy is recovering. March sales in the retail sector increased 1.6 percent, which shows growing consumer confidence. It is not certain whether consumers are making these purchases with credit cards or cash, but the increase is expected to continue. Federal Reserve Chairman Ben Bernanke stated, " Going forward, consumer spending should be aided by a gradual pickup in jobs and earnings, the recovery in household wealth from recent lows and some improvement in credit availability."

More Lucrative Credit Card Reward Programs

Admin — Wed, 16 Jun 2010 00:00:00 GMT

Hotel incentives and airline miles can be a bit misleading. Using these rewards might prove to be difficult and constraining. But there are cards out there that offers very lucrative reward programs that cardholders can easily take advantage of. Three of these cards will be discussed here.

The Charles Schwab Bank Visa is a very good example. The card offers a very intuitive incentives program that is very easy to understand. Charles Schwab's Visa card offers 2 percent cash back on all purchases with no annual fees. The card also charges no transaction fees for foreign currency conversion. Their customer service representatives are knowledgeable and extremely helpful and their security features are exceptionally impressive.

Another note worthy contender would be the Nordstrom Bank Visa card. Nordstrom has a well-earned reputation of treating their customers fairly. This sense of honesty and level of customer service is not limited to their department stores. Nordstrom's incentive program is based on a point system. For every Nordstrom purchase, two points are granted for every dollar you spend. Any other purchase gives you one point per dollar. Two thousand points will earn you $20 that can be used with any Nordstrom store. This essentially equates to four percent cash back on all Nordstrom purchases and two percent cash back on sales through any other stores besides Nordstrom. Nordstrom cardholders do need to be aware that their points are only valid on Nordstrom purchases and will expire within six months.

The American Express Business Platinum Card also has an excellent rewards program. Frequent flier miles from the Platinum card allows you to use the miles on multiple airlines and a host of hotels. Dollars can also be redeemed through Hertz car rentals during peak seasons. Carriers of the American Express Business Platinum Cards are also able to gain access to Delta, American, and Continental airport lounges. American Express's exclusive relationships with expensive resorts and hotels can also translate to significant markdowns for the cardholder. The biggest downside of the Platinum card is its $395 annual fee and their diminishing service partners.

Consumers Struggle With Decreased Credit Limits

Admin — Wed, 16 Jun 2010 00:00:00 GMT

A growing phenomenon, known as "follow me down", is affecting a great many number of consumers. As credit card debt bearers become more financially responsible in paying off their loans, credit card companies are seemingly punishing them by decreasing their credit limit.

Spending limits are being drastically slashed throughout the credit card industry. Upon paying up a majority of your revolving card balances, you may discover that your card limit has been reduced by more than 85 percent, leaving you with only a few hundred dollars spending margin. Are consumers being punished for being financially responsible? Linda Sherry, director of Consumer Action, said, "It's appropriate that card companies have slowed down the automatic credit line increases, but we think it's unfair to grab back from what's already been given."

Besides being a frustrating experience, a drastic decrease in your credit limit can also have profound effects on your credit score. The amount of credit available to consumers actually dictates more than 30 percent of their total credit score. Jeffrey Weber at SmarBalanceTransfers.com said, "If all of a sudden you go from using 35% or 40% of your available credit to 90%, that's going to have a huge effect on your credit score." Weber has seen an increase in complaints from cardholders who have been affected by the "follow me down" phenomenon in recent months. "It seems like the card companies' computerized models are being counterintuitive," says Weber. "These people are paying down their debt and then their limits are reduced even though they're trying to avoid delinquency."

A majority of the complaints were in reference to credit cards provided by Chase and Citibank. Both refused to comment on their actions.

Those who do not wish for their credit limits to be decreased do not have a lot of options. If consumers are on their card issuers "watch list", their fate is inevitable. Even if they do decide to pay off a majority of their ongoing balances, it is still very probable that their limits will be slashed significantly. Ben Woolsey at CreditCards.com said, "The computer models have been telling card companies that certain customers might be in an industry, or an area of the country, where people are more likely to walk away from debt."

But there are ways to avoid being in this "watch list." By evading sudden increases in spending on a particular card, one can avoid the banks' computer algorithms to distinguish you as being a high-risk candidate for a limit cut.

Industry Taking Advantage of Credit Card Law Loophole

Admin — Wed, 16 Jun 2010 00:00:00 GMT

President Barack Obama has signed into law a major reforms bill to regulate the practices of the credit card industry. The sole purpose of the law is to provide oversight on arbitrary interest rate increases and fees subjected to credit card holders. Although the law will have great impact on the way card issuers do business, it will not be fully initiated for nine months.

The major concerns are not with the law itself, but with the nine months grace period given to the industry. It is feared that the banks will exploit these nine months to initiate harsh policy changes to unsuspected consumers.

A growing number of concerns has already risen after the passing of the law. A credit counseling center in Dallas Texas has reported a 40 percent increase in calls primarily from card holders who are burdened with credit card debt. Todd Mark of the Consumer Credit Counseling Service of Greater Dallas said, "It's amazing how much of the debt is actually fees and interest instead of principal."

There are several actions the credit card companies are expected to kick off in response to the new regulations. Implementing annual fees, eliminating grace periods for interest charging, and abolishing rewards programs are all initiatives the industry will enact to offset the revenue loses they will see with the new law. Interest rates and fees are the primary source of revenue for banks.

In addition to these changes, the industry is also making it more difficult for consumers to borrow money. Approximately 60 percent of lenders have incorporated harsher credit card lending standards for this year. This ultimately means less money for consumers to make purchases in an already difficult economy. Adam Levin of Credit.com said, "And we still face the fact that Americans are debt-ridden and that Americans have to focus on developing a serious plan personally to reduce their debt. Because this is not going to solve that problem."

It is estimated that Americans owed $980 billion in credit card debt six months before. But with stricter lending standards and the American consumers' determination to pay off their credit balances, the number has fallen to $945 billion.

Americans Shying Away from Credit Cards

Admin — Mon, 14 Jun 2010 00:00:00 GMT

There seems to be a growing trend of consumers shying away from the use of plastic for their daily expenditures. Equifax has reported that the number of new credit cards issued in 2009 fell to 32 million. This is less than half of what it was two years ago at 70 million cards issued. The report also shows a drastic decline in standing debt for most cardholders. Credit card debt declined at a yearly rate of 2.25 percent. Although this falling trend can be attributed to consumers wanting to be more financially independent, some of it is due to the recent actions by the card industry.

Credit card interest rates has risen significantly during recent times. With a national average rate of about 17 percent, consumers are more reluctant to spend their hard earned money on interest payments. The chief executive of lowcards.com, Bill Hardekopf, says, "If you're a serial spender or charger, and you have a lower credit limit, you're able to charge less and carry less of a balance." Bill later adds, "It's much more expensive to carry debt on your credit card."

Your browser may not support display of this image. But the times of high credit card debt did not just impact the consumers. During the recessing economy, banks had to deal with a high rate of payment defaults with a greater number of their cardholders as well. Bill Hardekopf states, "They had given credit much too freely and approved high-risk people. Issuers found themselves in a precarious situation, so now they've cut back." For this reason, cardholders are getting less card offers which had stimulated much of the spending before.

The lack luster economy also encouraged Americans to be more knowledgeable in regards to their spending practices. It is more typical for people to seek independence from credit card debt and live within their financial capabilities. This basically means a majority of them are spending less money and making fewer purchases. This preference towards fiscal responsibility is also promoting the use of debit cards versus credit cards.

Even with the consumers changing perception of credit cards, they are still a long way from becoming completely debt free. According to Federal Reserve reports, personal and automotive loans are on the rise. So even with a growing avoidance of credit cards, Americans still find it necessary to borrow money from other means besides the plastic card.

Reasons Why Credit Card Companies Will Parish

Admin — Mon, 14 Jun 2010 00:00:00 GMT

The growing consumer discontent toward credit card companies and their tactics may result in the inevitable demise of these institutions. According to a report issued by creditcards.com, credit card debt has consistently decreased at an annual rate of 2.25 percent. The report also shows that ten percent of consumers had voluntarily relinquished their credit cards or had them revoked in the past eight months. High interest rates, decreased credit limits, increase in alternative payment options, growing government restrictions on card issuers, and financially responsible consumers are all contributing factors to the disappearance of the credit card industry.

Due to the ailing economy, card companies have raised interest rates on their offerings considerably during recent years. This makes using credit cards more costly and less advantageous. The average interest rate on credit cards is now 16.8 percent. Along with the higher rates, introductory and promotional rate offers of previous years are quickly diminishing.

Banks have also seen the need to decrease credit limits on their credit cards. This decrease in credit means consumers will have less available money to make purchases. The average available credit for cardholders are estimated to be half of what it was years ago. Consumers with below average credit scores find it very difficult to sign up for new cards.

Consumers are also finding it more convenient and financially responsible to use debit cards instead of credit cards. Jeremy Simon, a reporter for www.creditcards.com, says that people are preferring debit cards, “partially because cardholders are trying to lower their debt levels in an uncertain job market.” With debit cards, consumers know that they are using money they already have. A study conducted by the Javelin Strategy & Research showed that online sales and debit card use rose an astonishing 21 percent between 2008 and 2009.

Increasing government restrictions on credit card companies are also contributing to their possible extinction. The Credit CARD Act of 2009 limits a lot of unethical tactics the card industry has used for years to generate revenue. Banks are no longer able to inflict uninformed interest rate increases to cardholders without a reasonable cause. The CARD Act forces these companies to reinvent themselves and find alternative sources of revenue.

But the ultimate cause of the fall of the credit card industry will probably be the consumers' aspiration to becoming more informed and financially responsible. People are beginning to be enlightened by the fact that using a credit card may not be a good thing. A research conducted by BIGresearch showed that approximately 40 percent of respondents are currently trying to pay off standing debt and decreasing their expenditures. The lack of progress in the discouraging economy has provoked a sense of fiscal accountability with many Americans.

The Truth About Free Credit Reports

Admin — Mon, 14 Jun 2010 00:00:00 GMT

Online advertisers has always been stressing the importance of credit reports. They often promote their services as being free of charge. Consumers should be enlightened on how some of these claims can be misleading.

Beginning Friday, the Web sites that offer these so called free services will need to change their method of advertising. The CARD Act of 2009 mandates all companies marketing free credit reports to reveal that the product they offer at no cost is not the free credit report a consumer is entitled to by law.

Everyone is entitled to one free credit report each year which is mandated by the Federal Trade Commission. These reports are provided by credit report agencies, Transunion, Equifax, and Experian. The free report can be obtained through AnnualCreditReport.com.

Although these report services claims to be free of charge, there are often certain deceptions in the process. In most cases, unneeded services such as credit monitoring products are attached to the free credit reports. These add-on services are not free and are usually charged by the credit companies. Companies such as FreeScore.com, CreditReport.com and, FreeCreditReport.com are renowned for using such tactics.

With the new rules set by the CARD Act, a message is now obligated to be shown on any page advertising free credit reports. This message will read: "THIS NOTICE IS REQUIRED BY LAW. Read more at FTC.GOV. You have the right to a free credit report from AnnualCreditReport.com or 877-322-8228, the ONLY authorized source under federal law."

This new law was in direct response to the growing number of complaints the FTC had received from consumers who had requested the free credit reports. A majority of the requesters were not aware of the charges they were subjected to during the process of obtaining the report. Charges that can range from $15 a month for credit monitoring services. Consumers also discovered that it was sometimes difficult to get out of these monthly obligations once they were unknowingly enrolled in the program.

In opposition to the new rules, credit report companies are beginning to change their marketing strategies. Instead of promoting free credit reports, many advertisers are beginning to offer free trials, free scores or inexpensive reports. But even with this change in tactics, we are assured that the Federal Trade Commission will continue to monitor these businesses and correct them if they seemed to be out of line.

Interest Rates move higher on Capital One's New Business Strategy

Admin — Tue, 08 Jun 2010 00:00:00 GMT

The domestic median interest rate on new credit cards rose to 14.50 percent this week due to Capital One's pronouncement to increase rates on their business credit cards. This is according to the CreditCards.com Weekly Credit Card Rate Report. These changes are in a direct response to compensate projected revenue losses due to the Credit CARD Act's restrictions.

Interest rates for the Visa Business Platinum card, which ranged from 14.99 to 24.99 percent, was changed to a single rate of 19.99 percent. But because the rate average is computed using the lowest APR range, the change increased the general national average. Along with the rate amendment, Captial One got rid of one of its business reward incentives.

Credit card issuers have been testing out a variety of APRs and fees during the economy recovery to assess consumer responses. It is believed that these trails will not end anytime soon. Senior vice president of Comperemedia, Andrew Davidson, stated, "" The change to the Business Platinum card may be an attempt to simplify the product offering ahead of more sweeping changes to come."" As banks are testing the waters, consumers continue to pay more on interest rates.

But APRs changes to business cards are nothing revolutionary. Due to the uncertainties of the failing economy in 2007, banks were doubtful of the American small businesses' ability to repay their unsecured debts. In response, interest rates were increased dramatically to combat the increase in risks. And with the increase in APRs, consumers and business ended up paying more to have access to money. With the recovering of the economy, this trend is beginning to change. But until we can see the financial system go back to its full strength, we can expect to see a still greater number of changes as risks and doubtfulness continues to linger.

Chase Reimburses Credit Card Rewards

Admin — Tue, 08 Jun 2010 00:00:00 GMT

Chase stopped promoting their Chase Plus card in 2006. This card provided a 5 percent cash back incentive for daily purchases that fit into a certain category and a 1 percent cash back for purchases in an unspecified category. The 5 percent cash back was applied to purchases from drugstores, gas stations, and grocery stores, etc.

Since 2006, Chase had presented their Chase Freedom card to their customers, which gave 3 percent back on daily purchases that fit into similar categories as the Chase Plus card. The problem with this card was that Chase altered qualifying purchase groups every quarter without proper notification to cardholders. This made it difficult for consumers to take full advantage of the cash back incentives.

Recently, Chase has announced the revival of its 5 percent cash back policy while also expanding the qualified purchase categories to include higher priced items. More detailed information on these categories will also provide cardholders an easier method of tracking their rewards. This new policy will be enacted on March 15, and detailed information will be posted on their website (www.chase.com).

Chase's move in increasing reward availability is in opposition to many other credit card companies who are cutting back on cash back offerings. Chase hopes that this will attract more customers and increase consumer spending with their products. Though any increases in consumer spending is undecided, it is still a bold step for Chase.

There will be adjustments to qualifying purchases every quarter. During the first quarter, the 5 percent cash back will be offered on a variety of daily purchases and high priced items. In the second quarter, rewards will be focused on home improvement items, lawn and garden products, and home furnishings purchases, etc. The third quarter will bring rewards with purchases pertaining to travel, airlines, hotels, and auto rentals. The 5 percent reward will be available on department store, move, and grocery store purchases during the fourth quarter.

Although this system is more straight forward and easier to understand, cardholders may still not be able to coordinate their expenditures with the given timeline. This might render their new policies less attractive to buyers using their older Chase Plus cash back system.

Wells Fargo slashes APRs

Admin — Tue, 08 Jun 2010 00:00:00 GMT

Wells Fargo lowered their interest rates on several cards this week to stay competitive with other banks. This cut in APRs caused average domestic rates on new credit cards to drop significantly.

According to CreditCards.com Weekly Credit Card Rate Report, the average interest rate on new credit cards dropped to 14.45 percent after Wells Fargo's decision to reduce interest rates on four of their credit cards. This move is in stark contrast to the growing trend of increasing rates to offset government regulations which limits credit card issuers' source of revenue.

Lisa Westermann, Wells Fargo's assistant vice president of public relations, commented, "" As a normal course of business, Wells Fargo evaluates its pricing and fees to ensure the best competitive pricing for our customers while managing risk for the company.""

Although, there are no assurances that all credit cardholders will be affected by the lowered rates, Wells Fargo's decision to drop interest rates on their credit cards is still a step of great significance and departure from more popular trends. Many other banks have raised interests rates to counterbalance government laws enacted in February to limit credit card company's ability to raise interest rates. Wells Fargo has broken this trend.

Lowered interest rates is the second good news for consumers this week. The Federal Open Market Committee also voted to keep the federal funds rate at a range of 0 percent to 0.25 percent and the prime rate at 3.25 percent. This falling interest rate trend seems to be solid and long standing. And with these lowered interest rates, many credit cardholders are substituting their fixed rate with variable rate credit cards. If the Federal Reserve keeps its interests rates at this level, lenders will not see increases for at least 45 days' notice from banks.

National Average Interest Rates Drops as First Premier Retires High Interest Credit Card

Admin — Sun, 06 Jun 2010 00:00:00 GMT

According to the CreditCards.com Weekly Credit Card Rate Report, the nationwide median interest rate on credit cards dropped to 14.39 percent. This is a quarter-point decline which is the largest fall recorded after 2007. But there is no reason for consumers to get too thrilled. The root cause of the significant fall in interest rate is due to the decision of First Premier to resign it's card offer with a rate of nearly sixty percent. This single act was the reasoning behind the significant drop in interest rates.

The Gold MasterCard, offered by First Premier, was primarily targeted to customers with a poor credit history. The product was a trial offering by the company and charged an astonishing 59.9% interest to customers carrying the credit card. First Premier's decision to do away with this product triggered the reduction in the national average interest rate. A reduction that would have been more excessive if it wasn't for rate increases by other card issuers which offset the decline.

Both Comerica and Citi raised interest rates on a number of their products. The increases are in response to revenue losses due to restrictions from the Credit CARD Act of 2009 and a growing number of delinquent payments by cardholders. Although the CARD Act limits interest rate increases on existing accounts, it places not restrictions on new card offers. The increased rates allow banks to substitute revenues obtained by previous practices prohibited by the CARD Act.

Credit card issuers admits that consumers may be less than thrilled with the higher rate costs, but insists that cardholders are still provided with plenty of options. ""We have communicated these changes in a clear and transparent way,"" says Citi spokesman Samuel Wang. ""Every customer had the choice to opt out and pay off the existing balances over time at their current rate."" How financially responsible cardholders will be in paying off these balances will be reflected in the Federal Reserve's consumer credit report due in January of this year.

Federal Reserve Legislation May Limit Credit Card Fees

Admin — Sun, 06 Jun 2010 00:00:00 GMT

Wednesday marks a day of great reform for banks and credit card issuers. This is when the Federal Reserve suggested a proposition that would greatly hinder a bank’s ability to charge certain credit card fees and impose high interest rates. The proposed changes are a continuation of policies implemented in late February which is known as the Credit Card Accountability Responsibility and Disclosure (CARD) Act. Federal Reserve Governor Elizabeth A. Duke stated, “""The rule would prevent credit card issuers from charging large penalty fees for small missteps by consumers and would require issuers to re-evaluate rate increases imposed since the beginning of last year."" It is expected that credit card issuers would not be pleased with these new policies since fees and high interest rates are an easy and abundant source of revenue for banks.

These new rules are in response to the consumer discontent of tactics used by the banks to offset the initial changes of the CARD Act. The new Federal Reserve rules would forbid unpopular methods of revenue, such as charging card holders with “inactivity fees” for failing to use the credit card within a certain frame of time.

The new rules proposed by the Federal Reserve will also prohibit penalty charges that are higher than the amount concerning the card holders’ wrongdoing. A card holder, who is late on a minimum payment of $20, can only be charged a late fee which is less than $20. A common practice, by the credit card issuers, is to charge a late fee of $39 despite the actual dollar amount involved in the violation. Multiple penalties for a single late payment or other account infringements are also forbidden under these new rules which are expected to take effect in August.

The newly imposed rules of the Credit Card Accountability Responsibility and Disclosure Act are further attempts to make the practices of credit card companies more transparent. But even with the execution of these rules, we can be certain credit card companies will find more innovative ways to charge card holders. The chief executive of LowCards.com Bill Hardekopf said, ""If history is any indicator, credit card issuers will find new ways to make up for the revenue they will lose when these rules take effect in August, and those changes could be in the form of new or increased fees."

Smart Phone Credit Card Apps Makes Banking Mobile

Admin — Sun, 06 Jun 2010 00:00:00 GMT

A growing number of smart phone applications for banking purposes can be an invaluable tool for consumers.

According to the consulting firm Gartner Inc., the number of users of mobile payment increased a shocking seventy percent from 2008 to 2009. The total number of these users reached 73.4 million in 2009 and is expected to escalate to 190 million by 2012. Asia and Japan take up the majority in these numbers at 3.8 percent.

Although the number of users of mobile payment is growing, it is believed that it will still take several years before the practice becomes mainstream. According to research director for Gartner Inc, Sandy Shen, ""Many people have the habit of doing online banking at a set time and place -- weekends at home (or lunch hours at their desks) -- so they don't see a strong value in using mobile banking services."" She also states, ""Banks need to offer more than just simply an extension of their online banking to mobile phone customers.""

A majority of the credit card apps are available to Apple iPhone users. Mobile banking applications for Blackberry and Android users are less abundant but their availability is growing. Citi was one of the first large banks to provide mobile banking applications to their customers. The application allowed credit cardholders to view their monthly statements and check balances. Many other banks follow suit and today, a majority of the credit card issuers have mobile banking applications available.

Although many credit card companies scurry to provide mobile applications to their customers, their functionality is still fairly limited. Most features are straight forward, allowing you to check on your available balances, refund statuses, and payment due dates.

Similar to all online applications, security is a prime concern when dealing with the implementation of mobile banking applications. Risk and fraud analyst for Javelin Strategy and Research is fairly confident of the new technology. He states, ""At the moment, there aren't enough financial transactions being conducted over mobile phones so [hackers and thieves] aren't targeting them. Most apps tap into the browser through the smart phone, which means it's no different than online banking, it's just being done through the phone.""

Another major concern for these mobile apps, is its increased probability of user based errors. Since mobile app users are viewing an abundant amount of information on a small screen, it is more likely to miss billing errors or make payment mistakes.

New Credit Card Reforms Impact On The Next Generation

Admin — Sun, 06 Jun 2010 00:00:00 GMT

Under the Credit CARD Act, initiated in 2009, the enactment of innovative credit laws will insure our children’s financial future. The laws would assure our future generations are not frustrated by the same unfortunate financial experiences that many people today are so familiar with. The new laws are destined to guard young individuals from the unpopular money hording tactics of the banks and to teach cardholders financial responsibility.

One of these monumental rules is the prohibition to solicit anyone under the age of 21 who are unable to prove financial competence. Anyone under the age of 21 who wishes to obtain a credit card must now first prove they are financially capable of paying off their balances. If such proof cannot be provided, a co-signer would be required for the young individual to obtain the card.

Another beneficial regulation involves statement information that educates cardholders of the impact of their monthly minimum payments. Credit card issuers are now mandated to print a detailed timeline on how long it will take a balance holder to repay their debts by paying only the minimum required payment. Banks will also be required to show the total interest they would be dealing with.

Credit card issuers are not allowed (within 1,000 feet of college activities and campuses) to entice young students with free offerings and giveaways. It was a common practice for banks to offer college students free food in order for them to sign up for a credit card. And with college students’ tight budgets, they often leap at any prospects for free hand-outs.

Yet another way the CARD Act benefits young individuals is transparency. The law now requires all contracts between credit card issuers and colleges to be made evident and available. Any incentives given to the campuses, by the banks, for allowing them to promote their credit services must be made public. It was previously a common practice for schools to sell information regarding their students to the creditors.

The Credit CARD Act is a true landmark in securing our children’s financial future and independence.

The wealthy may benefit from the credit card law

Admin — Tue, 01 Jun 2010 00:00:00 GMT

According to a BusinessWeek report released Monday, a recent credit card law may be intended to reward the wealthy.

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 will mandate that credit card companies standardize monthly billing patterns and give 45 days' notice before raising credit card interest rates, fees or finance charges. The conventions of this law are increasing competition among credit card issuers. Credit card companies like American Express Co, rely heavily on reward points to retain and captivate customers with a good credit history.

The Credit Card Accountability, Responsibility and Disclosure Act (CARD) are leading credit card issuers to place more focus on their wealthier customers. In turn, this will bring more competition among companies who are focusing on a smaller and more lucrative market. Jason Arnold, of RBC Capital Markets in San Francisco, said, ""The CARD Act is leading all issuers to the top of the credit food chain, and more competition is never a good thing in any industry, regardless of the product, but particularly in the relatively homogenized card space."" On the average, American Express cardholders has a credit score of 754 versus an average 722 score for the remainder of the industry.

Those with a not so ideal credit history may see new or higher membership fees implemented to their existing credit cards. These fees are designed to offset any lost revenue that may be a result of the CARD Act. These are typically consumers who are already struggling to apply for credit because of the strict lending standards. A survey conducted by the Federal Reserve Board, already indicates a drastic reduction in credit limits by some of the major lenders. A different report from the Federal Reserve also showed an increase interest from consumers to pay off their standing balances. Revolving consumer credit dropped by thirteen percent in the fourth quarter.

Online Shoppers Avoid Using Credit Cards

Admin — Tue, 01 Jun 2010 00:00:00 GMT

With the onslaught of the falling economy, more and more consumers are using alternative forms of payment for their online shopping. A study conducted by Javelin in February 2010 shows that an increasing percentage of online purchases are made using debit cards and other forms of payment. The report also shows a 10.8 percent growth with e-commerce in 2009.

Consumers are progressively more comfortable with making their purchases online. The Javelin study shows that an astounding 63 percent of American consumers shop online. This number is expected to reach 78 percent within the next four years.

One of the key points of the study states, """"In addition, as the total value of purchases continues to increase, consumers will often -- by necessity -- need to continue to diversity the payment options they use. For example, they may want to move away from credit when they reach an available credit limit, or shift from debit card or ACH-based options when their checking account balance is too low.""

While purchases using debit cards becomes increasingly popular, online credit card transactions are expected to fall from 54.8 percent in 2008 to 39 percent by 2014. It is forecasted that debit cards will be involved in 26 percent of all online sales in 2014.

Online payment services (i.e. PayPal or Google Checkout) covered 51 percent of online acquisitions, exceeding gift cards (41 percent), store-branded credit cards (27 percent), prepaid cards (17 percent), online credit services such as Bill Me Later (17 percent) and store-branded debit cards (16 percent) in 2009.

The contributing factors to the decrease in credit card use is highlighted by the Javelin study. Key causative aspects includes the increase in online payment options, improved security features of online payments, and bank referrals to use these services. Javelin study predicts alternative payment methods will contribute to 19 percent of total retail purchases in 2014 with the help of these influences.

3 Year Plan to Being Debt Free

Admin — Tue, 01 Jun 2010 00:00:00 GMT

Having a financial strategy to paying off a standing debt is of the utmost importance. Given the economy the way it is now, it is usually disadvantageous to carry a large debt load. Having a 3 year plan to eliminate standing credit card balances is more feasible then many might believe.

Given a reasonable interest rate of 12 percent, a card holder will pay about $370 per month for a $11,000 card balance for the period of 3 years. A general rule of thumb is to pay as much as you can each month. The larger the monthly payments, the less time it will take for you to achieve your debt-free goal. The method of paying off a debt is really dependant on the individual card holder. There are really no best ways of doing so.

Some customers would be to pay off the accounts with the lowest balances first. Supposing your $11,000 overall balance are spread across multiple credit cards, it is advisable that you attempt to relieve the debt from the credit card where you hold the lowest balance. After paying all the minimum required payments for all your cards, allocate the remaining portion of your debt illumination budget to the credit card to which you owe the least amount.

Other card users might prefer to deal with the credit card with the highest interest rates. The same philosophy applies to this method as well. Simply make the minimum payments to all your credit card accounts and apply the excess to the card which has the highest interest rate.

Other people hate to see how much money they are paying in interest charges each month and choose to tackle the balance with the highest interest rate first. You would apply the same principle as above to pay off your high interest rate accounts first. Make at least minimum payments on all other accounts and apply the bulk of your budgeted amount to the highest interest rate account. Yet another option is to pay off the account with the highest balance as quickly as possible.

A standard rule that applies to almost all instances is to expect to pay more than the minimum payment. Paying only the minimum required payments each month will most likely inhibit you from meeting your deadlines. For example, if you make paying your $7,500 account your top priority, you will need to make a constant payment of $100 each month to your $3,200 balance instead of the minimum due to meet your target time limit of three years.

Finally, it is suggested you transfer balances to low interest rate cards if your current interest rates are unreasonable. It is also advisable to have some emergency funds available while going with your 3 year plan to help avoid adding more to your current balance.

Current administration optimistic of CARD Act

Admin — Tue, 01 Jun 2010 00:00:00 GMT

According to a recently released statement from President Barack Obama, the recent execution of the Credit Card Accountability, Responsibility and Disclosure Act (CARD) -- the most recent effort of government legislation to protect consumers from credit card companies -- marks a turning point for Americans.

Beginning February 22 of this year, a secondary set of regulations under the CARD Act will be put into practice. These new laws stop credit card companies from implementing over-limit fees unless cardholders approve such transactions. This will reduce credit card accessibility for young people under the age of 21. People in this age group are often aimed at by credit card companies.

The new enactments also provides more information to the cardholders on their monthly billing statements. It is now mandatory for banks to include credit counseling and debt management services via a toll-free number provided by the credit card issuers. The bills must also list a timetable for how long standing balances can be paid off with minimum payments.

In a statement issued by President Barack Obama, ""These new rules don't absolve consumers of their obligation to pay their bills, but they finally level the playing field so that every family and small business using a credit card has the information they need to make responsible financial decisions.""

Treasury Secretary Timothy Geithner also commended the CARD Act, stating it would aid families in comprehending the rules and payment processes of credit cards. ""We continue to work on strengthening consumer protections and disclosure for a wide array of financial products,"" Geithner said.

This summer marks the time when even additional reforms will be imposed. On August 22, the third component of the Credit Card Accountability, Responsibility and Disclosure Act will be in effect. The third part will scrutinize penalty fees and increases to see if they are acceptable. It will also mandate a five year life span on certain gift cards, and abolish hidden fees and declining values.

Consumer credit escalates as credit card debt decrease

Admin — Tue, 25 May 2010 00:00:00 GMT

Consumer credit faced mixed results during the first month of the year, according to a recent report from the Federal Reserve Board.

As of January, the Federal Reserve report showed a 2.4 percent increase in consumer credit as a whole. This is a notable jump from 2.2 percent which was recorded in December. As of January, there is still $2.45 trillion in consumer credit debts.

Nonrevolving credit seems to be the driving force behind the increase in consumer credit. The amount of nonrevolving credit increased five percent in January. February posted a 3.7 percent increase, while November indicated a 7.7 percent decline. The total nonrevolving credit for the general American consumer in January, came out to $1.59 trillion.

But even in light of the increase in nonrevolving credit, consumer credit card debt continues to decline. According to the Federal Reserve Board, total revolving consumer credit declined at an yearly rate of 2.3 percent in the first month of 2010. This total amounted to $864.4 billion. This trend has been consistent throughout the previous year as well. In 2009, revolving credit fell by 9.6 percent.

Although this drop in revolving consumer credit may seem to be encouraging, there can be destructive effects as well. Though there seems to be more financial responsibility with American consumers and credit card holders, a decline in revolving debt can also indicate that many banks are charging off of what is owed due to the fact that many of their customers are finding hard to pay off their credit card balances.

Credit card interest rates continue to tumble

Admin — Tue, 25 May 2010 00:00:00 GMT

For a fifth straight week in a roll, credit card interest rates have declined significantly, according to CreditCards.com.

With the drop in interest rates of Citi based credit cards, the average interest rate on all new credit cards fell to its lowest level since January. Annual percentage rates (APRs) tracking began in 2007, and we have seen it decline consistently for the last five weeks. The rapid decline is primarily due to Citi decreasing the lower range of the APR on its Platinum Select MasterCard. Citi reduced the APR on its Citi Platinum Select MasterCard from a range of 11.99 to 19.99 percent to a range of 9.99 to 19.99 percent. Analysts suggests that banks are working to encourage borrowers in a recovering economy.

Citi had previously highlighted card pricing and term adjustments in its first-quarter earnings announcement. The bank commented in its April release, ""The growth in card revenues primarily reflects pricing actions, partially offset by lower volumes."" Their statement concedes the fact that consumers are using their credit cards less and less.

Banks are struggling with the decrease in consumer spending using their credit cards. A report conducted by the Federal Reserve's showed that in March, the average credit card balances fell 4.5 percent. This was the eighteenth straight month in decline for that debt category.

Even with these bleak statistics, the economy is showing signs of improvement and recovery. Data obtained from Consumer Reports, a nonprofit organization, shows improvements in the finances of consumers. Their April report shows that fewer and fewer people are having trouble paying major bills, medical expenses, or have negative changes in their credit card terms. Other encouraging signs of a recovering economy are suggested through improved consumer responses, increased retail spending, and gains in employment. Ed Farrell, a director of the Consumer Reports National Research Center, said, ""We are seeing modest improvements across our indices since April, which demonstrate that consumers are starting the long slog out of this historic recession. But a full recovery will require a substantial period of growth for consumer confidence to fully take hold."

Credit Card And Overdraft Restrictions Will Save Consumers $5B

Admin — Sun, 23 May 2010 00:00:00 GMT

The latest analytical projections estimated that the execution of new credit card laws by Congress and recent Federal Reserve regulations will eventually save American consumers at least $5 billion in fees a year. Though this is good news for the average consumer, its affect could be devastating to the credit card industry.
In previous years, banks have made it easy for credit card holders to overdraw their accounts and raise card fees and interest rates. But increasing consumer discontent with these practices -- along with the recessing economy -- triggered the government to initiate actions that will restrict these deceptive practices. Lawmakers are hopeful that these new regulations will save consumers a considerable amount of money, thereby stimulating an increase in spending. By keeping billions of dollars to the U.S. consumers, officials hope that these savings will in-turn be used on purchases instead of being profits gained from deceptive processes by the banks issuing the credit cards.
Some of the largest institutions have projections that shows how much these new regulations will affect this industry. Issuers including Citigroup, Bank of America, JPMorgan Chase, Wells Fargo, U.S. Bankcorp, HSBC North America, and Barclays Group US estimates they will lose approximately $2.5 billion to $3.1 billion in fees for the year alone. Seven of the largest depositary institutions also expects a combined loss of between $2.4 to $2.6 billion. Another forecast by R.K. Hammer Investment insinuates a $9.9 billion loss in revenue a year due to the new credit card regulations. But these figures can be even more alarming then expected by the banks. Scott Talbott, a senior vice president at the Financial Services Roundtable commented that the banks may be underestimating the impact because they ""don't take into account the loss of services and credit that would be available."

Credit Card Industry Gets An Axe From Congress

Admin — Sun, 23 May 2010 00:00:00 GMT

The Senate has recently passed an amendment that will restrict debit card interchange fees. Interchange fees are fees that are deducted from the store or merchant with each credit card transaction. Usually, the fee is approximately 1%-3% of the transaction amount. With a purchase of $100, the merchant will only receive between $97-$99. The $1-$3 are deducted as an interchange fee. It is estimated that a whopping $35 billion in interchange fees were collected by credit card companies in 2007 alone.
There is a general misconception to where these fees are ultimately allocated. Most assume that the interchanges fees goes to credit card companies such as Visa and MasterCard. While Visa and MasterCard collects these fees, the money is ultimately reimbursed to the banks that issues the cards. In this case, banks that dominate the credit card issuing market -- such as Citigroup, Bank of America, and Chase -- are the ones adversely affected by this ruling. On the other hand, Visa and MasterCard makes most of its profits through data processing fees and service fees charged to the banks issuing the credit cards.
This doesn't mean the legislation will not affect Visa and MasterCard's earnings. By hurting the banks that issue the credit cards, less incentives to obtain or use the cards will be given to consumers. Fewer credit card transactions will indirectly and ultimately affect the profit earnings of these credit card giants. The affects of this legislation on both the banks and credit card companies are expected to be significant and prolonged.

2010 Credit Card Reforms

Admin — Wed, 19 May 2010 00:00:00 GMT

Credit cards are a fundamental part of American life. 2010 is a year of major reforms on credit card policies that can greatly impact cardholders. A clear understanding of these changes are critical to a consumers preparation on how to make transactions using these cards under the new reformations.

A large number of the significant adjustments has already been implemented February of this year. The passing of the CARD Act legislation is the primary engine in driving these changes.

A majority of the changes affect the billing practices of these credit card institutions. With the execution of the CARD Act, a credit card issuer must assign all payments to go to the highest balance first. This ensures the payments a cardholder sends is allocated to the most problematic balances first. Credit card companies are also now required to give a 45 days' written notice to cardholders if they decide to increase interest rates. Certain tactics, such as assigning ridiculous due date schedules have also been banned. Most importantly, credit card companies are now mandated to send payment guidelines on paying of the credit card debts. This information will allow balance holders to know exactly how long it will take them to pay off standing balances and to better plan these payments.

The CARD Act eliminates or limits the unprincipled tactics the credit card companies have used for years to gain profits from consumers. Restricted are the loopholes and fine print policies credit card issuers used to charge penalties and high interest rates to unsuspecting consumers in order to gain a hefty profit.

Though the CARD Act is a huge step toward consumer protection, customers can also expect the banks to adopt new tactics of making money. Credit card companies are aware of the impact of the CARD Act and you can be sure they will come up with more clever ways of making money. The implementation of new fees are one of these methods. American Express and JPMorgan Chase have already started to add annual fees for existing customers. Most cardholders can also expect to see interest rates to rise on their current credit cards.

The best protection for consumers is to try to use cash on purchases as much as possible. If a credit card must be used, try to use one that offers a low fixed interest rate.

Types Of Credit Cards

Admin — Wed, 19 May 2010 00:00:00 GMT

There are a variety cards available for a customer to choose from. Each has its specific features and incentives that may or may not work for some. To help guide you in choosing the right card that fits your spending style most, three of major type of credit cards will be discussed here.

Reward Credit Cards
Reward cards provide incentives to you when you make a purchase. These incentives are given to cardholders in the form of rewards. The type of reward may vary with different credit cards. Some will give travel discounts or free travel while others allow you to earn cash back with every purchase. Certain reward cards work on a point system, giving you points towards products based on your monthly spending amount. These points can be used for discounts through certain stores or sometimes be redeemed for cash. Customers who use their cards extensively through the month can see their reward points accumulate very quickly.
Unfortunately, many reward cards also come with high annual fees and interest rates. These fees and rates can offset all the advantages you get from the rewards. Some reward cards also make it non-intuitive or difficult for you to redeem the rewards. It would be advisable for one to be familiar with the reward program and methods of redemption before choosing a specific card. Because of its complexity, high fees, and interest rates, reward cards are usually beneficial to those who make a lot of purchases and pay off those balances every month.

Secured Credit Cards
Secured credit cards are usually made available for those with poor credit scores and a below average payment history. The interest rate and fees for these cards are usually higher than most of the other cards so secured credit cards are not fit for those with good credit. If you have a flawed credit history, secured credit cards are a second chance for you to rebuild your credit. Some secured cards will report your payment history to the three major credit bureaus. If your monthly payments are punctual and regular, this feature will allow you to recover from bad credit more quickly. Secured credit cards are also provided to those with no credit history. Students, young adults, or people who've just recently moved from a foreign country are also suitable for secured credit cards.

Many secured cards will ask you to give a cash deposit in order to get the card. This deposit can range from $100 to $250. The other obvious negative aspect of secured cards are their high annual fees and interest rates. When applying for a secured card, look for ones with the lowest interest rate, annual fees, and required security deposit.

Low or 0% Interest Credit Cards
Low or no interest credit cards are just that. It allows a customer to transfer a standing balance from another credit card to one that has these promotional rates. These cards are usually made available to attract new customers. Depending on your current situation, transferring your balance to these cards can save you a considerable amount in interest.
However, most of these promotional rates are only temporary. Once the designated promotional period is over, cardholders are stuck with the normal APR rate that can range from 10% to 18%. Also, if you are late in your payment within the period, your promotional interest rate can be revoked immediately. When transferring a standing balance to these cards, it is best to plan to purge that debt within the promotional period.

0% Balance Transfer Offers

Admin — Wed, 19 May 2010 00:00:00 GMT

0% balance transfer offers might seem to be an attractive deal for cardholders with a large standing balance and high interest rates. These incentives are sometimes presented by the credit card companies to attract new customers. But are these offers really free?

It is important for cardholders to carefully understand any credit card promotion and to read its fine print. A 0% balance transfer is typically good only for a predetermined amount of time. After the usual six to twelve months promotional period is over, the remaining balance that has not been fulfilled will usually be hit with high interest rates. Plan ahead in trying to pay off the balance before the promotional period ends.

Cardholders usually don't pay attention to the interest rate that will be charged after the promotion ends. If you are currently paying 9% interest to a card and transfer your balance to a promotional 0% interest card, you can be hit with a high 19% after the promotional rate expires. Depending on your ability to repay the balance within the designated promotional period, transferring the balance may or may not be as beneficial.

Another deciding factor one should consider before accepting these offers is the balance transfer fee. A transfer fee from 1% to 5% can be applied to the total amount transferred. Depending on this amount, the transfer fee can offset the savings you will get from the 0% offer. Add to this the higher interest rates after the promotional period, and the deal can look less attractive.

0% balance transfers are also only good as long as you keep your payments in good standings. Depending on the credit card issuer, your promotional offer can end as soon as one of your payments are late. Consequently, you will have to pay a higher interest rate before you had a chance to take in the savings from the promotion.

It might be more beneficial for some to just find a credit card with a low interest rate that is fixed for a longer period of time. Some cards offer a 1.99% to 3.99% fixed interest on the life of that balance. These offers might provide better savings to cardholders as opposed to a 0% offer that is limited to a predetermined length of time.

Transferring Your Credit Card Balance

Admin — Wed, 19 May 2010 00:00:00 GMT

Many credit cardholders find themselves carrying a household debt of over $10,000. Depending on your circumstances, it may be beneficial for customers with a high interest rate to transfer their balances to a 0% interest card. Discussed will be some key points to helping you decide if a balance transfer is right for you.

In most cases, 0% interest cards are offered to customers with a good credit rating. If your credit rating is less then excellent, most likely you will not be offered these incentives. Customers should also know that 0% interest is only given for approximately 6-12 months. If the balance is not paid in full by this period of time, you can expect the interest rates to rise sharply. Most of these cards will also charge a balance transfer fee that ranges from 3-5% of the total transfer amount.

It is critical for a cardholder to do some extensive research before planning to transfer balances. One should compare a variety of credit card companies and know the pros and cons of each offer provided. A careful calculation of the transfer fees and interest amount saved would be invaluable to making the most lucrative decision. You should compare the advantages and disadvantages of going with 0% offers to ultimately decide if the maneuver is beneficial or not.

If you do decide to transfer your balance, make sure you continue to make your monthly payments while you wait for the final approval and transfer procedures to go through. Make sure you do not miss a payment or you will have to face stiff penalties and increased interest rates from your card issuer.

Customers should also be aware that most of the 0% offers only applies to the transfer amounts. Future purchases or charged amounts are usually subject to their non-promotional interest rates. It is a good idea to keep new purchases on a different card.

Visa'S Earnings Promising

Admin — Wed, 19 May 2010 00:00:00 GMT

Visa Inc. showed strong quarterly financial results Wednesday, outperforming Wall Street's expectations. For the quarter ended Dec. 31, Visa recorded profits of $763 million, or $1.02 per share. This surpassed Wall Street's initial forecast of 91 cents per share. In addition, the report reveals an increasingly greater number of Visa customers who are using their cards more often.

Visa card transactions increased by 12% compared to the year before. Analysts' initially predicted only a 10.5% increase. Along with the increase in Visa card transactions, the number of Visa branded cards also increased by 5%.

Wednesdays news will undoubtedly put some pressure on their biggest rival MasterCard. MasterCard's quarterly results are due to be released on Thursday. Thomson Reuters' survey on analysts expect a profit increase of 32% or $2.47 per share.

The speculated reason behind Visa and MasterCard's success is their fee-collection business model which avoids credit risks. Both Visa and MasterCard allows financial institution partners to issue their cards. These businesses, in turn, has helped both credit card companies avoid the dangers of many other financial sector peers.

The slowly recovering economy has many analysts optimistic about the future performances of these two credit card giants. Even with an escalating unemployment rate and declining consumer spending, Wall Street is hopeful that these credit card issuers will roll well with the tides.

Credit Card Debts and Tax-Time Woes:

Admin — Wed, 19 May 2010 00:00:00 GMT

With the ongoing increase in credit card interest rates, people are getting more and more adamant on trying to pay off those longstanding credit card debts. Little do they know that this demonstration of fiscal responsibility can actually be damaging. A greater number of cardholders are shockingly finding out that they can be penalized for an effort that seems righteous and sensible.

Any differences between your initial credit card balance and the negotiated amount you ultimately pay to eliminate that debt, is considered as income by the Internal Revenue Service. So if a creditor has collaborated a reduced sum for you to scrub out your balance completely, you will have to inform the IRS of how much the amount was reduced, and pay the tax on it accordingly.

The biggest issue with this scenario, is that most people are not aware of this requisite after the reworked debt sum has been negotiated and the amount paid. And failing to report these transactions can ultimately get cardholders in trouble with the IRS. Creditors will usually mail you a Form 1099-C to fill out and return to the government. Unfortunately, the required forms are most often mailed along with the debt-cancellation notices and are often overlooked by the cardholder.

Anyone who qualifies for are student loan or have gone into public service is exempt from this rule. More information on the IRS policies regarding canceled or reduced debt can be found on their website.

The new Legislation of 2010

Admin — Thu, 13 May 2010 00:00:00 GMT

The economy may be in tatters, but new legislation is expected to save you and your fellow consumers about $10 billion a year in credit card fees. The legislation came into effect on Feb. 3, 2010, and the Pew Trust’s “Safe Credit Cards” project released that very positive prediction around that time.

Not everyone has reacted with joy to this news. Newly mandated billing practices under the new card act will make it harder for banks to maintain steady income from their credit card divisions. This is because irksome policies like retroactive interest rate increases will no longer be allowed.

Also, payments have to be registered by the date they are received, rather than by the hour. This means that payments received before the close of business on their due date must be accepted, so credit card companies cannot say payments are “late” when they arrive after a time as early as ten a.m.

Card issuers haven't taken this lying down. Last year, anticipating these new rules, Citi told some customers they'll be charged an annual fee of up to $90 unless they spend at least $2,400 a year on their card. Chase increased the cost of a balance transfer to 5% from 3% recently. American Express and Bank of America also have added annual fees to their existing cardholder accounts, and have introduced new cards that come with annual fees as high as $99.

So, despite new legal protections, borrowers must be even more careful with their monthly balances. As if that weren't enough, lenders are now profiting from things that used to be entirely free, like the printed statement, which in some cases now costs $1 a month.

In the final analysis, though, consumers still have a little power. It turns out that fewer people are carrying credit cards these days. Even those who never carried a balance in the past are finding the new profit attempts from their credit card issuers annoying, and are going back to good old cash. At least they don't have to pay the U.S. Mint $1 extra just for printing it!

Cash Back Credit Card - A Practical Guide

Admin — Thu, 13 May 2010 00:00:00 GMT

Cash back credit cards provide cardholders with a credit to their card balance when a purchase is made. Some cash back cards sends the cardholder coupons in the mail to use for future purchases. These cards are popular with the cardholders who use their credit cards for the majority of their spending.

However, the rebate incentives for these cards are becoming less and less compared to years before. Cash back incentives are down from 5% to 3% of the total amount spent. Take the American Express Blue Cash card as an example. Previously, interest rates for the card was no higher than 13%. Today, card applicants with even excellent credit histories might get a 17.2% rate. People with bad credit may get a paying rate of up to 21.24%. Additionally, card companies have been increasing interest rates on balances not paid off in order to boost revenues. The advantages of cash back credit cards have decreased and is quickly losing its charm.

Reaping the biggest rebate benefits from these cash back cards has also become very complex. There are many different ways for you to receive the rewards. Some will cut you a check automatically once you have earned a certain amount of reward money, while others will expect you to monitor your own rewards and to request your cash back on your own. Yet others will automatically apply your reward towards your credit card balance or will invest your money in certain savings programs. Usually, if you use your credit cards in gas stations and grocery stores, the rebates are higher than with other purchases. For those who carry a balance over each month with a better-than-average rebate program for your cash back card, it is still no better than a low interest card. The numbers below will show you why.

Assuming you make $800 in purchases per month with your credit card: $50 at the drugstores; $120 at restaurants; $120 for gas; $50 for movies and other entertainment; $70 for your cell phone; and $150 for miscellaneous spending on clothes, home improvements, etc. The above costs combined equals $9,600 in total credit card usage annually. Let's take the Cash Rewards Visa Signature Card of Bank of America as a example. Assuming you have a very good credit history, you can get 10 months of 0% interest rate for the first year. This will equate to $139.20 in cash back rewards for the first year. This is in accordance to the different discounts between gas, groceries and other purchases with the credit card. Because you have only to pay interest on the balance you run up for the last two months of the first year, your cash back will make up for those debt service payments that are still remaining. While in the second year, lets assume that your balance ballooned to $1,200, and your cash back has fallen to $96. Still using Bank of America as a example, lets also presume your credit score has dropped during the year, and your interest rate has risen to 18%. Your interest payments will now be accumulating at a rate of $216 a year. Your cash back rewards will now only cover less than half of your interest expenses.
So doing the math is very important when deciding if a particular cash back card is right for you. Of course, everyone has different spending and payment habits. When choosing a credit card, it is extremely important to read the fine print and to carefully calculate the rewards based on your spending habits.

Do you want to know how much using that card is really costing you?

Admin — Thu, 13 May 2010 00:00:00 GMT

Thanks to the newly instated law, it is mandatory for you to receive a statement from your credit card issuer regarding how much you are charged in interest, and the method to which this interest is calculated with every change to the terms of your card.

The card company is required to give you a 45 days written notice before raising the interest rate on existing cards and to list out the amount of time necessary for a customer to pay off the balance. The statement will show you the ugly truths and gimmicks that card companies have been using for years to drive up profits, which will undoubtedly make a lot of people turn their stomachs. With the law in effect, some of you will find out that it could take you 10 years to pay off a $3,000 balance, assuming you pay the minimum with a 14 percent interest rate. With the inhibition of interest rate increases alone, customers will save at least an estimated $10 billion a year. But there is a downside. While the Federal Reserve is making final clarifications to the law, card companies are given nine months to make the necessary preparations for implementation. These nine months are used by the credit card issuers to impose actions that will ultimately hurt the same customers the law was designed to protect. Over 1.4 billion credit cards users are affected by the law.

Credit card companies are really impacted by this new law while they are still trying to recover from the recession.

As the unemployment rate rose by 10 percent, banks has already written off about $35 billion in credit card debt last year. The new law could furthermore slash their future profits. Take FICO Inc. for example, which was best known for its credit scores. Its revenue generated from the average card holder was $200. With the new law established, this profit will be less than $100 in a three years period.

So it is not difficult to understand why the credit card industry has created such a heated debate regarding this law. The increase in credit card interest rates, creation of new fees, raising old ones, cutting of credit lines, and the closing of millions of accounts are all direct responses from the credit card providers to counteract this law. As a result, using a credit card has become extremely expensive today, making it difficult for millions of Americans to obtain a credit card.

For the card companies, the most popular customers are those who carry a balance from month to month for at least a part of the year while paying their bills on time. Also, those who are willing to do more business with the bank that issues their card are preferred customers. These are the most profitable customers and the least risky. These lucrative customers will always be sought after by the card companies.

The CARD Act Helps Balance Carriers in Different Ways

Admin — Thu, 13 May 2010 00:00:00 GMT

According to a survey of Consumer Finances conducted by the Federal Reserve Board in 2007, an astonishing 46 percent of American families carry a standing credit card debt every month. These people will be greatly impacted by the Credit Card Accountability, Responsibility and Disclosure Act (CARD), which was signed into law on May 22,2009.

The CARD Act implements policy changes which (depending on the card holders' circumstances) can be advantageous to people who carry credit card balances. Some of the key changes of this law are as follows:
RATE FREEZE
Under the CARD Act, the cardholders can apply for a rate freeze within the first year after the account has been opened. Cardholders will not have their initial rates changed for reasons such as market conditions or a decreased credit score. A rate freeze can be denied under four conditions.

(1) A promotional rate expires. (2) An index, such as the U.S. prime rate, rises. (3) A workout agreement expires. (4) The cardholder has a payment past due for over 60 days. But even with these conditions, the credit card issuer is required to disclose the reasons for increasing the interest rate.

According to Greg McBride, senior financial analyst at Bankrate, 68% of the credit cards offered have a variable rate based on indexes such as the U.S. prime rate. The rise of variable APR can be regarded as a particular loophole which affects most credit cards. If the rate increase is due to a payment past due by 60 days or more, issuers are required to disclose the reason for the rate hike. There is usually a set period of six months for the lower APR to be reinstated, but only if the borrower makes the required minimum payments on time every month during that period.

DOUBLE-CYCLE BILLING
Double-cycle billing is a method of calculating finance charges which uses the average daily balance for the current and previous billing cycle when a customer revolves a balance. With double-cycle billing, borrowers are required to pay interest on the original charged amount verses the amount left over after the payment. Under the CARD Act, the method of double-cycle billing is prohibited.

EXISTING BALANCE PROTECTION
With the implementations of the CARD Act, cardholders will find that their initial rates and credit scores won't change as easily. The CARD Act, protects a cardholder's outstanding balances from raises in fees ,rates, and finance charges. For example, rates will not continue to escalate with the changes in market situations. Outstanding balances are defined as the amount of money owed at the end of the 14th day after the cardholder has been notified of the terms change. However, the card issuers can still increase your future balance rates unconditionally, by simply giving you a 45 days' advanced notice.

CONSUMER-FRIENDLY PAYMENT ALLOCATION
The law also provides a form Consumer-friendly payment allocation. Prior to the CARD Act, card issuers could first apply payments to the amount with the lowest interest rate over the minimum. But with the CARD Act passed into law, card providers must first apply the highest interest rate to the balance.

Safe Credit Card Use for Students Under New Regulations

Admin — Wed, 12 May 2010 00:00:00 GMT

According to a recent survey by Sallie Mae, college students now have an average of 4.6 credit cards and roughly $3173 in card balances. Only 17% of college students can pay off their balances each month. Students are paying high interest from their scarce resources and scant incomes. In the past, it had become hard for young people to establish credit, even when financially well-disciplined. More and more of them ended having to drum up a co-signer to rent an apartment, or end up paying higher interest rates on their first car loans. The the tables turned and students began getting into troukle with too much easy credit available. That led to the current crackdown and the student protections built into the CARD bill approved in late 2009.

Students are easy marks for credit card companies. Freshman, those in their first year of college, are especially vulnerable to hawkers marketing Visa and MasterCard accounts with overly high credit limits in relation to student resources for paying off their balances.

Legislation was passed last year that will help students avoid being overwhelmed with debt. The law requires students who are under 21 and want to get a credit card to either provide adult co-signers, or prove that they earn sufficient income to service the expected debt. On campus or at college sporting events, card issuers will not able to exploit students with tempting “free” gifts.

It seems that the “loading up on plastic” days enjoyed by many students came to a close when the bill went into force on Feb. 22, 2010. However, there are still options for using credit cards and building credit history. For example, you can choose to use an adult co-signer, which usually means having a parent agree to pay the balance if you don't. This is the credit card companies' equivalent of a backstop to reduce the risks of lending money to college students.

You also can add the student to the parent's credit card account, essentially piggybacking on a parent's good credit. In this way, all charges are reflected on the parent's account, and the credit limit of primary cardholder will accommodate the new user as well. Of course, the students' card can be imprinted with his or her name.

There is another option, which is using a prepaid card. Prepaid credit cards require the cardholder to fill the account with cash up to a specified limit. This takes away some of the temptation that a college student has in using borrowing to spend beyond his means, but offers the convenience and security they want from credit cards. A Visa prepaid card reports customer activity to all three major credit bureaus at regular intervals. The disadvantage of a prepaid card is the rather high processing and transactions fees. It would cost a lot to build credit this way, when you think about it.

It might be wiser to perpetually charge with, and pay off, a secured card. It feels a lot like using a pre-paid card, and requires you to let the bank hold a sum of money, equivalent to your “credit line,” in order to ensure that your mistakes will not cost them anything. It's true that you won't have the use of the securing cash balance during the time you keep the account open, but at least you can't spend it on rubbish or waste it in the transaction fees charged by the pre-paid cards.

Parents always want their children to be safe at school. The bill that went into force this year was written, and voted into law, to serve that goal. It can't protect from all campus risks, but it muzzles, to some extent, the financial vultures that would otherwise pick young adults' wallets clean at every opportunity.

Does Capping Credit Card Interest Rates Help?

Allen Song — Mon, 19 Apr 2010 00:00:00 GMT

A new law favored by Democratic lawmakers was announced recently. It sets a new national cap on credit card interest rates, prevents card issuers from charging interest rates higher than 16%, and limits penalties for cardholders who exceed their credit limits or make late payments. Card issuers could charge no more than $15.00 in such cases. College students who want to open credit card accounts also face more hurdles with the bill, but this is thought to be in their best interests.

Ahead of the implementation of the federal credit card reform act, nearly all the major banks concurrently increased interest rates. It goes against the consumer's interest, of course, when credit card issuers do this. At least with this legislation, credit agencies will be restricted in the future in their quest for absurd profits from the wallets of the American people, who are still paying for the entire credit crisis with the sweat of their brows and in some cases, homelessness.

It is no surprise that the bill met with vehement opposition from the financial services industry, and from congressional the representatives from South Dakota and Delaware. South Dakota is home to Citigroup’s credit card division, and Delaware is home to the credit card arms of Bank of America, HSBC, and JP Morgan Chase. Under the new bill, it is harder to get consumer credit. This is due to better practices that keep unsound borrowers from getting into trouble in the first place. With less credit card lending, the economy of Delaware has already taken a hit. Overall salaries paid in the state declined 25% after the bill went into law. So, in order to keep attracting credit card issuers, Delaware and South Dakota have repealed the interest rates caps that the other 48 states still honor.

Before and after this act, card issuers rake in the dollars like fallen leaves. With the protections of the new act in place, it remains to be seen whether any benefit will flow to consumers.

How to Manage Your Credit Card Rewards

Admin — Mon, 22 Mar 2010 00:00:00 GMT

You already know from looking at your bill that credit card companies make a lot of money from the interest you pay on your monthly balance. But here's a little known fact: they get most of their income from transaction fees charged to merchants who accept their credit cards. So, it's in their best interest to encourage you to use your cards as often as possible. Various card issuers have come up with a vast array of reward schemes to get you to use their credit cards for purchases instead of ponying up cash at the till. So, even though the card issues make money when you use your rewards card, if you're careful, you too can at least save money, if not make some, by careful use of rewards credit cards.

There are several different types of credit card rewards. The three main types are cash back rewards, miles rewards, and points rewards. Take cash back rewards cards as an example. The “cash back” you get depends on the kind of purchases you make. Most cash back cards give a maximum return of up to 5% on certain purchases, but it may less for certain of purchases. Groceries are an example of a necessity that, for some reason, rarely pays the highest cash back rate. With a cash back card, the amount you get as a cash is credited to your account, and reduces your total balance. That's got to feel great! Some select cards may even give you a much higher cash return, depending on where you shop and whether a special promotion is in place. You'll find that some of the best rewards credit cards double their rewards when you use your rewards at a participating store or website.

It's not all fun and games, though. Some credit card companies limit the amount of points, miles or dollars you can earn each year. The best credit card rewards are unlimited. You will get the most from your credit card purchases if you choose a card that has no annual rewards limits, and further, no expiration date for your earnings.

Understanding how to compare the three different types of rewards cards can help you find the best credit card rewards, and let you see your rewards stretching further and further. So, why not do a bit of research and some proper planning, and see how much easier life is when your credit cards start working for you? At TaoCredit.com, research is easy and there's never a fee for using our comparison tools.

The New Credit Card Laws: Will they save you money?

AllenSong — Mon, 22 Mar 2010 00:00:00 GMT

The Credit Card Accountability, Responsibility and Disclosure Act (also known as the CARD Act ) was enacted in 2009 to protect borrowers from predatory and unfair practices by credit card companies. There are some major changes to what is allowed under the new law. It's important to know what they are as you now have more rights to monitor and protect.

Although there are financial benefits to the CARD bill, one of the most important benefits is actually in the realm of personal privacy. Before CARD was enacted, one credit card company could alter your terms based on behavior reported to credit bureaus by another credit card company! If you'd defaulted on your Kohl's card, for instance, and Mastercard found out, Mastercard would then lower your credit limit or raise your interest rate, or both. This is called "universal default" will no longer be allowed. This won't undo the harm that was done in the past, but it will keep it from happening in the future.

In the informational domain, credit card companies are now required to give you 45 days' written notice before raising the interest rate on existing card. Further, card issuers now must disclose your cost of borrowing more clearly than they had in the past, and the amount of time it will take to ay off your bill must also be spelled out.

On campuses and college events, the Credit Card Accountability, Responsibility and Disclosure Act restricts lenders from marketing to students. This will make it far harder for college students and anyone under age 21 to acquire a credit card and get themselves into serious financial trouble. Any young person who applies for a card will need a parent to cosign the loan, or proof (in contrast to a simple declaration) of income sufficient to service debt that might be accrued. See: "New Credit Card Choices For College Students" for more on this topic.

There are many credit card industry practices that have long been slammed by consumer rights advocates, and that have helped lead many Americans off of a financial cliff. The Credit Card Accountability, Responsibility and Disclosure Act ends the credit card industry's days of operating in a virtual Wild West, and with broad bipartisan support, has made credit cards more consumer-friendly. Although it's hard to predict the savings for each individual borrower, the nonprofit Pew Charitable Trust found that the new practices will save consumers at least $10 billion.

Credit Card Comparison - Find the Most Attractive Offers

Admin — Wed, 17 Mar 2010 00:00:00 GMT

Are you still getting those attractive credit card offers in the mail? What to do? Toss them out, unread? Or carefully fill them out and hope it's a good idea? If you choose to complete and return the forms, there's plenty you should know before you lick the stamp.

Lenders are still offering a wide array of credit card products, each with its own special lure. Because of all the different options, it's important that you learn how to compare cards. If you don't choose the right one for your spending habits, you might end up accruing debt faster than you can comfortably pay it off.

It seems that there's an unlimited number of credit cards that come in all sizes, shapes, and styles. You might even have to make a chart to compare their features. It is important to remember that you should thoroughly read through the terms of service, even though it seems impossible! One trick is to enlarge the tiny print by using a photocopier that can reproduce things bigger than the originals. Be on the lookout for any high fees or other high risk penalties before accepting any credit card offer. Late fees are as much as $39 nowadays. Cards with that kind of penalty should be avoided!

Comparing credit card offers before accepting an offer is a great way to save your money. Some websites offer credit card comparison services, and it's a good idea to check them out. You should compare credit cards' rewards programs, interest rates, annual fees, and balance transfer fees. Unless you look, you never know what other credit cards are out there right for you!

One of the most important factors to examine when comparing credit card offers is interest rates. Different companies offer different rates. Be careful of companies that offer zero or low interest introductory rates, because some of them charge pretty crazy rates once the real interest rate kicks in. If you want to avoid falling victim to credit card debt, the majority of your focus should be on long-term credit card interest rates, not just introductory interest rates, which do not last forever.

Another crucial step in comparing credit cards is evaluating fees. We all know that companies charge different fees, but the variations are wider than you might expect. Some common fees to compare include (but are not limited to) annual fee, cash advance fee, balance-transfer fee (some instant approval balance transfer cards may charge this), penalty charges for late payment or for exceeding your credit limit, and set-up fee. Remember to inquire about any other charges that may be included in your card.

I hope I made it clear here that credit card comparison is important. Comparing credit card offers can help you find the credit card that best suits you and your needs, and is another way to save your cash and build toward a sound financial future.

What Does Credit Card APR Mean to You?

Admin — Tue, 16 Mar 2010 00:00:00 GMT

Attachments:
In a general sense, your annual percentage rate is a measure of how much it'll cost you to borrow money on a new credit card. But once we get into specifics, the annual percentage rate, or APR, is a slippery devil whose mysteries can only be understood by reading the fine print. If you're over 40, get out the reading glasses! Meanwhile, here's a short lesson on what to look for in an APR when choosing a new credit card. When you have had a credit card for at least a month, you'll notice that your purchases are charged interest. This interest is one of the main ways the credit card issuer makes money. Two factors affect how much interest the lender will collect from your account: 1. The length of time you take to pay back what you borrow, and 2. The APR. The first factor is easy to address: pay it off as soon as you can! But let's address the second, more complicated one: APR. First, a little about interest rates in general. There is usually a grace period (about 21 days) at least for you to pay off a new balance before the credit companies begin charging interest on the remaining balance. Then, there are two main types of interest rates, fixed and variable. Fixed rates do not fluctuate according to any index or financial market condition. They remain as stated when you entered into the contract. This is not to say that the fixed rate interest is all your credit card borrowing will cost you; you might have other fees and charges, and maybe the lender reserves the right to change your rate interest based on your repayment behavior. Variable rates, on the other hand, are meant to move up and down according to some index. This index might be the status of some published interest rate, or prices on things like Treasury Bills. Your rate at the beginning of the contract is no indication of what it will be from month to month. If you have a card with a variable rate, it might be low to begin with, but watch it on your monthly statement. If it gets too high, you'll have to consider accelerating your repayment of the loan! Now that you know the difference between fixed and variable rates, I'll introduce the APR. The APR is important because it is the basis for the interest component of your monthly bill. By law, you must receive a pamphlet explaining the APR and how interest charges are calculated when you first receive a credit card. The way the APR is applied to your purchases varies from card to card, and this too must be explained in the pamphlet. To predict your interest charge for a given period, you first use the APR to get your “periodic percentage rate.” That's a fancy way of saying that you divide your annual percentage rate by 12, which is typically the number of billing periods in a year, to get the periodic rate. So, a 24% APR is divided by 12 to give you a periodic rate of 2%. This periodic rate is multiplied by some portion of your outstanding balance to get the interest charge for the month. So, it follows that one of the main differences in interest payment calculations lies in how much of your outstanding balance (old balance plus new purchases) is charged interest each billing cycle. There are a number of methods used to determine how much of your total balance is charged the periodic rate: Average Daily Balance, Adjusted Balance, Two-Cycle Average Daily Balance, Previous Balance, and Ending Balance. It's a long list, so in this article I'll use Average Daily Balance as my example. The Average Daily Balance is determined by adding the balances from each day of the billing cycle. Payments you make are subtracted from the sum, and purchases are added. The sum is then divided by the number of days in the billing cycle. This yields the Average Daily Balance for that period. Your interest payment is then based on a percentage of that. There's no right way to calculate the interest charge on a credit card. The right card for you will calculate it in a way that suits your spending habits. If you want to choose a card with the best rates and keep your borrowing costs lower, be sure you understand how a card uses your APR to determine the interest you actually pay. It's pretty complicated, but maybe things will get better under the newly passed credit card reform lawsMeanwhile, get out those reading glasses, and may you make a wise decision about APRs.

Hints to Avoid Unreasonable Fees and Panalties on Credit Cards

Admin — Tue, 16 Mar 2010 00:00:00 GMT

If use credit cards in your daily life, you probably know that a large balance will hurt your credit score. But did you know that it can result in higher borrowing costs? This is one of the traps set for borrowers facing temporary difficulties, and it's wise to avoid them at the outset, before you sign up for any new credit cards. Here, I'm going to show you what to look out for, and make recommendations on how to avoid unreasonable fees, penalties and interest rates.

Credit card companies make big profits through fees, penalties and interest. How do they do it? If you make a late payment, a late fee is assessed. Credit card companies used to collect this late fee as a minor penalty for your mistake. Recently, many borrowers have noticed that their formerly minor late fees are now in the stratosphere. Some companies now charge a late fee of $39.00. Further, they are imposing this penalty for accounts that are as little as two days overdue.

And what about interest rates? A borrower I know is now paying 30.9% on her Mastercard because she missed a payment while she was in the hospital for surgery!

So, what's going on? I am sure you have heard that many lending institutions are facing record losses due to the bad loans on their books. They lent money to people who for one reason or another cannot, or will not, pay it back. Lenders are trying to redeem their losses by charging higher late fees, penalties, and interests for borrowers of all kinds, good and bad. It's obvious that credit card revenue is a fast way to make up for losses in lenders' other divisions.

Here are some statistics on the top three credit card issuers in the United States:

Discover
Late fee: $15 on balances up to $100; $25 on balances of $100 up to $1,000; $35 on balances of $1,000 and greater. Over-the-limit fee: Same as late fee.

Citibank
Late fee: $15 on balances up to $100; $25 on balances of $100 to $1,000; $35 on balances of $1,000 and more. Over-the-limit fee: $35

Bank of America
Late fee:$19 for balances less than $100; $29 for balances $100 to $1,000; $39 for balances greater than $1,000. Over-the-limit fee: $35

To protect yourself from high interest rates, late fees, and penalties, I strongly recommend that you compare credit cards and seek out offers that carry the lowest and fairest penalties and fees. Check the Terms and Conditions carefully before applying for any credit card. Be sure that you know every detail of the lenders's privacy policy. If your account becomes troubled, will the bank inform other lenders? While you're at it, check the terms and conditions for any cards you currently hold. In some cases, you are best off canceling a “bad” card and getting a “good” one, from a new lender who wants your business.

TaoCredit.com recommends comparing several credit card companies and making your decision after careful evaluations. Beware: sometimes, low interest rate credit card offers are just temporary promotions. Remember also that variable interest rates change according to economic conditions, in addition to your own behavior as a card holder. Your interest rate in the future may not be something you can control, no matter how well you treat your lender. Also, be sure that any low interest rate cards for which you apply have terms that make sense with regard to your spending and payment habits.

I think have armed you with enough information to apply for the best and right credit card for you. If you choose a suitable card from among several credit card companies, you can keep unreasonable fees and penalties at bay. If you're looking for lower payments on all your purchases, you can compare offers, and apply for a low interest rate credit cards, at TaoCredit.com. With luck, you can find a great new card, and cancel any old credit cards whose lenders are not treating you right!

Choosing a Prestige Credit Card for Yourself

Admin — Wed, 03 Mar 2010 00:00:00 GMT

Years ago, credit card choices seemed to be limited to the classic (good), gold (better) or the exclusive platinum (best) level. The platinum credit card was the preferred card level for status-conscious cardholders. These days, consumers with high incomes and high credit scores are eligible for the lowest balance transfer and purchase APR offers, exclusive “members only” benefits, and the best rewards programs. Good credit customers can find prestige credit cards that offer all this and are not just platinum cards - but black, silver, clear, blue, green, plum, titanium, and every hue in between!

Though the types and terms of prestige credit cards may differ, they have one thing in common—they can provide you with a high credit limit, a low APR (Annual Percentage Rate, your interest rate) and more valuable extra benefits than can the classic or gold level cards. Having a prestige card is a reflection of your good credit rating and financial responsibility, and the rates, rewards and benefits are more attractive because of those things. The banks trust you, and they let you know it with their prestige-type cards.

When you want the best prestige credit card offer, you may think the one with the lowest interest rates, and the highest rewards at places where you spend the most, is the best. That’s usually right, but be sure to read the terms and conditions, and understand how long your interest rate offer is available on purchases and balance transfers, and what the APR will be after the introductory period.

There are other things you should consider. The first is what additional fees apply. Is there an annual fee? Can you make same-day card payments for free? Are you charged for services that other card companies provide at no charge? What benefits of the prestige card are you interested in? Will they save you money? Will they save you time, or help you track your spending, so you can better control your finances? What unique benefits does your credit card offer? How do other customers rate the lender's customer service? What security features are in place?

Here is a great tip to help you to get the lowest interest rate possible from a prestige credit card. Be sure you have a solid FICO credit score—above 650 is usually solid enough to secure the lowest interest rates. After that, happy hunting! May the best platinum card win!

How to build good credit habits?

Admin — Wed, 03 Mar 2010 00:00:00 GMT

When you are working to build or rebuild your credit history, how you use credit is everything. It is important that you build the right credit habits to develop and maintain a good credit score. But how can you build good credit habits and maintain a good credit score? Taocredit.com can tell you a simple way to accomplish this...

Start out slowly. Make just small charges on your credit card. Pay the balance in full each month. The goal is to begin building a good credit history and practice good credit habits. Do not use your credit card to buy things you can't afford! The interest you will pay actually makes things less affordable.
One way you can practice safe credit card use is to use it to pay a small monthly subscription or other recurring bill, something around $20 or less, and pay off your entire balance each month. For at least six months, let this be the only charge you make with your credit card. This will get you in the habit of staying below your credit limit, and of paying your balance in full every month. These are two habits that will help keep your credit score high.

After you have gotten into the habit of paying your bill in full, you can begin using your credit card to make small purchases other than the subscriptions discussed earlier. Continue to keep your balance low, perhaps using 30% of your credit limit or less. Your balance should never rise above $30 on a credit card with a limit of $100. When you make a credit card purchase, put the money with which to pay it offaside, immediately, so you will not spend it before your bill comes. Then, when it is time to pay your credit card bill, you already have payment.

As you use your credit card the right way, your creditors will likely increase your credit limits, allowing you to charge more on your card. If you decide to use this additional borrowing ability, just continue to stay within 30% of your limit.

Because credit cards do not come with manuals for wise use, I wrote down my best strategies for using credit cards, and maintaining a high credit score. You may have already learned the hard way about the devastating effects of credit misuse, but it is never too late to start over!

Five Consumer Warnings Involving Reward Credit Cards

Admin — Wed, 03 Mar 2010 00:00:00 GMT

Nearly every card issuer that issues credit cards offers its customers a reward or rebate program. Rebate credit cards will reward you for making everyday purchases with your card. Rebate cards are very popular and when used in a wise manner, rewards cards can help improve your bottom line- who doesn’t like free stuff?!? However, five potential drawbacks of reward credit cards can turn these generous programs into financial quicksand.

1.   Rebate Credit Cards Often Have Higher Interest Rates.
2.   Reward Cards Can Result in Big Finance Charges.
3.   Tempting Credit Card Rewards Can Result in Budget-Busting Expenses.
4.   Rebate Credit Card Pitfalls Include Fees.
5.   Reward Credit Card Benefits Can Quickly Vanish.

If you want to know more information about other credit cards information, just feel free to visit: www.taocredit.com !

How to choose which credit card is right for me

Joseph — Mon, 22 Feb 2010 00:00:00 GMT

When a person is looking to open up a new line of credit by opening up a credit card account, they will find that there are many different types of credit cards that are offered by many different financial institutions. How does one decide on which credit card to apply for? Do you get a Visa or Mastercard? How about a Discover card or American Express? There are so many questions that someone might ask when trying to choose a credit card, especially someone who is just starting their credit history.

When applying for a credit card, make sure that you look at what the annual percentage rate will be on your credit card. This determines how much interest you will pay on your carried balance of your credit card. The lower the A.P.R. is, the better it is for you. Low interest credit cards are the type of cards that are sought after by people, but they are not always available to everyone. The better your credit score is, the lower A.P.R. you are usually offered by the credit card issuer. If you are just starting out with your first credit card and have no previous credit history, your A.P.R. may be higher than what you would like, but once you establish a good credit history you will be able to negotiate a lower A.P.R. or apply for credit cards that offer you lower interest rates. Lots of young people who are just starting out, many times open up a student credit card. Student credit cards are usually easier for young people to get as they cater to students. The credit limit on student credit cards may not be nearly as big as someone who is looking to open up a business credit card account, but those who are opening up a business credit card account most likely has a long history of positiver credit.

Visa, Mastercard, Discover, and American Express are the most frequently used type of credit cards and can be used almost anywhere. There are a number of other types of credit cards but Visa and Mastercard are the most widely used. There are many credit card companies that will give you a special deal for using their credit cards. They may offer you a 0% A.P.R. credit card, with these type of credit cards you do not have to pay any interest on your purchases for a certain amount of time. There are also instant approval credit cards where you are instantly approved for a line of credit. Some credit cards will offer you certain incentives for using their credit card. For example, cash back credit cards do exactly what they say, you actually get cash back for every purchase you make with your credit card. Others may offer you other incentives such as rewards credit cards, or airline credit cards. You will obviously need to choose for yourself which credit cards are best for you, just be sure to read your credit card agreement before sending them your credit card application. If you agree, send for that credit card.

The Pros and Cons of Borrowing on Credit Cards

Caroline — Tue, 16 Feb 2010 00:00:00 GMT

As young people enter adulthood, they face many decision, and no longer must accept their parents' advice. It's time to think on your own, right? Unfortunately, young people can fall prey to solicitations from lenders and can unwittingly enter a lifetime of unmanageable debt. With a little bit of attention to some good advice, almost amnion can avoid the credit card trap, and learn to use credit responsibly, and when needed.

Credit card solicitations come on fast and hard when a young person enters college. There are enticing deals, and given how tight finances usually are for students, the offers of easy money can be most appealing. Some are good offers, others are not. So, how can you tell the difference?

Hardly anyone reads the fine print on a credit card application or contract, so I have boiled down all that information into something quite digestible, and easy to understand and follow. When you are apply credit card, skim the fine print until you find these three areas: interest rates, annual fees, late charges and grace periods. When examining the interest rate for a credit card, find out what it starts at, and under what conditions it will change. Evaluate the lender's ability to increase the rate on short notice, or sky-high. If the lender seems to control all aspects of the interest rate, and you own behavior has no or little bearing, you might be walking into a haunted house of unexpected rate hikes. Compare as many cards as you can, and ask friends. Find out the prevailing rate before you sign anything,

Annual fees can be quite annoying. They are often promised in conjunction with some pie-in-the-sky reward such as airline travel. it may seem like a good bargain. But, how much must you spend to earn a trip? How many annual fees will you have to pay while so doing? Are you sure it wouldn't be cheaper just to buy a ticket?

Late charges can add up quickly and really break your heart. An associated fee is the classic "over limit" fee which some debit cards charge, after allowing you to go over your limit for a tiny purchase. So, keep an eye on your payments, and try to make them earlier rather than later. The sooner you make them, the less likely it is that you will get hit with late fees.

Grace periods are the short period during which no interest is paid on a new balance. If you pay your balance off within the grace period, you'll never pay interest at all! Some cards offer nearly a month. That's a great money-aver for you.

Credit cards can help you out of trouble, to be sure, but can also lead you right into it. Whatever toys and baubles you want now, you should think of yourself five years from now. Happy about your debts?

The bottom line is, life's too short not to feel happy. If you can use credit cards in the way they are pitched, as a way to make life easier and more enjoyable, then please do so. But be sure and read the fine print to make sure!

For more credit card information, please refer to werbsite: http://www.taocredit.com

Zip-zap machine

Admin — Mon, 25 Jan 2010 00:00:00 GMT

A zip-zap is a manual credit card impression machine that creates multiple receipts by sliding a handle to record the raised numbers on the front of a credit card onto carbon-paper packet copies. The credit card is placed on the bottom of the machine and the carbon receipts on top. The user then slides the handle across the machine and back to make the impression. Also called a knuckle-buster.

Zero liability policy

Admin — Mon, 25 Jan 2010 00:00:00 GMT

Major credit card issuers, concerned about public reactions to identity theft and fraud, have voluntarily adopted zero liability policies to product consumers. Zero liability policies go beyond the requirements of federal law, which limit individuals' out-of-pocket expenses to $50 if a credit card is lost or stolen and then used fraudulently.

Zombie debt

Admin — Mon, 25 Jan 2010 00:00:00 GMT

Zombie debt is old credit card and other debts that are beyond the statute of limitations, so a debt collector cannot successfully use the courts to collect them. Although these debts no longer have the courts as an avenue of collection, there's nothing to prevent debt collectors from asking consumers to pay them. In recent years, the debt collection industry has expanded, creating more agencies and lengthier efforts to collect. So from the consumer's perspective, debts don't die, they rise to live on and on. Like zombies.

Zero balance

Admin — Mon, 25 Jan 2010 00:00:00 GMT

Zero balance is to have no debt on your credit card. Depending on how long you've had the credit card, how many accounts you have and the size of your credit limit, canceling the card due to a zero balance could hurt your credit score because you might lose some credit history from your credit report, and your debt if the credit reporting agency purges its records. However, if you continue to use credit cards wisely by showing consistent payments, the credit score damage from closing a zero balance card is small and brief.

Z score

Admin — Mon, 25 Jan 2010 00:00:00 GMT

The Z score is a a bankruptcy-prediction model introduced by New York University professor Edward Altman in 1968. The Z score's formula assigns values to five financial ratios to gauge how likely it is that a manufacturing or industrial firm will go bankrupt.

Z (regulation)

Admin — Mon, 25 Jan 2010 00:00:00 GMT

The Truth in Lending Act (TILA) of 1968 is a United States federal law designed to protect consumers in credit transactions, by requiring clear disclosure of key terms of the lending arrangement and all costs. The statute is contained in Title I of the Consumer Credit Protection Act, as amended (15 U.S.C. § 1601 et seq.). The regulations implementing the statute, which are known as "Regulation Z", are codified at 12 CFR Part 226. Most of the specific requirements imposed by TILA are found in Regulation Z, so a reference to the requirements of TILA usually refers to the requirements contained in Regulation Z, as well as the statute itself.

Yield on earning assets

Admin — Mon, 25 Jan 2010 00:00:00 GMT

Yield on earning assets is one measure of a financial industry's solvency used by banking regulators. It looks at total interest, dividend and fee income earned on loans and investments as a percentage of average earning assets.

X (Regulation X)

Admin — Mon, 25 Jan 2010 00:00:00 GMT

Regulation X is a Federal Reserve Board rule governing limits on the amount of credit that can be granted to purchasers of securities from securities brokers, dealers, banks and other lending institutions.

Wall Street Journal prime rate

Admin — Mon, 25 Jan 2010 00:00:00 GMT

The Wall Street Journal Prime Rate (WSJ Prime Rate) is defined by The Wall Street Journal (WSJ) as "The base rate on corporate loans posted by at least 70% of the 10 largest U.S. banks." It is not the 'best' rate offered by banks. It should not be confused with the federal funds rate set by the Federal Reserve, though these two rates often move in tandem. The current rate is 3.25% (as of 2008-12-16).

Wage garnishment

Admin — Mon, 25 Jan 2010 00:00:00 GMT

A garnishment is a means of collecting a monetary judgment against a defendant by ordering a third party (the garnishee) to pay money, otherwise owed to the defendant, directly to the plaintiff. In the case of collecting for taxes, the law of a jurisdiction may allow for collection without a judgment or other court order.

Void transaction

Admin — Mon, 25 Jan 2010 00:00:00 GMT

A deletion of the transaction information.

Void

Admin — Mon, 25 Jan 2010 00:00:00 GMT

A void nullifies a transaction that has been recorded for settlement, but has not yet been settled. This removes the transaction from the batch of transactions to be settled.

Voice authorization

Admin — Mon, 25 Jan 2010 00:00:00 GMT

An approval response that is obtained through interactive communication between an issuer and an acquirer, their authorizing processors or stand-in processing or through telephone, facsimile or telex communications.

Visa merchant

Admin — Mon, 25 Jan 2010 00:00:00 GMT

A merchant that displays the Visa symbol and accepts all Visa cards.

Visa issuer

Admin — Mon, 25 Jan 2010 00:00:00 GMT

A financial institution that partners with Visa to issue credit and/or debit cards.

Visa card

Admin — Mon, 25 Jan 2010 00:00:00 GMT

Visa Inc. (NYSE: V), commonly referred to as VISA (Visa International Service Association), is a multinational corporation based in San Francisco, California, USA. The company operates the world's largest retail electronic payment network, managing payments among financial institutions, merchants, consumers, businesses and government entities. Before Visa Inc's IPO in early 2008, it was operated as a cooperative of some 21,000 financial institutions that issued and marketed Visa products including credit and debit cards.

VISA

Admin — Mon, 25 Jan 2010 00:00:00 GMT

Variable interest rate

Admin — Mon, 25 Jan 2010 00:00:00 GMT

With variable-rate cards, the APR changes when interest rates or other economic indicators change. Also known as a floating rate.

VantageScore

Admin — Mon, 25 Jan 2010 00:00:00 GMT

VantageScore is the name of a credit rating product that is offered by the three major credit bureaus (Equifax, Experian, and TransUnion). The product was unveiled by the three bureaus on 14 March 2006. The VantageScore is an attempt to compete with the FICO score produced by Fair Isaac.

Validation code

Admin — Mon, 25 Jan 2010 00:00:00 GMT

A unique four-character value that VISA includes as part of the CPS/ATM program in each authorization response. This code ensures that key authorization fields are preserved in the clearing or settlement record.

Utilization ratio

Admin — Mon, 25 Jan 2010 00:00:00 GMT

Utilization ratio is used in the calculation of credit scores. It compares the amount of credit being used to the total credit available to the borrower. Having a low ratio -- in other words, not much debt but a lot of available credit -- is good for your credit score. Also known as a balance-to-limit ratio.

Usury

Admin — Mon, 25 Jan 2010 00:00:00 GMT

The lending of money at exorbitant interest rates. Many states have usury laws that cap interest rates, but a 1978 Supreme Court rulings allowed credit cards or other lenders to ignore those laws if the lender is headquartered in a state that does not have them. Most major card issuers have located their headquarters in states with no usury laws, and hence there is no cap on most credit cards' interest rates.

User authentication

Admin — Mon, 25 Jan 2010 00:00:00 GMT

User authentication is the process of validating a credit card user's identity or authorized user status. User authentication is an important part of a merchant's duties in accepting credit card, although in practice, authentication has in recent years become often cursory or nonexistent.

Unsecured credit cards

Admin — Mon, 25 Jan 2010 00:00:00 GMT

Unsecured credit cards are the most common type of credit cards. They are not secured by collateral. That means that unlike secured loans, such as mortgages or auto loans, unsecured credit cards are not directly connected to property that a lender can seize of the cardholder fails to pay. Issuers of unsecured cards must make use of other means -- such as the courts or garnishment -- to collect unpaid debts. Customers qualify for unsecured cards based on their credit history, their financial strength and their earnings potential.

Universal default

Admin — Mon, 25 Jan 2010 00:00:00 GMT

Universal default is the term for a practice in the financial services industry for a particular lender to change the terms of a loan from the normal terms to the default terms (i.e. the terms and rates given to those who have missed payments on a loan) when that lender is informed that their customer has defaulted with another lender, even though the customer has not defaulted with the first lender.

Two-cycle billing

Admin — Mon, 25 Jan 2010 00:00:00 GMT

Two-cycle billing is the balance computation method used by some issuers that allows them to apply interest charges to two full cycles of card balances, rather than the most recent billing cycle's balances. Two-cycle billing effectively eliminates the grace period for people who paid off a balance in the previous month. Two-cycle was heavily criticized by consumers and federal regulators banned the practice, beginning in July 2010. Also called double-cycle billing.

Truth in Savings Act

Admin — Mon, 25 Jan 2010 00:00:00 GMT

The Truth in Savings Act (also known by the acronym TISA) is a United States federal law that was passed on December 19, 1991. It was part of the larger Federal Deposit Insurance Corporation Improvement Act of 1991 and is implemented by Regulation DD. It established uniformity in the disclosure of terms and conditions regarding interest and fees when giving out information on or opening a new savings account. On passing this law, the US Congress noted that it would help promote economic stability, competition between depository institutions, and allow the consumer to make informed decisions.

Truth in Lending Act

Admin — Mon, 25 Jan 2010 00:00:00 GMT

The Truth in Lending Act (TILA) of 1968 is a United States federal law designed to protect consumers in credit transactions, by requiring clear disclosure of key terms of the lending arrangement and all costs. The statute is contained in Title I of the Consumer Credit Protection Act, as amended . The regulations implementing the statute, which are known as "Regulation Z", are codified at 12 CFR Part 226. Most of the specific requirements imposed by TILA are found in Regulation Z, so a reference to the requirements of TILA usually refers to the requirements contained in Regulation Z, as well as the statute itself.

Truncation

Admin — Mon, 25 Jan 2010 00:00:00 GMT

The habit of merchants to display only some digits of a customer's credit card number on a sales draft or receipt, in order to provide better security while still enabling identification (for the cardholder) of the card used. Truncation has been required by federal law since 2006. By law, no more than the last five digits of a debit or credit card may be shown on a receipt.

Transactor

Admin — Mon, 25 Jan 2010 00:00:00 GMT

In the credit card world, a transactor is a cardholder who transacts -- that is, makes purchases with a credit card -- but does not carry a balance.

Transaction identifier

Admin — Mon, 25 Jan 2010 00:00:00 GMT

A transaction identifier is a unique 15-character value that Visa assigns to each transaction and returns to the acquirer in the authorization response. Visa uses this value to maintain an audit trail throughout the life cycle of the transaction and all related transactions, such as reversals, adjustments, confirmations and charge-backs.

Transaction

Admin — Mon, 25 Jan 2010 00:00:00 GMT

(1) Any agreement between two or more parties that establishes a legal obligation. (2) The act of carrying out such an obligation. (3) All activities affecting a deposit account that are performed at the request of the account holder. (4) All events that cause some change in the assets, liabilities or net worth of a business. (5) An action between a cardholder and a merchant or a cardholder and a member that results in activity on the cardholder account.

Tranche

Admin — Mon, 25 Jan 2010 00:00:00 GMT

A tranche is a portion of a securitized credit card portfolio. Tranches are typically organized into classes based on risk (i.e. Class A, Class B, etc.) Investors buy portions of a securities portfolio and are paid based on the hierarchy of tranches.

Total finance charge

Admin — Mon, 25 Jan 2010 00:00:00 GMT

Total finance charge is the amount that a consumer pays for credit card borrowing. The total finance charge is calculated in several ways, most commonly by multiplying the average daily balance by the daily periodic rate by the total number of days in the billing cycle. The charge is applied to credit card bills monthly.

Time-barred debt

Admin — Mon, 25 Jan 2010 00:00:00 GMT

Time-barred debt is a term that describes a particular type of old, unpaid debt. Every state has a statute of limitations that limits how long a creditor can get a court judgment forcing payment. For credit card debt, states' statutes set limits of three to 10 years. Debt older than that is "time-barred debt."

Tiered rewards

Admin — Mon, 25 Jan 2010 00:00:00 GMT

A tiered reward is a rewards earning calculation that is typically disclosed as "up to" a certain percentage cash back. As card users spend more, they increase the percentage of their rewards, up to a maximum. For example, a tiered reward offer could involve 0.25 percent for the first $1,000 in spending, 0.5 percent for the next $1,000 and 1 percent for all spending over $2,000.

Thrift

Admin — Mon, 25 Jan 2010 00:00:00 GMT

A thrift is a financial institution whose main purpose is to take in deposits and fund mortgages, as famously depicted in the 1946 movie "It's a Wonderful Life." However, thrifts may also issue credit cards. Thrifts, also known as savings and loan associations, are regulated by the Office of Thrift Supervision, a division of the U.S. Treasury.

Thin file

Admin — Mon, 25 Jan 2010 00:00:00 GMT

"Thin file" is a term used in the credit scoring world to describe a brief credit history. Traditionally, credit bureaus would not lend to people with thin files because they displayed too little experience in handling loans. However, more credit bureaus are considering alternate data -- such as the history of utility payments or rent -- in making lending decisions.

Terms and conditions

Admin — Mon, 25 Jan 2010 00:00:00 GMT

Terms and conditions is the common name for the document in which credit card issuers describe in detail their practices. After a consumer applies for a credit card and receives it in the mail, the first use of the card turns the terms and conditions into a legal contract.

Teaser rate

Admin — Mon, 25 Jan 2010 00:00:00 GMT

A teaser rate is a low, adjustable introductory interest rate advertised for a loan or credit card in order to attract potential customers to obtain the service. The teaser rates are normally too good to be true for the long term, and are far below the common realistic rate for the service. In a competitive market, many companies will compete with each other for the lower teaser rate. Typically, the teaser rate is 0%.

Tabling

Admin — Mon, 25 Jan 2010 00:00:00 GMT

Tabling, in credit card lingo, is when student credit card issuers set up tables on or near campuses for the purpose of enticing students to fill in credit card applications by plying them with free gifts.

Subprime credit card

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A credit card designed for those with little credit history or bad credit. These types of bad -credit credit cards typically carry higher fees and interest rates to offset the increased risk involved with subprime lending.

Subprime credit

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A person with subprime credit has a credit record that is too weak to be offered good or excellent terms by someone extending credit. Someone with subprime credit gets worse deals offered than someone with good (prime) credit -- if any at all. There is no one exact score that divides prime credit and subprime credit consumers; it depends on the product and each creditor sets its own rules.

Stored-value card

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A stored-value card refers to monetary value on a card not in an externally recorded account and differs from prepaid cards where money is on deposit with the issuer similar to a debit card. One major difference between stored value cards and prepaid debit cards is that prepaid debit cards are usually issued in the name of individual account holders, while stored value cards are usually anonymous.

Stoozing

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Stoozing, also called arbitrage, is the practice of taking a free or low interest loan from a credit card company, depositing it in a high-yield savings account, making the minimum payments on the card and pocketing the difference. Consumers who practice stoozing make money on the interest rate spread between money received and money paid -- just like a bank.

Statement

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A written record prepared by a financial institution, usually once a month, listing all transactions for an account, including deposits, withdrawals, checks, electronic transfers, fees and other charges, and interest credited or earned. The statement is usually mailed to the customer (also known as a billing statement).

State bank

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A state bank is generally a financial institution that is chartered by a state. It differs from a reserve bank in that it does not necessarily control monetary policy (indeed, the state in question may have no legal capacity to create monetary policy), but instead usually offers only retail and commercial services.

Standard floor limit

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A floor limit that varies by merchant type. This refers to a currency limit on transactions, above which authorization requests are required.

Standard APR

Admin — Tue, 19 Jan 2010 00:00:00 GMT

This APR comes into effect after the introductory period expires. A single credit card will have several APRs, applicable to different types of transactions -- purchases, cash advances and balance transfers.

Spoilage

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Spoilage refers primarily to gift cards that are lost or left unused. It is also the portion of funds left on a partially used gift card that are never cashed out. Also referred to as "breakage."

Soft pull

Admin — Tue, 19 Jan 2010 00:00:00 GMT

The term used to describe a credit report check that does not impact the borrower's credit score. Also known as a "soft inquiry."

Soft inquiry

Admin — Tue, 19 Jan 2010 00:00:00 GMT

The term used to describe a credit report check that does not impact the borrower's credit score. Also known as a "soft pull."

SMS

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Short Message Service (SMS), or texting, is used to send text messages via cell phone. However, it can also be used as a payment technology on cell phones. SMS allows you to conduct a transaction by typing a dollar amount into your phone and sending it to the payee.

Smart card

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A smart card, chip card, or integrated circuit card (ICC), is any pocket-sized card with embedded integrated circuits which can process data. This implies that it can receive input which is processed — by way of the ICC applications — and delivered as an output. There are two broad categories of ICCs. Memory cards contain only non-volatile memory storage components, and perhaps some specific security logic. Microprocessor cards contain volatile memory and microprocessor components. The card is made of plastic, generally PVC, but sometimes ABS. The card may embed a hologram to avoid counterfeiting. Using smart cards is also a form of strong security authentication for single sign-on within large companies and organizations.

Skimming

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Skimming is a method of stealing credit card information by using a small, handheld electronic device that scans and stores card data from the magnetic strip. It can be done manually by a corrupt employee while out of sight (usually at restaurants or bars) or by criminals who place a skimming device on top of a regular credit card reader (usually at gas stations or ATMs machines) and retrieve it later. The stolen credit card information can be used to make fraudulent purchases online or for cloning.

Signature strip

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A signature strip is an area on the back of a card coated with a white or gray material that holds ink. Imprinted above it are words to the effect of "Authorized signature, Not valid unless signed." Some people write "Show ID" in place of their signature, in an effort to discourage unauthorized use. While that may work in practice, merchants are not supposed to accept such cards.

Short Message Service

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Short Message Service (SMS) is a communication service component of the GSM mobile communication system, using standardized communications protocols that allow the exchange of short text messages between mobile phone devices. SMS text messaging is the most widely used data application in the world, with 2.4 billion active users, or 74% of all mobile phone subscribers.^{[citation needed]} Because of its ubuquity, the term SMS is used as a synonym for all types of short text messaging, as well as the user activity itself, in many parts of the world.

Setup fee

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Like an activation fee, a setup fee is often charged by places that rent space or other things. In the case of self-storage businesses, this negates claims of "only one dollar for the first month" made by Public Storage and others. Apartment complexes often charge fees for pets (mainly dogs and cats). Some complexes euphemisitically call these a non-refundable deposit, ignoring the definition of a deposit as inherently being refundable.

Settlement bank

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A settlement bank is an institution authorized to execute settlement on the credit card payment processing system on behalf of the member or the member's bank.

Settlement

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A credit card obtained by using a cash deposit or other collateral to guarantee the credit card. The credit limit is based upon the amount of deposit or collateral.

Service charge

Admin — Tue, 19 Jan 2010 00:00:00 GMT

"Service charge" is a broad term that encompasses a variety of charges for services provided by a credit card company.

Security code

Admin — Tue, 19 Jan 2010 00:00:00 GMT

The security code on a credit card is the brief number that is printed on the card that helps verify its legitimacy. Depending on the card, the security code can be a three-digit or four-digit number, printed on either on the back of the card or the front, and goes by several names. The most common is CVV, which stands for "card verification value" code. Other card issuers call their security codes CVV2 (Visa), CVC2 (MasterCard) or CID (American Express).

Secured credit cards

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A credit card obtained by using a cash deposit or other collateral to guarantee the credit card. The credit limit is based upon the amount of deposit or collateral.

Schumer Box

Admin — Tue, 19 Jan 2010 00:00:00 GMT

The Schumer box is a summary of the costs of a credit card. It is named after Charles Schumer – the New York Congressman responsible for the legislationwhich requires that terms of credit cards be clearly outlined in any promotional material. The law was enacted in 1988 but took effect in 2000 in the United States. Similar legislation was enacted in the United Kingdom and took effect in March 2004. Credit card companies are required to list long-term rates in at least 18-point type and other key disclosures in 12-point type.

Savings bank

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A savings bank is a financial institution whose primary purpose is accepting savings deposits. It may also perform some other functions.

Savings and loan association

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A savings and loan association (or S&L), also known as a thrift, is a financial institution that specializes in accepting savings deposits and making mortgage and other loans. The terms "S&L" or "thrift" are mainly used in the United States; similar institutions in the United Kingdom, Ireland and some Commonwealth countries include building societies and trustee savings banks.

Sales draft

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A paper record that evidences the purchase of goods or services by a cardholder.

Roll rate

Admin — Tue, 19 Jan 2010 00:00:00 GMT

In the credit card industry, the "roll rate" is the rate at which 30-day delinquencies "roll" to become 60-day and then 90+ day delinquencies. For example, industry figures show that about one in five people who are 30 days become 60 days late, for a roll rate of 20 percent.

RFID

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Radio frequency identification (RFID) technology is increasingly used in everything from library books to key fobs that let office workers in their buildings to credit cards. They transmit very short range radio signals that a receiving device reads before it decides whether to let you check out a book, get to your cubicle or pay for that vente Cinnamon Dolce Frappuccino.

Reward card

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Certain credit cards that offer cash back, air miles, points, or other rewards.

Revolving line of credit

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A revolving line of credit refers to a bank or merchant offering a certain amount of always available credit to an individual or corporation for an undetermined amount of time. The debt is repaid periodically and can be borrowed again once it is repaid. Borrowing using a credit card is an example of using a revolving line of credit.

Revolver

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A revolver is a credit card issuer term for customers who carry balances, paying off those balances over time, thus "revolving" them. Someone who pays their credit card balance each month is not a revolver.

Retail merchant

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A merchant that provides goods and/or services in the retail industry, but that is not a mail/phone merchant, a recurring services merchant or a travel and entertainment (T&E) merchant.

Residual interest

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Residual interest is the amount of interest that accrues between when a credit card bill is sent, and when payment is received. It applies only when you carry a balance on your credit card. Consumer advocates call it an unfair practice because unless you call your issuer and ask exactly how much it will cost to pay your bill in full on the date you expect your payment to arrive, you'll still owe interest on your next bill, regardless of whether you make any more purchases with your card.

Reloadable card

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A reloadable card is often called a prepaid credit card, prepaid Visa card or prepaid MasterCard, but it also can be reloaded with monetary value multiple times. It does not necessarily have to be associated with a bank account run by the owner of the card. They usually carry multiple fees, charged for purchase of the card, for use of the card and for reloading the card.

Regulation Z

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Federal Reserve regulation implementing the consumer credit protections in the Truth in Lending Act of 1968, The major areas of the regulation require lenders to:

-give borrowers written disclosure on essential credit terms including the cost of credit expressed as a finance charge and an annual percentage rate.

-respond to consumer complaints of billing errors on certain credit accounts within a specified period.

-identify credit transactions on periodic statements of opened credit accounts.

-provide certain rights regarding credit cards.

-inform customers of the Right of Rescission in certain mortgage-related loans within a specified period.

-comply with special requirements when advertising credit.

Regulation X

Admin — Tue, 19 Jan 2010 00:00:00 GMT

It's a regulation of the Department of Housing and Urban Development that implements the Real Estate Settlement Procedures Act

Regulation DD

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A law that requires depository institutions -- such as banks, thrifts and savings and loan associations -- to disclose any fees, interest rates or other charges assessed to deposit accounts. This includes any overdraft or other fees associated with transactions processed through debit cards linked to savings accounts. Also called the Truth in Savings Act or the FDIC Improvement Act of 1991.

Refund

Admin — Tue, 19 Jan 2010 00:00:00 GMT

The creation of a credit to a cardholder account, usually as a result of a product return or to correct an error.

Reference number

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Number assigned to each monetary transaction in a descriptive billing system. Each reference number is printed on the monthly statement to aid in retrieval of the document, should it be questioned by the cardholder.

Redlining

Admin — Tue, 19 Jan 2010 00:00:00 GMT

The illegal practice of giving differential treatment in lending, housing, insurance and other services based on the customer's race. Decades ago, lenders were said to draw a red line around an area or community marked for differential treatment, hence the term redlining.

Recurring billing

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Transactions for which a cardholder grants permission to the merchant to periodically charge his account number for recurring goods or services.

Receipt

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A hard copy document that records when a transaction took place at the point of sale. The receipt contains a description of the transaction, which usually includes the date, the merchant name/location, a portion of the primary account number, the amount and the reference number. Since 2007, federal law has required that account numbers on credit and debit card receipts must be truncated -- that is, not show more than the last five digits of the card number, and not show the card's expiration date.

Rate tart

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Rate tart is a term used in the UK to describe someone who transfers balances repeatedly, chasing the lowest possible rate. When credit tightens, rate tarts can be forced into interest-rate monogamy.

Radio frequency identification

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Radio-frequency identification (RFID) is the use of an object (typically referred to as an RFID tag) applied to or incorporated into a product, animal, or person for the purpose of identification and tracking using radio waves. Some tags can be read from several meters away and beyond the line of sight of the reader.

Qualifying ratio

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Qualifying ratios are ratios lenders use to assess a loan applicant's ability to meet debt obligations. They are most commonly used in mortgage underwriting. They include a front end ratio, which is a percentage of monthly income before tax that is used for a house payment; and a back end ratio, which is the percentage of income compared to the combined monthly debt from house, car, credit card and student loan payments. Whether a ratio is acceptable can fluctuate from lender to lender and vary with market conditions, but if the ratios of debt to income are too high, an applicant won't be approved for a loan.

Purchase rate

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A purchase rate is the interest rate charged on regular purchases put on a credit card. It differs from a cash advance rate in that it is lower because banks and issuers view regular purchases as less risky.

Program manager

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A program manager is the owner of a prepaid stored value card program. The program manager typically is responsible for establishing relationships with processors, banks, payments networks and distributors and for establishing pooled account(s) at banks.

Processor

Admin — Tue, 19 Jan 2010 00:00:00 GMT

In prepaid stored value card programs, a processor facilitates payment transactions and tracks and distributes funds in pooled accounts.

Processing date

Admin — Tue, 19 Jan 2010 00:00:00 GMT

The date on which the transaction is processed by the acquiring bank.

Private label credit card

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Private label credit cards are cards branded for a specific retailer, independent dealer or manufacturer. If the retailer does not manage the private label card, a third-party issues the cards and collects the payments from cardholders. Terms and conditions for private label credit cards are made by contracts between the retailer and the third party. Retailers prefer to have their own card because it offers customers another way to shop with them, thus increasing sales.

Prime rate (or prime interest rate)

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Prime rate, or Prime Lending Rate, is a term applied in many countries to a reference interest rate used by banks. The term originally indicated the rate of interest at which banks lent to favored customers, i.e., those with high credibility, though this is no longer always the case. Some variable interest rates may be expressed as a percentage above or below prime rate.

Prime credit

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A person with prime credit has a credit record that is strong enough to be offered good or excellent terms by someone extending credit. People with subprime credit get worse deals offered, if they get any at all. There is no one exact score that divides prime credit and subprime credit consumers; it depends on the product and each creditor sets its own rules.

Prime borrower

Admin — Tue, 19 Jan 2010 00:00:00 GMT

In credit card parlance, prime borrowers are cardholders with a good history of paying their debts on time. Prime borrowers tend to get the lowest rates from credit card issuers.

Primary account number (PAN)

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A bank card number is the primary account number found on credit cards and bank cards. It has a certain amount of internal structure and shares a common numbering scheme. Credit card numbers are a special case of ISO/IEC 7812 bank card numbers.An ISO/IEC 7812 number contains a single-digit Major Industry Identifier (MII), a six-digit Issuer Identification Number (IIN), an account number, and a single digit check sum calculated using the Luhn algorithm. The MII is considered to be part of the IIN.

Primary account holder

Admin — Tue, 19 Jan 2010 00:00:00 GMT

The person listed as the initial or main user of a credit card account and responsible for paying account balances. Any secondary users listed on the account are considered authorized users and would not be responsible for paying account balances.

Prepaid cards

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Pre-approved

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A conditional offer of credit from a credit card issuer based on a pre-qualification of the individual's credit from an abbreviated credit bureau report. Upon acceptance of such an offer, the issuer makes a credit decision (usually after obtaining more detailed credit information) and assigns an annual percentage rate based on the most up-to-date credit profile of the customer.

Posting

Admin — Tue, 19 Jan 2010 00:00:00 GMT

The process of updating individual cardholder account balances to reflect merchandise sales, instant cash, cash advances, adjustments, payments and any other charges or credits.

Post date

Admin — Tue, 19 Jan 2010 00:00:00 GMT

In credit card terms, the post date is the date upon which cardholders' purchases are recognized on the books of their credit cards' issuers.

Point of sale (POS)

Admin — Tue, 19 Jan 2010 00:00:00 GMT

Point of sale (POS) or checkout is the location where a transaction occurs. A "checkout" refers to a POS terminal or more generally to the hardware and software used for checkouts, the equivalent of an electronic cash register. A POS terminal manages the selling process by a salesperson accessible interface. The same system allows the creation and printing of the voucher.

Plastic (card)

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A generic term that is used to identify any of the various cards issued to cardholders.

Plain vanilla

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A "plain-vanilla" credit card is the type the industry used to offer commonly -- a simple card with no features. The industry evolved to offer multiple cards that offered many benefits, but also confused many consumers. Whether a return to "plain vanilla" cards was desirable became part of the debate over the Credit CARD Act of 2009.

PIN cashing

Admin — Tue, 19 Jan 2010 00:00:00 GMT

PIN cashing is a type of fraud that involves using stolen credit card or debit card information to directly withdraw cash from an identity theft victim's credit line, credit card or bank account.

PIN (personal identification number)

Admin — Tue, 19 Jan 2010 00:00:00 GMT

A personal identification number (PIN; pronounced "pin") is a secret numeric password shared between a user and a system that can be used to authenticate the user to the system. Typically, the user is required to provide a non-confidential user identifier or token and a confidential PIN to gain access to the system. Upon receiving the User ID and PIN, the system looks up the PIN based upon the User ID and compares the looked-up PIN with the received PIN. The user is granted access only when the number entered matches with the number stored in the system.

Piggybacking

Admin — Sun, 17 Jan 2010 00:00:00 GMT

Piggybacking is the act of improving your credit score or rating by becoming an authorized user on someone else's credit card. By doing this, you receive all the benefits of having good credit without actually having built any of the credit yourself. It is most often used by parents with their children or with spouses. In recent years, the practice has become controversial because companies sprang up to act as middlemen, matching up strangers -- one with bad credit, one with good.

Phishing

Admin — Sun, 17 Jan 2010 00:00:00 GMT

Phishing is a criminal technique that uses computers to steal credit or debit card or bank account information. Consumers often see phishing attempts in the form of fake e-mails that mimic those of banks. Consumers who click on such copycat e-mails will be transferred to a phony site that will try to dupe them into entering Social Security or bank account numbers.

Per transaction fees

Admin — Sun, 17 Jan 2010 00:00:00 GMT

In credit card merchant accounts, fees are paid per transaction: Each time a merchant accesses the payment processing system to authorize a customer's purchase, the merchant is charged a fee.

Penalty rate

Admin — Sun, 17 Jan 2010 00:00:00 GMT

The penalty rate, also called the default rate, is the very high interest rate charged by the credit card issuer when a borrower violates the card's terms and conditions. The penalty rate is most often triggered by late payments or going over the card's limit.

Payroll card

Admin — Sun, 17 Jan 2010 00:00:00 GMT

In a company, payroll is the sum of all financial records of salaries, wages, bonuses and deductions.

Payments network

Admin — Sun, 17 Jan 2010 00:00:00 GMT

A payment system is a system (including physical or electronic infrastructure and associated procedures and protocols) used to settle financial transactions in Automated teller machine networks, Stored-value card networks, bond markets, currency markets, and futures, derivatives, or options markets, or to transfer funds between financial institutions. Due to the backing of modern fiat currencies with government bonds, payment systems are a core part of modern monetary systems.Also, Electronic Payment is a subset of an e-commerce transaction to include electronic payment for buying and selling goods or services offered through the Internet.

Payment due date

Admin — Sun, 17 Jan 2010 00:00:00 GMT

The payment due date is the monthly date when at least a minimum payment is due to be paid on a credit card account. It may not fall on the same date each month.

pay to pay

Admin — Sun, 17 Jan 2010 00:00:00 GMT

A phrase used to describe the practice of charging customers fees to process bill payments.

Password

Admin — Sun, 17 Jan 2010 00:00:00 GMT

A password is a sequence of characters that allows users access to a system. Passwords are required to access online bank accounts. A PIN number is another type of password.

Overdraft protection

Admin — Sun, 17 Jan 2010 00:00:00 GMT

An overdraft occurs when withdrawals from a bank account exceed the available balance. In this situation a person is said to be "overdrawn".If there is a prior agreement with the account provider for an overdraft protection plan, and the amount overdrawn is within this authorised overdraft limit, then interest is normally charged at the agreed rate. If the balance exceeds the agreed terms, then fees may be charged and higher interest rate might apply.

Over-limit fee

Admin — Sun, 17 Jan 2010 00:00:00 GMT

A fee charged when your balance goes over your credit limit (also known as over the limit fee).

Over-limit

Admin — Sun, 17 Jan 2010 00:00:00 GMT

Being over-limit, or over the limit, refers to a cardholder account that has surpassed its credit limit with a transaction. When cardholders attempt to make purchases that will put them over their credit limit, the card issuer may decline the transactions or, as has become more common in recent years, may charge consumers hefty over-limit fees.

Opt out

Admin — Sun, 17 Jan 2010 00:00:00 GMT

Under the Credit CARD Act of 2009, consumer gained the right to opt out of interest rate increases, fee increases and other significant changes in terms. Issuers must give 45 days' notice of the changes and notify consumers of their opt-out rights and procedures. However, to discourage spending sprees, the law also calls for the new interest rate to apply to new purchases after 14 days. Consumers who opt out have a minimum of five years to pay off their existing debt under the old terms.

Open loop

Admin — Sun, 17 Jan 2010 00:00:00 GMT

Open loop is a term used to describe general purpose cards that carry the American Express, Discover, MasterCard or Visa logo and can be used wherever those cards are accepted. Closed loop cards, by contrast, can be used only in a single store or group of stores.

Online financial transaction

Admin — Sun, 17 Jan 2010 00:00:00 GMT

An online financial transaction is one that is authorized, cleared and settled in a single online session.

Online bill presentment and payment

Admin — Sun, 17 Jan 2010 00:00:00 GMT

Online bill presentment and payment is a process that allows consumers to receive, view and pay certain bills online via computer, by transferring money from their checking accounts or charging bills to their credit card. Online bill presentment means that bills arrive online, not by mail.

Office of Thrift Supervision

Admin — Sun, 17 Jan 2010 00:00:00 GMT

The Office of Thrift Supervision (OTS) is a United States federal agency under the Department of the Treasury. It was created in 1989 as a renamed version of another federal agency (that was faulted for their role in the Savings and loan crisis). Like other US federal bank regulators, it is paid by the banks it regulates. The OTS was initially seen as an aggressive regulator, but was later lax. Declining revenues and staff led the OTS to market itself to companies as a lax regulator in order to get revenue.

Office of the Comptroller of the Currency (OCC)

Admin — Sun, 17 Jan 2010 00:00:00 GMT

The Office of the Comptroller of the Currency (or OCC) is a US federal agency established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States. Currently, the Comptroller of the Currency is John Dugan.

Nondischargeable debt

Admin — Sun, 17 Jan 2010 00:00:00 GMT

A nondischargeable debt is a debt that cannot be cleared away -- in legal terms, "discharged" -- after filing for bankruptcy. Examples of such debt vary between Chapter 11 and Chapter 7 bankruptcy, but both include family support, unpaid taxes and fines related to criminal charges.

NFC

Admin — Sun, 17 Jan 2010 00:00:00 GMT

Near Field Communication (NFC) is a wireless technology that allows data to be exchanged between two different devices .

New balance

Admin — Sun, 17 Jan 2010 00:00:00 GMT

New balance is the balance owed on a credit card after the unpaid balance from the previous billing cycle and new purchases, finance charges and other fees are added together.

Negative option deals

Admin — Sun, 17 Jan 2010 00:00:00 GMT

Negative option deals are free trial offers that launch a series of automatic credit card charges if consumers forget to cancel. For example, signing up for a "free" credit report ends up leading to other charges, such as a monthly fee for credit monitoring after the free trial has expired. While negative option marketing isn't illegal, consumers argue that it is misleading.

Negative information

Admin — Sun, 17 Jan 2010 00:00:00 GMT

In quantum mechanics, quantum information is physical information that is held in the "state" of a quantum system. The most popular unit of quantum information is the qubit, a two-level quantum system. However, unlike classical digital states (which are discrete), a two-state quantum system can actually be in a superposition of the two states at any given time.

Near Field Communication

Admin — Sun, 17 Jan 2010 00:00:00 GMT

Near Field Communication or NFC, is a short-range high frequency wireless communication technology which enables the exchange of data between devices over about a 10 centimetre (around 4 inches) distance.^[1] The technology is a simple extension of the ISO/IEC 14443 proximity-card standard (contactless card, RFID) that combines the interface of a smartcard and a reader into a single device. An NFC device can communicate with both existing ISO/IEC 14443 smartcards and readers, as well as with other NFC devices, and is thereby compatible with existing contactless infrastructure already in use for public transportation and payment. NFC is primarily aimed at usage in mobile phones.

National issuers

Admin — Sun, 17 Jan 2010 00:00:00 GMT

National issuers are banks that issue credit cards to all 50 states. They are different than regional issuers that supply cards on a regional, state or on a smaller scale.

National bank

Admin — Sun, 17 Jan 2010 00:00:00 GMT

The term national bank has several meanings:

especially in developing countries, a bank owned by the state
an ordinary private bank which operates nationally (as opposed to regionally or locally or even internationally)
in the United States, an ordinary private bank operating within a specific regulatory structure, which may or may not operate nationally.

Mutual savings bank

Admin — Mon, 11 Jan 2010 00:00:00 GMT

A mutual savings bank is a financial institution chartered through a state or federal government to provide a safe place for individuals to save and to invest those savings in mortgages, loans, stocks, bonds and other securities.The institution most frequently identified as the first modern savings bank was the “Savings and Friendly Society” organized by the Reverend Henry Duncan in 1810, in Ruthwell, Scotland. Rev. Duncan established the small bank in order to encourage his working class congregation to develop thrift. European voluntary organizations and “friendly societies” provided the inspiration for their state incorporated American counterparts.

Monthly periodic rate

Admin — Mon, 11 Jan 2010 00:00:00 GMT

The monthly periodic rate is part of the formula used in computing consumers' credit card bills. It is multiplied by the amount of a cardholder's outstanding credit card balances to come up with the interest rate charge for a billing cycle.

Minimum payment

Admin — Mon, 11 Jan 2010 00:00:00 GMT

The minimum payment is the lowest amount of money that you are required to pay on your credit card statement each month. See your credit card "terms and conditions" document to see how your credit card's minimum payment is calculated.

Minimum finance charge

Admin — Mon, 11 Jan 2010 00:00:00 GMT

You will be charged a minimum finance charge if the calculated amount of your finance charge is less than the minimum finance charge set by your credit card company for a billing cycle. For example, your finance charge may be calculated to be $0.35 but if the company's minimum finance charge is $0.50, you'll pay $0.50. A minimum finance charge applies only when you must pay a finance charge -- that is, when you carry over a balance from one billing cycle to the next. Not to be confused with minimum payment.

Merchant category code (MCC)

Admin — Mon, 11 Jan 2010 00:00:00 GMT

Every transaction processed by the card networks (Visa and MasterCard) is assigned a merchant category code (MCC), a four-digit number that denotes the type of business providing a service or selling merchandise. MCCs are used by card issuers to categorize, track or restrict certain types of purchases.

Merchant bank

Admin — Mon, 11 Jan 2010 00:00:00 GMT

A merchant bank is one that has a merchant agreement with a merchant to accept(acquire) deposits generated by bank card transactions.

Merchant agreement

Admin — Mon, 11 Jan 2010 00:00:00 GMT

A merchant agreement is the written agreement between a merchant and a bank that contains their respective rights, duties and warranties, with respect to acceptance of the bank card and matters related to the bank card activity.

Merchant

Admin — Mon, 11 Jan 2010 00:00:00 GMT

An entity that contracts with merchant banks or ISOs to originate transactions.

Medical identity theft

Admin — Mon, 11 Jan 2010 00:00:00 GMT

Medical identity theft is the theft or unauthorized use of a person's personal information to obtain unauthorized medical goods and services.

MCC (merchant category codes)

Admin — Mon, 11 Jan 2010 00:00:00 GMT

MasterCard issuer

Admin — Mon, 11 Jan 2010 00:00:00 GMT

A MasterCard issuer is a financial institution that issues MasterCard cards.

MasterCard card

Admin — Mon, 11 Jan 2010 00:00:00 GMT

A card that bears the MasterCard symbol, enabling a MasterCard cardholder to obtain goods, services or cash from a MasterCard merchant or acquirer.

MasterCard acquirer

Admin — Mon, 11 Jan 2010 00:00:00 GMT

A MasterCard acquirer is a company that signs a MasterCard merchant agreement or disburses currency to a MasterCard cardholder in a cash disbursement, and directly or indirectly enters the resulting transaction receipt into interchange.

MasterCard

Admin — Mon, 11 Jan 2010 00:00:00 GMT

MasterCard Worldwide (NYSE: MA) is a multinational corporation based in Purchase, New York, United States. Throughout the world, its principal business is to process payments between the banks of merchants and the banks of purchasers that use its "MasterCard" brand debit and credit cards to make purchases. MasterCard Worldwide has been a publicly traded company since 2006. Prior to its initial public offering, MasterCard Worldwide was a membership organization owned by the 25,000+ financial institutions that issue its card.

Margin

Admin — Mon, 11 Jan 2010 00:00:00 GMT

The number of percentage points that credit card lenders add to the prime rate (index) to calculate the variable interest rate. For example, if the prime rate is 3.25 percent and the variable rate is 17.24 percent, the margin is 13.99 percent. Issuers must disclose the margin for variable rate accounts at account opening and in each monthly statement.

Mandatory binding arbitration

Admin — Mon, 11 Jan 2010 00:00:00 GMT

Mandatory binding arbitration is a contract clause commonly added by credit card issuers. It eliminates the cardholder's right to sue the credit card issuer, and instead, forces the parties to settle disputes before an arbitrator.

Man in the middle fraud

Admin — Mon, 11 Jan 2010 00:00:00 GMT

In cryptography, the man-in-the-middle attack (often abbreviated MITM), or bucket-brigade attack, or sometimes Janus attack, is a form of active eavesdropping in which the attacker makes independent connections with the victims and relays messages between them, making them believe that they are talking directly to each other over a private connection, when in fact the entire conversation is controlled by the attacker. The attacker must be able to intercept all messages going between the two victims and inject new ones, which is straightforward in many circumstances (for example, an attacker within reception range of an unencrypted Wi-Fi wireless access point, can insert himself as a man-in-the-middle).

Mail/phone order transaction

Admin — Mon, 11 Jan 2010 00:00:00 GMT

A mail or phone order transaction is one in which a cardholder orders goods or services from a merchant by telephone, mail or other means of telecommunication, and where neither the card nor the cardholder is present at the merchant outlet. Card processing companies such as Visa and MasterCard charge higher fees to the merchant for such transactions.

Mail/phone order merchant

Admin — Mon, 11 Jan 2010 00:00:00 GMT

A mail/phone order merchant is one that transacts credit card business by mail or phone. Because that merchant cannot physically check the credit cards that its customers use for payments, the transaction processors, such as Visa and MasterCard, charge that merchant higher fees to process credit card transactions.

Magnetic stripe

Admin — Mon, 11 Jan 2010 00:00:00 GMT

A magnetic stripe card is a type of card capable of storing data by modifying the magnetism of tiny iron-based magnetic particles on a band of magnetic material on the card. The magnetic stripe, sometimes called a magstripe, is read by physical contact and swiping past a reading head. Magnetic stripe cards are commonly used in credit cards, identity cards, and transportation tickets. They may also contain an RFID tag, a transponder device and/or a microchip mostly used for business premises access control or electronic payment.

Loyalty programs

Admin — Mon, 11 Jan 2010 00:00:00 GMT

Loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behavior — behavior which is potentially of benefit to the firm.

Linked transfer account

Admin — Mon, 11 Jan 2010 00:00:00 GMT

A linked transfer account is one in which a consumer's checking account is linked to another account at the same bank. The linked account can be a savings or a credit card account. If a checking overdraft occurs, the bank will transfer money from the customer’s other accounts linked to the checking account.

Line of credit

Admin — Mon, 11 Jan 2010 00:00:00 GMT

A line of credit is any credit source extended to a business by a bank or financial institution. A line of credit may take several forms such as cash credit, overdraft, demand loan, export packing credit, term loan, discounting or purchase of commercial bills etc. It is like an account that can readily be tapped into if the need arises or not touched at all and saved for emergencies. Interest is only paid on the money actually taken out.The concept has been introduced recently after the East Asian Crisis.The government can borrow money from international monetary institutions without having to handle the problem of an increasing foreign exchange reserves.Lines of credit are often extended by banks and financial institutions to credit worthy customers to overcome liquidity problems.

LIBOR

Admin — Mon, 11 Jan 2010 00:00:00 GMT

LIBOR (the London Interbank Offered Rate) is benchmark rate used as an index in setting many consumer variable rate loans. The LIBOR itself is based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market (or interbank market). Like the consensus prime rate, it is often used as a referenced rate on which many variable interest rates are based.

Late payment fee

Admin — Mon, 11 Jan 2010 00:00:00 GMT

A late fee, also known as a late fine or a past due fee, is a charge levied against a client by a company or organization for not paying a bill or returning a rented or borrowed item by its due date. Its use is most commonly associated with businesses like creditors, video rental outlets and libraries. Late fees are generally calculated on a per day, per item basis.

Knuckle-buster

Admin — Mon, 11 Jan 2010 00:00:00 GMT

A knuckle-buster is a manual credit card impression machine that creates multiple receipts by sliding a handle to record the raised numbers on the front of a credit card onto carbon-paper packet copies. The credit card is placed on the bottom of the machine and the carbon receipts on top. The user then slides the handle across the machine and back to make the impression. Also called a zip-zap machine.

Key

Admin — Mon, 11 Jan 2010 00:00:00 GMT

Key is a term used in the data storage and encryption that takes place during the credit card authorization process. Keys, as the name implies, lock and unlock -- in this case, data. When credit card numbers are stored or transmitted, they are electronically disguised to prevent thieves from stealing them. One commonly used method is the triple DES encryption, which has a 192-bit key.

Joint credit

Admin — Mon, 11 Jan 2010 00:00:00 GMT

Joint credit is when two or more people share credit. Sometimes, it is used by couples when one person has little or bad credit, or they need to make a big purchase, such as a house. It is based on both people's combined assets, incomes and credit report and makes both parties responsible for repaying any debt. If couples enter into joint credit, they are both responsible to repay any debt. In that respect, it is different from having an authorized user on an account, an arrangement in which case only one person is responsible for repayment.

Joint account

Admin — Mon, 11 Jan 2010 00:00:00 GMT

Joint account is a bank account shared by two or more individuals. Any individual who is a member of the joint account can withdraw from the account and deposit to it. Usually, joint accounts are shared between close relatives or business partners.

Issuer identification number (IIN)

Admin — Mon, 11 Jan 2010 00:00:00 GMT

If you look at a credit card's numbers, the digits are divided into two parts. The first six digits are the issuer identification number. When you make a purchase with a credit card, the processing system first looks at the first six digits, which identify the issuer. The remaining digits identify your specific account.

Issuer

Admin — Mon, 11 Jan 2010 00:00:00 GMT

A credit card issuer is any financial institution that issues, or causes to be issued, credit cards. Consumers often think that their credit cards are issued by MasterCard or Visa; they're not. Those companies are credit card transaction processors, not card issuers.

Introductory rate (or intro APR)

Admin — Mon, 11 Jan 2010 00:00:00 GMT

Introductory annual percentage rate (APR) is a low rate offered by a credit card company as an incentive to apply for the card. The APR will usually go up after the introductory period is over. The introductory rate is also known as the teaser rate.

Introductory period

Admin — Mon, 11 Jan 2010 00:00:00 GMT

In credit cards terms, the introductory period is the length of time during which the introductory annual percentage rate is in effect. The APR will usually go up after the end of the introductory period.

Interest rate cap

Admin — Mon, 11 Jan 2010 00:00:00 GMT

An interest rate cap is a derivative in which the buyer receives payments at the end of each period in which the interest rate exceeds the agreed strike price. An interest rate cap is the maximum amount of interest that can be charged to a customer. Rate caps may be imposed by a credit card agreement, or by state or federal law. An example of a cap would be an agreement to receive a payment for each month the LIBOR rate exceeds 2.5%.

Interchange fee

Admin — Mon, 11 Jan 2010 00:00:00 GMT

Interchange fee is a term used in the payment card industry to describe a fee that a merchant’s bank (the “acquiring bank”) pays a customer’s bank (the “issuing bank”) when merchants accept cards using card networks such as Visa and MasterCard for purchases. In a credit card transaction, the card-issuing bank in a payment transaction deducts the interchange fee from the amount it pays the acquiring bank that handles a credit or debit card transaction for a merchant. The acquiring bank then pays the merchant the amount of the transaction minus both the interchange fee and an additional, usually smaller fee for the acquiring bank or ISO, which is often referred to as a discount rate, an add-on rate, or passthru.

Inquiry

Admin — Mon, 11 Jan 2010 00:00:00 GMT

Inquiry (also enquiry) is any process that has the aim of augmenting knowledge, resolving doubt, or solving a problem. A theory of inquiry is an account of the various types of inquiry and a treatment of the ways that each type of inquiry achieves its aim.In credit terms, an inquiry is created when a lender looks at your credit report to see whether to loan you money. An inquiry can be "soft," as when a credit card issuer prospecting for new customers looks at your report to see whether to mail you an offer. Or an inquiry can be "hard" -- that is, initiated because you yourself have applied for a loan. Hard inquiries have a slight, negative impact on your credit scores. Soft inquiries have no effect on credit scores.

Index

Admin — Mon, 11 Jan 2010 00:00:00 GMT

An index is a benchmark rate, such as the prime rate or LIBOR, to which a margin is applied to calculate a variable interest rate. For example, if your credit card agreement says your interest rate is prime plus 10 percent, and the prime rate is at 5 percent, your credit card's interest rate will be 15 percent.

Inactivity fee

Admin — Mon, 11 Jan 2010 00:00:00 GMT

A fee imposed by some banks on credit card accounts that go dormant or unused for a certain period of time. Once rarely used, inactivity fees gained popularity with banks considering ways to earn income in the wake of the Credit CARD Act's passage.

Inactive account

Admin — Mon, 11 Jan 2010 00:00:00 GMT

An inactive account is a bank account with infrequent or no use. In the case of credit cards, if no activity is recorded for the account, some card issuers will close the account and revoke charging privileges. An inactive account is also called a dormant account.

In-house

Admin — Mon, 11 Jan 2010 00:00:00 GMT

In credit card terms, in-house describes store credit cards owned and operated directly by the retailer.

Identity theft

Admin — Mon, 11 Jan 2010 00:00:00 GMT

Identity theft is a term used that is to refer to fraud that involves someone pretending to be someone else in order to steal money or get other benefits. The term dates to 1964 ^[1]and is actually a misnomer, since it is not inherently possible to steal an identity, only to use it. The person whose identity is used can suffer various consequences when he or she is held responsible for the perpetrator's actions. In many countries specific laws make it a crime to use another person's identity for personal gain.Identity theft is somewhat different from identity fraud.

Dump

Admin — Fri, 08 Jan 2010 00:00:00 GMT

A dump is an electronic copy of the magnetic stripe of a credit card, used by carders and cybercriminals to counterfeit credit and debit cards

Due date

Admin — Fri, 08 Jan 2010 00:00:00 GMT

Credit card bills have a due date. If your credit card payment does not arrive -- and get posted -- by the due date, you will be charged a late fee. It's important for credit cardholders to watch their payment due dates, since they sometimes change. Some credit card issuers allow their customers to set their own due dates.

Drop

Admin — Fri, 08 Jan 2010 00:00:00 GMT

A drop is the address used by carders to deliver goods or services for re-sale that were purchased with stolen credit card or bank account information.

Double-cycle billing

Admin — Fri, 08 Jan 2010 00:00:00 GMT

Double cycle billing is a method used by some creditors to calculate the amount of interest to charge for a given billing cycle. The most common usage of double cycle billing is by credit card companies. However, it is important to note that not all credit card providers use this method.Double-cycle billing is the balance computation method used by some issuers that allows them to apply interest charges to two full cycles of card balances, rather than the most recent billing cycle's balances. Two-cycle billing effectively eliminates the grace period for people who paid off a balance in the previous month. Double-cycle billing was heavily criticized by consumers and federal regulators banned the practice, beginning in July 2010. Also called two-cycle billing.

Dormant account

Admin — Fri, 08 Jan 2010 00:00:00 GMT

In general, a low-balance savings account which has shown no activity (deposits and/or withdrawals) over a long period, other than posting of the interest and/or service charges. Statute of limitations usually does not apply to dormant accounts, and their funds can be claimed by their owner or beneficiary at any time.

Distributor

Admin — Fri, 08 Jan 2010 00:00:00 GMT

The term distributor has many meanings, but in the context of prepaid stored value card programs, distributors sell the cards themselves.

Discover card

Admin — Fri, 08 Jan 2010 00:00:00 GMT

It's a credit card cpmpany.Discover, the newest of the payment card brands, formed in 1986. Company now has more than 50 million card members, but is the smallest of the four payment brands in terms of market share. Discover Card's payment networks -- Discover Network and PULSE -- together processed more than 3 billion transactions in 2006. Like American Express, but unlike Visa and MasterCard, Discover acts both as a card-issuing bank and as a transaction processing network.

Direct mail

Admin — Fri, 08 Jan 2010 00:00:00 GMT

Despite growth in online credit applications, direct mail is the means by which the most credit card offers are delivered, and accepted.

Delinquent account

Admin — Fri, 08 Jan 2010 00:00:00 GMT

A delinquent account is a credit card account for which the cardholder has not made at least a minimum payment more than 30 days past due.

Deleveraging

Admin — Fri, 08 Jan 2010 00:00:00 GMT

A company's attempt to decrease its financial leverage. The best way for a company to delever is to immediately pay off any existing debt on its balance sheet. If it is unable to do this, the company will be in significant risk of defaulting.

Deferred interest

Admin — Fri, 08 Jan 2010 00:00:00 GMT

Definition of Deferred Interest on Investopedia,Payment plans that offer to delay (or defer) payment of interest during a specified period of time are deferred interest plans. In the retail sector, these are often advertised as charging "no interest until" a certain date. After that date, however, interest that has been accruing since the purchase date is charged to the account.

Default APR

Admin — Fri, 08 Jan 2010 00:00:00 GMT

A default APR (Annual Percentage Rate) is used in certain cases when you fail to make the minimum payment on your credit card account, or exceed your credit limit by a certain amount. The Default APR is higher than the other APRs for your account. If you are late in making payments, your standard APR may increase to a default APR. Default APRs may be applied to all outstanding balances on your credit card. Also called penalty rate.

Default

Admin — Fri, 08 Jan 2010 00:00:00 GMT

To default is to fail to make a payment on a debt by the due date. If this happens with a credit card, creditors might raise interest rates to the default (or penalty rate) or decrease the line of credit. In case of serious delinquency, the card issuer can even take legal action to enforce payment or to garnish wages.

Debtor

Admin — Fri, 08 Jan 2010 00:00:00 GMT

A debtor is an individual who or company that has borrowed money and has a legal obligation to pay money back to another individual or company.

Debt-to-limit ratio

Admin — Fri, 08 Jan 2010 00:00:00 GMT

A debt-to-limit ratio is used in the calculation of credit scores. It compares the amount of credit being used to the total credit available to the borrower. Having a low ratio -- in other words, not much debt but a lot of available credit -- is good for your credit score. Also known as a balance-to-limit ratio and credit utilization ratio.

Debt-to-income ratio

Admin — Fri, 08 Jan 2010 00:00:00 GMT

A debt-to-income ratio (often abbreviated DTI) is the percentage of a consumer's monthly gross income that goes toward paying debts. (Speaking precisely, DTIs often cover more than just debts; they can include certain taxes, fees, and insurance premiums as well. Nevertheless, the term is a set phrase that serves as a convenient, well-understood shorthand.) There are two main kinds of DTI, front ratio and back ratio.

Debt Management Plan (DMP)

Admin — Fri, 08 Jan 2010 00:00:00 GMT

A Debt Management Plan (DMP) is a method used in various countries for paying personal unsecured debts. Typically, such debts are out of control -- even minimal payments are late and take too large a portion of income, or even exceed it. A DMP usually involves a third party organization that aggregates all or some of the debts, assessing income and budget, and re-negotiating interest rates and payments with the lenders. The negotiated rates and payment plan is based upon the probability of a higher likelihood of collection by the lenders in light of the debtor's more realistic monthly repayment.

Debt consolidation

Admin — Fri, 08 Jan 2010 00:00:00 GMT

Debt consolidation entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.

Debt

Admin — Fri, 08 Jan 2010 00:00:00 GMT

A debt is an amount owed. In credit card terms, debt is in the form of a charge to a customer's bank card account.

Debit card

Admin — Fri, 08 Jan 2010 00:00:00 GMT

While debit cards and credit cards are alike in appearance, they differ in one critical aspect: A debit card withdraws money from a bank account, while a credit card creates a loan.

Debit

Admin — Fri, 08 Jan 2010 00:00:00 GMT

A debit, in accounting terms, is a charge to an account. To consumers, a debit is a charge to a customer's bank card account.

Deadbeat

Admin — Fri, 08 Jan 2010 00:00:00 GMT

A "deadbeat" is the unflattering credit card industry term for consumers who pay off their balances every month, using the lenders money but paying no interest on it.

DD (Regulation DD)

Admin — Fri, 08 Jan 2010 00:00:00 GMT

Data breach

Admin — Fri, 08 Jan 2010 00:00:00 GMT

A data breach is the unintentional release of secure information to an untrusted environment. Other terms for this phenonmenon include [unintentional] information disclosure, data leak and also data spill.This may include incidents such as theft or loss of digital media such as computer tapes, hard drives, or laptop computers containing such media upon which such information is stored unencrypted, posting such information on the world wide web or on a computer otherwise accessible from the Internet without proper information security precautions, transfer of such information to a system which is not completely open but is not appropriately or formally accredited for security at the approved level, such as unencrypted e-mail, or transfer of such information to the information systems of a possibly hostile agency, such as a competing corporation or a foreign nation, where it may be exposed to more intensive decryption techniques.

Hold

Admin — Thu, 07 Jan 2010 00:00:00 GMT

A teller may put a hold on a deposited cheque until it clears the payor’s financial institution.

Hard Pull

Admin — Thu, 07 Jan 2010 00:00:00 GMT

Hard pull is a credit scoring term. It describes when a consumer has applied for a loan. The potential lender checks the consumer's credit report, which creates a small negative impact on the consumer's credit score. An occasional hard pull, or a quick burst of hard pulls, has little impact on credit scores; the credit scoring formulas recognize routine loan shopping. What hurts a credit score most are multiple hard pulls over a long period. A hard pull is also known as a "hard inquiry."

Hard inquiry

Admin — Thu, 07 Jan 2010 00:00:00 GMT

An indication on a person's credit report that someone has asked for a copy of the individual's report. Hard inquiries happen as a result from a person applying for credit, such as a mortgage, a car loan, a credit card or a rental application.

Grace Period

Admin — Thu, 07 Jan 2010 00:00:00 GMT

The grace period is the time during which you are allowed to pay your credit card bill without having to pay interest. The grace period varies by credit card issuer. In recent years, the grace period has been shortening; 28 days used to be common, 21 days is common now. The grace period usually applies only to new purchases.
Payment grace periods apply only to mortgages on which interest is calculated monthly. Simple interest mortgages do not have a grace period because interest accrues daily.

Go-to rate

Admin — Thu, 07 Jan 2010 00:00:00 GMT

The go-to rate is the interest rate charged on a credit card after the introductory, or "teaser," period ends.

Gift Card

Admin — Thu, 07 Jan 2010 00:00:00 GMT

A gift card is a type of stored-value payment card commonly issued by retailers and banks. Gift cards are preloaded with a set value. There are two major types of gift cards -- those that can be used only at one store chain or one location (closed loop) and those that can be used anywhere (open loop). The closed loop variety of gift cards generally carry no fees or expiration date -- the issuing store makes its money off the profit from selling merchandise. The open loop cards always carry fees; because they are issued by banks or credit card transaction processors, such as Visa or MasterCard, fees are the only way they can profitably issue gift cards.

Funding

Admin — Thu, 07 Jan 2010 00:00:00 GMT

Funding is basically the phase of credit according by the credit card issuer. After all other phases have been completed, and you are found eligible for the credit because you fulfill all the necessary criteria, you account is being funded. Usually, if you are a new member will have to wait more for funding than a returning member; of course it always depends on your credit history as well.

Fulls

Admin — Thu, 07 Jan 2010 00:00:00 GMT

Fulls are packages of stolen credit card and bank account information and identifying characteristics. They're called "fulls" because each unit within contains the full set of information needed for successfully committing credit card fraud -- such as an individual's mother's maiden name, computer passwords, CVV (three-digit security) and PIN numbers. Often, they are illegally traded in online carding forums, and sell at a premium to other fraudulently obtained credit card information.

Fraudulent User

Admin — Thu, 07 Jan 2010 00:00:00 GMT

A fraudulent user is an individual who is not the credit cardholder or designee and who uses a credit card account to obtain goods or services without the cardholder's consent.

Fraudulent Transaction

Admin — Thu, 07 Jan 2010 00:00:00 GMT

A fraudulent credit card transaction is one in which the rules and regulations are not properly followed. Such transactions are categorized as lost, stolen, not received, issued on a fraudulent application, counterfeit, fraudulent processing of transactions, account takeover or other fraudulent conditions as defined by the card company or the member company.

Fraud Alert

Admin — Thu, 07 Jan 2010 00:00:00 GMT

A fraud alert is a security alert placed on a credit card account or credit bureau listing by either the customer or the issuer when a fraudulent account activity is either experienced or suspected. Fraud alerts are also known as credit freezes.

Foreign Transaction Fee

Admin — Thu, 07 Jan 2010 00:00:00 GMT

The fee that you will get assessed on the purchases that you make while traveling outside the U.S. OR while purchasing items over the internet from merchants that are located outside the U.S. Sometimes this fee is called a foreign exchange fee. It once was called a currency conversion fee.

Forbearance

Admin — Thu, 07 Jan 2010 00:00:00 GMT

Forbearance programs are established by credit card companies to give temporary relief to overstretched cardholders. They can take several forms, among them: postponing payments for six months to a year or even longer; lowering minimum payment monthly payments; reducing interest rates; eliminating some fees. Forbearance is not forgiveness -- consumers still must repay the credit card debt.

Floor Limit

Admin — Thu, 07 Jan 2010 00:00:00 GMT

Floor limit is the maximum amount; credit card brands like Visa and MasterCard have set froth for a single transaction for specific types of merchants, outlets and branches. An authorization is required, usually via a phone call to exceed the floor limit.

Floor

Admin — Thu, 07 Jan 2010 00:00:00 GMT

In credit card terms, the float is the difference in time between when a transaction occurs and the time it is posted to a credit card account, often one to two days.

Float

Admin — Thu, 07 Jan 2010 00:00:00 GMT

In credit card terms, the float is the difference in time between when a transaction occurs and the time it is posted to a credit card account, often one to two days.

Fleet Cards

Admin — Thu, 07 Jan 2010 00:00:00 GMT

Fleet cards are designed chiefly for business use. Fleet cards are commercially issued cards that target auto expenses for a business. They typically allow a business with many vehicles to enable drivers to easily purchase fuel and transportation supplies, and to easily track those purchases.

Fixed Rate

Admin — Thu, 07 Jan 2010 00:00:00 GMT

A loan in which the interest rate does not change during the entire term of the loan. opposite of adjustable rate.

Finance Charge

Admin — Thu, 07 Jan 2010 00:00:00 GMT

FICO Score

Admin — Thu, 07 Jan 2010 00:00:00 GMT

A FICO score is a credit score derived from the credit model developed by Fair Isaac Corporation. The FICO score is the best-known credit score in the United States, and a version of the FICO score calculated by all three of the major credit bureaus from reported information. FICO scores are calculated by the credit bureaus using complex formulas that predict future debt repayment behavior.

Federal Reserve Board

Admin — Thu, 07 Jan 2010 00:00:00 GMT

The Federal Reserve Board is the central bank of the United States. It's name is often shortened to "The Fed." Its importance to credit cards is that the Federal Reserve Board sets a key interest rate, the federal fund rate.Federal Reserve Board meetings are also attended by a rotating subset of the 12 individual Federal Reserve Bank branch presidents.

Federal Funds Rate

Admin — Thu, 07 Jan 2010 00:00:00 GMT

The federal funds rate is an interest rate set by the Federal Reserve Board's Federal Open Market Committee. It is the rate at which banks will loan each other money overnight, and it is an important rate to holders of variable rate credit cards. If the federal funds rate is higher, then banks are likely to raise the interest rates they charge, like the prime rate, home mortgage rate, or rate on car loans.

Federal Deposit Insurance Corporation

Admin — Thu, 07 Jan 2010 00:00:00 GMT

The US federal agency that manages insurance funds that insure deposits in commercial banks and in savings and loans associations.

Fair Lsaac

Admin — Thu, 07 Jan 2010 00:00:00 GMT

Fair Isaac is the company that created the popular FICO credit score. Fair Isaac renamed itself FICO, after its credit score, in March 2009.

Fair Credit Reporting Act

Admin — Thu, 07 Jan 2010 00:00:00 GMT

The Fair Credit Reporting Act was enacted to govern how credit bureaus maintain, share and correct information in credit reports. It sets out, for example, a method by which consumers can force inaccurate information to be removed from credit files. Individuals are also given the right to examine their own credit history due to the FCRA. It also bars credit bureaus from reporting negative information that is older than seven years, with the exception of a bankruptcy. Bankruptcies may remain on your report for ten years.

Fair Credit Billing Act

Admin — Thu, 07 Jan 2010 00:00:00 GMT

A federal law, passed as an amendment to Regulation Z, also known as the Truth in Lending Act. The FCBA is intended to protect consumers from credit card account billing errors or other unfair practices. The FCBA sets out specific guidelines that must be followed by both consumers and creditors, so a consumer must follow a specific procedure in order to be covered by this law (such as making a written dispute within sixty days of the error), and then the creditor becomes obligated to follow the guidelines set out for creditors.

Expired Card

Admin — Thu, 07 Jan 2010 00:00:00 GMT

A credit card whose validity date has passed is an expired credit card. How long it will take a card to expire depends on the card issuer's policy and the credit record of the credit cardholder.

Equitable Division

Admin — Thu, 07 Jan 2010 00:00:00 GMT

An equitable division of property is made by a court in a decree of divorce or annulment, with consideration of the rights of each party and any children of the marriage. Equitable division is more flexible than community property, but the outcome is harder to forecast because factors are subjectively deliberated by a judge.

Equal Credit Opportunity Act (ECOA)

Admin — Thu, 07 Jan 2010 00:00:00 GMT

The Equal Credit Opportunity Act (ECOA) is designed to ensure that all qualified people have access to credit.

It forbids lenders from rejecting credit applicants on the basis of race, gender, marital status, age, or national origin and requires lenders to consider public assistance in the same light as other forms of income.

The Equal Credit Opportunity Act of 1974 is a federal law requiring creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.

Encription

Admin — Thu, 07 Jan 2010 00:00:00 GMT

In credit card terms, encryption is the process of encoding credit card information for secure transmission through credit card processing networks or across the Internet.

Embossed

Admin — Thu, 07 Jan 2010 00:00:00 GMT

On most credit cards, the credit card numbers are embossed, that is, raised above the surface of the card. It once was necessary when the common way of approving credit card transactions involved making a physical impression of the numbers via carbon packets and a "zip zap" machine. Today, with most card transactions handled electronically, embossed numbers are just a manufacturing habit.

Emancipated Minor

Admin — Thu, 07 Jan 2010 00:00:00 GMT

An emancipated minor is someone who has not yet reached the age of majority -- usually 18 -- but has by court order or actions become independent of his parents or other adult supervisors. An ordinary minor may not enter into binding financial contracts, such as credit card agreements. An emancipated minor can.

Electronic Funds Transfer (EFT) ACT

Admin — Thu, 07 Jan 2010 00:00:00 GMT

Electronic Funds Transfer (EFT) is a system of transferring money from one bank account directly to another without any paper currency changing hands whatsoever. It refers to the overall, internationally-integrated, computer-based systems used to perform financial transactions electronically. One of the most common EFT programs is known as direct deposit, in which employment payrolls are deposited right into employees’ checking or savings accounts.

CVV

Admin — Thu, 31 Dec 2009 00:00:00 GMT

CVV is one of the credit card industry's several acronyms for the credit card security code that helps verify the legitimacy of a credit card. Depending on the card, the security code can be a three-digit or four-digit number, printed on either on the back of the card or the front. CVV stands for "card verification value" code. Other card issuers call their security codes CVV2 (Visa), CVC2 (MasterCard) or CID (American Express).

Currency Conversion Fee

Admin — Thu, 31 Dec 2009 00:00:00 GMT

The currency conversion fee is the initial name of what we currently know as the foreign transaction fee.which is the fee that you will get assessed on the purchases that you make while traveling outside the U.S. OR while purchasing items over the Internet from merchants that are located outside the U.S.

Credit Ratio

Admin — Thu, 31 Dec 2009 00:00:00 GMT

The ratio of credit spent to total available credit.It compares the amount of credit being used to the total credit available to the borrower. Having a low ratio -- in other words, not much debt but a lot of available credit -- is good for your credit score. Also known as a balance-to-limit ratio.

Credit Union

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A non-profit financial institution that is owned and operated entirely by its members. Credit unions provide financial services for their members, including savings and lending. Large organizations and companies may organize credit unions for their members and employees, respectively. To join a credit union, a person must ordinarily belong to a participating organization, such as a college alumni association or labor union. When a person deposits money in a credit union, he/she becomes a member of the union because the deposit is considered partial ownership in the credit union.

Credit Score

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A credit score is a mathematical calculation that is used by lenders to assign a numerical value to a borrower's credit history. Those with high scores can qualify for larger loans at better rates. Those with low scores will get poor terms, or be turned down.

Credit Reporting Agency (CRA)

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A credit reporting agency (CRA) is a company that catalogs and sells information regarding the payment behavior of consumers and issues credit reports with related information. The three major national credit reporting agencies are Experian, Equifax and TransUnion. Also called a credit bureau.

Credit Report

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A report designed to indicate your existing debts and how well you've repaid past debts. It also lists the companies that have inquired about your credit recently, and public records such as bankruptcies, judgements, and foreclosures. To the extent provided by your creditors and other sources, your credit report also includes current and prior addresses, current and prior employment, and identification information such as date of birth, drivers license number, and social security number.

Credit Rating

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A credit rating is a measure used by lenders of the probability that any money lent will be repaid according to set terms. A bad credit rating will normally result in an increased cost of borrowing or a refusal of credit from lenders. Your credit rating can be sent to you in a report that is available at a small cost from credit rating agencies.

Credit Obligation

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A credit obligation is a document which legally binds a borrower to guarantee that he or she will repay a certain loan.A credit card agreement is one example of how a credit obligation is created.

Credit Monitoring Service

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A service that monitors credit card accounts for activity that is out of the ordinary. The card holder is then alerted when such activity happens. Typically there is an annual or monthly fee for the service billed to the primary card being monitored.

Credit Line

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A credit line is the amount of money that can be charged to a credit card account. The size of a credit line, and how much of it has been borrowed, have a large influence on consumer credit scores. Low credit utilization -- that is, a credit line on which little has been borrowed -- leads to a higher credit score. Credit line is also known as a credit limit.

Credit Limit

Admin — Thu, 31 Dec 2009 00:00:00 GMT

It is the maximum amount of money one can borrow on his credit card. Depending on your credit history and relationship with the credit card issuer, the credit limit can be increased or decreased.
Low credit utilization -- that is, a credit limit on which little has been borrowed -- leads to a higher credit score. Credit limit is also known as a credit line.

Credit Life Insurance

Admin — Thu, 31 Dec 2009 00:00:00 GMT

Term life insurance that pays off the balance of a loan if the borrower dies. Usually sold by banks or finance companies to their customers at the point of sale.Credit life insurance is sold on a group or individual basis, and usually is purchased to cover small loans of short duration. When issued under a group policy, a certificate is issued to the debtor, the master policy being issued by the creditor. The face value of a credit life insurance policy decreases in proportion to the reduction in the loan amount until both equal zero.

Credit Inquiry

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A credit inquiry an entry on a credit report that shows a business has requested a copy of the report. "Hard" credit inquiries happen when a business checks your credit report because you've made an application for credit. On the other hand, "soft" credit inquiries are made by businesses that you already have a relationship with, business who want to advertise products or services to you, and your own credit report inquiries.

Credit Histories

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A record of an individual's repayment of debt. Credit histories are reviewed my mortgage lenders as one of the underwriting criteria in determining credit risk.

Credit Freeze

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A credit freeze is a method by which a consumer can limit access to his or her credit report to companies with which he or she has a pre-existing credit relationship, such as mortgage, auto loan and credit card, or a company they wish to enter into a credit relationship with.There is generally a fee associated with this service, unless identity theft is suspected or has been detected. Credit bureaus might also charge a fee for revoking (or "thawing") the credit freeze.

A Credit Card Number

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A credit card number is the unique number imprinted on a credit card. The first six digits on a credit card are called the issuer identification number. They identify the issuer -- Discover, or American Express, for example. The remaining digits of a credit card number are unique to the individual card. Credit card numbers are usually embossed, a remnant the days when a physical impression of credit cards were made through zip-zap machines.

Credit Card Accountability Responsibility and Disclosure Act of 2009

Admin — Thu, 31 Dec 2009 00:00:00 GMT

The Credit Card Accountability Responsibility and Disclosure Act of 2009 or Credit CARD Act of 2009 is a federal law passed by the United States Congress and signed by President Barack Obama on May 22, 2009. It is comprehensive credit card reform legislation that aims "...to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes."The bill was passed with extremely high, bipartisan support by both the House of Representatives and the Senate.

Credit Card

Admin — Thu, 31 Dec 2009 00:00:00 GMT

Any card that may be used repeatedly to borrow money or buy products and services on credit. Issued by banks, savings and loans, retail stores, and other businesses.

Credit Bureau Risk Score

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A brief report of a consumer's credit history, as made available through credit bureaus to lenders and creditors. It the risk score evaluates people for the benefit of lenders, to help them decide the risk of whether a debt will be repaid.

Credit Bureau

Admin — Thu, 31 Dec 2009 00:00:00 GMT

An agency that collects and maintains individual credit information and sells it to lenders, creditors, and consumers in the form of a credit report. The three major credit bureaus are Equifax, Experian, and TransUnion.

Cramdown

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A bankruptcy court's enforcement of a reorganization plan despite the objections of some creditors.

Corporate Cards

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A credit or charge card issued to members of a company, for business use. Corporate cards may have limits installed to prevent their use at certain establishments.The cards may also have special features installed to prevent or limit their use at certain types of establishments.

Convenience Check

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A convenience check is a check that is not linked to the client’s credit line, and can be used exactly like normal checks that are linked to the client’s checking account. Convenience checks can be written in any amount, provided that the consumer does not surpass the his or her credit limit.They are treated like a cash advance, meaning there is no grace period and interest is charged from the moment the check is used. They also tend to have higher interest rates than that charged for purchases.

Consumer Credit File

Admin — Thu, 31 Dec 2009 00:00:00 GMT

The collection of a single customer’s debt repayment reports is also known as the individual’s consumer credit file. This file is stored at a credit bureau, otherwise known as a credit reporting agency.

A person’s credit score is largely based on his or her consumer credit file, which determines whether or not that individual is eligible for a credit card or a loan. These scores also determine the rate at which the consumer can be allowed to get a loan.

Concierge Service

Admin — Thu, 31 Dec 2009 00:00:00 GMT

Concierge service is a perk offered to some high-end credit cards as a reward. Concierges can give help to cardholders who have unique needs, from tickets to sold-out Broadway shows to advice on restaurants for special occasions.

Community Property

Admin — Thu, 31 Dec 2009 00:00:00 GMT

Community property is a legal theory that all property obtained between spouses during marriage is equally owned. Property, excluding gifts or inheritance in some jurisdictions, is viewed as a result of a combined effort, and therefore is split in equal halves between spouses during a divorce.

Commercial Card

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A catch-all name for cards specifically issued for business use: including corporate cards, business credit cards, and business charge cards.

COB Fraud

Admin — Thu, 31 Dec 2009 00:00:00 GMT

COB fraud -- the COB stands for "Change of billing" address -- is a scam in which the billing address of a cardholder is changed by a thief who calls or electronically contacts a financial institution so that goods or services purchased using a stolen credit card or bank account can be delivered to the thief.

Co-signer

Admin — Thu, 31 Dec 2009 00:00:00 GMT

A co-signer is a person who signs an agreement to pay off a loan for someone else if that someone else defaults.A co-signer is commonly a spouse or parent. The presence of a co-signer makes lenders more willing to approve loans for high-risk borrowers. While co-signing allows the person with bad credit to get a loan, it puts the person with good credit on the hook for the entire amount borrowed.

Co-branded Card

Admin — Thu, 31 Dec 2009 00:00:00 GMT

Co-branded credit card carries special deals and savings from the participating merchants.

Co-branded card is basically a card issued by two organizations, one a non financial group or business, for example sports franchises universities, nonprofit organizations and other groups of the sort. The other organization is a credit card issuer, like a bank or other kind of financial organization. These organizations offer diverse benefits for creating and using one of their cards, which vary from promotional items and discounts to free memberships and special deals, all sponsored by the retail organization.

Closed Loop

Admin — Thu, 31 Dec 2009 00:00:00 GMT

Closed loop is a payments industry term for a gift or credit card that can be used only in a single store or group of stores. Closed loop cards rarely have purchase fees, dormancy fees or other fees associated with the general purpose, open loop gift cards.

Cloning

Admin — Thu, 31 Dec 2009 00:00:00 GMT

The process of transmitting, reconciling and, in some cases, confirming payment orders or security transfer instructions prior to settlement, possibly including the netting of instructions and the establishment of final positions for settlement. Sometimes the term is used (imprecisely) to include settlement.
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