The 3 most common credit report errors

4:10 AM common, Credit, errors, Report No Comments

Business Week | By Bethy Hardeman, U.S. News & World Report

When scouring your credit report, pay attention to your address and credit limit information. And don't gloss over details like your name.

Everyone makes mistakes, and credit bureaus are no exception. In fact, a Federal Trade Commission study last year found that one in four consumer credit reports contain errors – these include everything from minor mistakes to outrageous oversights.

It’s important to know what to look for when you’re checking for mistakes in your credit reports. There are three types: identity errors, incorrect account details and fraudulent accounts.

The three major credit bureaus are Equifax, Experian and TransUnion. Each bureau maintains its own database of consumer data, including personal information, account information and payment history. This information is included in your credit reports.

From time to time, a credit bureau – or all three – will get some information wrong. Some of these errors are minor. For instance, one bureau might have your street address incorrect. It’s annoying, but it won’t hurt your credit.

Other times, it’s a more serious error: Your name could become mixed up with someone else’s, and you could begin seeing some of his accounts on your credit report. This will affect your credit either positively or negatively, depending on his payment history.

Sometimes the bank or lender providing information about your accounts to the credit bureaus gets things wrong. On the other hand, the credit bureau could incorrectly process the information provided. For instance, your credit card could be displaying the wrong credit limit, your mortgage might have the incorrect origination date or your auto loan could show as “open” when it’s clearly been closed.

This is the most serious error out there, since it means someone has used your identity – including your name, Social Security number and other personal data – to open and begin using an account. If there’s a line of credit on your credit report that you didn’t open, you’ll want to move quickly to ensure that the fraudster can’t continue opening accounts in your name. You can do so by adding a security freeze on your credit reports.

A security freeze will prohibit you – or anyone posing as you – from opening any new lines of credit. Keep the freeze on your account until you’ve sorted out what’s going on and taken the appropriate steps to prevent fraud from happening to you again, including signing up for a credit monitoring service. You also might want to consider changing your Social Security number.

Once you’ve identified an error on your credit report, you’ll need to dispute it with the credit bureau or directly with the information provider.

Disputing with the credit bureau. This is the most conventional route and is best for disputes involving incorrect personal information on your credit report. Get a copy of your credit report(s) containing the error, gather supporting documentation for your case and write a letter to the appropriate credit bureau(s) describing your specific dispute. Make it clear and concise. After you’ve made a copy for your own files, send the letter to the credit bureau. The credit bureau is legally required to investigate your dispute and will typically do so within 30 days of receiving the notification.

Disputing with the information provider. If your bank or lender is reporting incorrect information to the credit bureaus, or if someone else opened an account in your name, start by contacting your bank or lender (the information provider) directly. Find an email address or phone number, and make notes of any conversations you have with a representative. Sometimes, talking to your lender directly can facilitate the dispute process.

The bottom line: Now that you know which common errors to look for, remember that you’re responsible for clearing up mistakes. You’re entitled to one free copy of your credit report from each of the three credit bureaus each year. Stay on top of things by checking your credit reports often to make sure they’re accurate.

Read More

5 ways to use a card to repair bad credit

10:00 AM Credit, repair No Comments

Business Week | By Brian O'Connell, MainStreet

Credit cards often get you into your bad credit mess in the first place, but under certain circumstances they can also get you out.

You really can use a credit card to rebuild credit.

After lawsuits and medical bills, credit cards are one of the leading drivers towards bad credit. So it comes as at least somewhat of a surprise that credit cards can help on the back end of all that debt accumulation.

"It might sound a little crazy to suggest you can use a credit card to rebuild your credit history," Beverly Harzog, a nationally regarded credit card expert, consumer advocate and author of a new book, "Confessions Of a Credit Junkie."

"But as long as your bad credit problem doesn't stem from out-of-control spending," she says, "a credit card is one of your best tools for getting back into the good graces of the credit gods."

How so? Herzog offers the following strategies:

Harzog advises consumers with bad credit to get back in the game with a secured credit card. "With a secured credit card, you make a deposit into a bank account and that 'secures' the card for you," she says. "The card issuer gives you a credit card and you use the card just like a regular credit card. It doesn't say 'secured' on the card, so there's no stigma attached to it."

Just make sure you get a secured card that actually reports card payments to credit agencies.

Don't go into "panic mode" when you mount your good-credit campaign. "People tell themselves tell themselves that they need a lot of new credit cards to prove they're a good risk," she says. "This approach often backfires because they don't have good enough credit to get approved for the cards they're applying for."

Herzog says that every time you apply for a credit card, the process dings your credit score by between two and five points.

Harzog advises consumers to get acquainted with an industry measuring tool called a credit utilization ratio. "That is the amount of credit you have used compared to the amount you have available when you add up all of your credit limits," she says. "The standard advice is to keep your ratio below 30 percent.

Creditors and lenders love consumers who pay their credit card bills on time every month, and so do credit agencies. "Paying your bill off every month makes you look very responsible," Harzog says. "If you keep your balance low, paying the entire balance shouldn't be difficult to do."

It represents 35 percent of your entire FICO credit score, she adds.

Harzog also advises that consumers don't close unused credit cards. When a consumer closes a card, he or she loses the available credit linked to the card. That affects the credit utilization rate and can knock your credit score down.

Credit cards can ruin -- and rebuild -- a credit score. Use the tips above to nurture your score back to a healthy level.

Read More

Bad credit? These cards can help

7:30 AM cards, Credit, These No Comments

Business Week | By Peter Andrew, IndexCreditCards.com

If your credit scores are circling the drain, one of these credit cards could help you get back on track.

You might be surprised by how many Americans get by with few or no mainstream financial services.

The Federal Deposit Insurance Corporation reported in 2012 that 28.3 percent of U.S. households were either "unbanked" (didn't have so much as a checking or savings account), or "underbanked" (had at least one such account, but had still, in the previous 12 months, used alternative financial services, such as check-cashing companies or payday lenders).

It wasn't so long ago that not having a credit card was likely to seriously cramp your style. Without one, you couldn't make online transactions, book flights, rent cars, reserve hotel rooms and so on. But things have changed. Prepaid and debit cards now make it much easier to do most of those things.

So is there any point in having credit cards anymore? You bet!

This website is always talking about the unique consumer benefits and protections credit cards bring, but they also have an additional role for those whose credit reports have been damaged. Neither debit cards nor prepaid ones routinely report your financial activity to credit bureaus, which means they have zero impact on your credit score. Credit cards, however, do make such reports, and that means they can be one of the fastest and surest ways of boosting that score.

The problem is, if your score is low, you're likely to struggle to get approved for mainstream plastic. Luckily, there are two types of credit card designed for people in precisely that position:

Secured credit cards: These require you to lodge an upfront deposit, and you generally spend and replenish that. So it's hard to get further in debt, good behavior should boost your credit score, and you stand to get an ordinary, unsecured credit card once you've proved your finances are back on track.Unsecured credit cards for bad credit: These don't require an upfront deposit, but the issuers tend to cover the additional risk you pose with higher credit card rates, and, usually, annual fees.

You need to take care in committing to any financial product, and these are no exception. In fact, given that you're currently in a vulnerable situation, you should take even more care when applying for one of these cards. In particular:

Reporting to credit bureaus cuts both ways. It's a great opportunity to prove you have the resources and skills to manage your money well, and can quickly increase your score. But it can just as quickly make things worse if you mess up. Be certain you're going to have the cash and self discipline to act perfectly. A good way is to draw up a household budget in advance. Be prepared for rejection. If your financial history is messy enough, you may not qualify even for one of these products. If your application's declined, you could consider applying for a store card, some of which have low approval thresholds. But be aware of the dangers of these. Wherever people are desperate, there are sharks waiting to prey on them. Some card issuers offering these products are notoriously predatory, and charge outrageous fees (including especially dangerous "application fees") and usurious rates. Be sure you read and understand the terms and conditions in full before you commit to anything.
One of the best issuers of secured credit cards is First Progress, and it's worth exploring further three of its products in particular:

First Progress Platinum Select MasterCard® Secured Credit CardFirst Progress Platinum Elite MasterCard® Secured Credit CardFirst Progress Platinum Prestige Secured MasterCard®
Read the terms and conditions of all three for yourself to find the one that suits you best, but let's take a closer look at the main features of the last one, just as an example:

You have to maintain a minimum security deposit of $300, although you can decide to deposit up to $2,000.You won't get interest on that sum, but you will be charged interest at 11.99 percent APR variable on purchases (more on other transactions), which is very reasonable by comparison with average credit card rates. However, you don't get an interest-free grace period, and should begin to pay from the day a transaction is posted on your account.There's an annual fee of $44.These cards are not yet available to residents of Arkansas, Iowa, New York or Wisconsin. First Progress reports on accounts to all three credit bureaus each month.

With unsecured credit cards, you don't have to pay a security deposit, but the cards can be costly. Again, the advantage is that your accounts should be reported each month to credit bureaus, so giving you the chance to rebuild your score quickly.

Barclaycard Rewards MasterCard - average credit: This isn't for those with really bad credit, but it's a great deal for anyone who's just below the threshold for mainstream cards. There's no annual fee, but the rate is a high 24.99 percent APR. This is, of course, irrelevant, providing you completely pay your balance each month. You can get double rewards points on gas and groceries purchases and utilities payments.Credit One Bank Credit Card with Gas Rewards - poor credit: You're more likely to get approved for this than the Barclaycard product, but it comes with a $75 annual fee in the first year, and $99 annual fees each year thereafter. The rate charged is a steep 23.90 percent APR, but you can get basic rewards on gas purchases. One advantage is a pre-qualification process that lets you apply without affecting your credit score.

You wouldn't go anywhere near any of this plastic -- except, maybe, the Barclaycard product -- in normal circumstances, but these are difficult times. The sooner you can get your score back up, the sooner you can apply for mainstream cards and lose all the problems bad credit brings.

These products are good for that. However, if you do apply for one, just make sure you really are going to be able to make payments on time, and, if at all possible, pay down your balance in full each month. If you can't be certain of that, it may be best to wait until you are.

Read More

How to save and build credit at the same time

12:30 PM Build, Credit No Comments

Business Week | By Christine DiGangi, Credit.com

Does it sound impossible? It isn't -- in fact, saving and good credit go together like ice cream and cake.

Personal finance is full of decisions: Rent or buy? Roth or traditional IRA? Save or build credit?

But these aren’t all either-or scenarios. In fact, having good credit and well-managed savings go hand-in-hand.

“You have to be serious about building your savings, because you’ll either end up paying bills late or you’ll run up on debt,” said Gerri Detweiler, Credit.com’s director of consumer education. But if you’re already in debt, it can be intimidating to think you have to tackle that in addition to socking money away for later.

The game plan won’t be the same for everyone, but one thing applies to everyone: It can be tough to maintain good credit if you’re not saving, too.

One thing that doesn’t require extra money is making timely payments, whether that’s credit cards, utility or loan payments. It makes up a significant portion of your credit scores (Credit.com’s free Credit Report Card tool can show you how your payment history impacts your credit scores), so it’s crucial to be organized and avoid missing any payments. No matter your money situation, paying bills before they’re due should be a top priority.

Read more: 5 lessons from this bull market

It can be really hard to make lifestyle changes, even when you know it’s the most logical way to meet your goals. But living beyond your means isn’t a sustainable financial plan. (Hint: If you can afford all of your expenses but aren’t saving for the future, you’re living beyond your means.)

The beautiful thing about budgets is that they not only help you avoid overspending, they also identify areas you can cut from. There are lots of online budgeting tools that give you a breakdown of where your money goes, but knowing where to cut is easier than actually doing it.

“It’s very hard,” Detweiler said. “Sometimes you’re not willing to give up things that you know you should.”

Everyone has different priorities — for some people, eating out is much more important than having cable, a well-decorated home or updated wardrobe — but something has to give.

“If you are tracking your spending carefully, you probably will see areas where you’re spending more than you realize,” Detweiler said. “That can help make a decision of where to cut back, even if it’s just temporary.”

Good credit scores aren’t about how much money you have; they’re about how you manage your money. Even if you have a tight budget, making small moves toward savings will be incredibly helpful in the future. Think about it: Even putting an extra $40 away each month leaves you with nearly $500 at the end of the year. If college students did that for four years, they’d have almost $2,000 in savings by the time they started their first jobs.

It has to be a priority, and if your current income really doesn’t cut it, it’s time to get creative. Consider getting another job, selling possessions you don’t need, opening a high-yield savings account or even changing your withholding on your taxes.

Without a sufficient emergency or retirement fund, any hard work you put toward improving your credit may be short-lived. For every step you take toward chipping away at credit card debt, paying off student loans or paying bills on time, you should contribute something to your future. Otherwise, you’ll end up back where you started.

Read More

The best, most unused credit card perk

3:30 PM card, Citi, Credit, MasterCard, perk, unused No Comments

Business Week | By Catey Hill, MarketWatch

Price-match credit cards can mean less legwork and more savings.

Price matching is not a new credit card perk, but it’s one that consumers often overlook — potentially forgoing $1,000 or more in holiday savings.

Some call it price matching, some call it a price guarantee, but no matter the name, many credit card issuers and network, including Discover, Citi and MasterCard, are offering consumers refunds for the difference in price should they buy an item and then find it for a lower price later on. Discover says it’ll refund the difference up to $500 if you find your item at a lower price within 90 days of making a Discover card purchase, Citi says it will refund the difference in price up to $250 per item within 30 days of the purchase, and MasterCard says it will also refund up to $250 but within 60 days.

They say they’re offering this perk because it’s popular with customers. Citi, for example, says it launched a limited version of its price-match program in 2010 but last fall expanded it to cover all of its cards, because of positive consumer feedback. Discover says that their program, which they launched in June 2012, has been “very well received” by cardmembers.

Still, experts say that a lot of consumers have cards that offer this feature and don’t even realize it. Ben Woolsey, the director of marketing and consumer research for CreditCards.com , estimates that less than 1 percent of consumers who have the price-match perk know about it. “Cardmembers just aren’t aware of it and rarely if ever make claims.” For the card companies, that makes it a relatively low-risk perk, he says. “They’re hoping this benefit just increases people’s willingness to buy things without worrying about prices being lower in the near future or at another retailer.” (Citi, MasterCard and Discover did not share numbers with MarketWatch on the percentage of their consumers who used this perk.)

Even those who do know about the perk may be stymied by the red tape involved in actually taking advantage of it.

“They all have a lot of exclusions,” explains Jelena Ewart, a senior associate at card comparison site NerdWallet.com. Indeed, many popular gift items are typically excluded from the price match programs, she says: jewelry, art, antiques, motorized vehicles, many types of travel, items sold at a business closeout sale, items sold in very limited quantities (like some door-buster deals), items sold on online auction sites, food and animals. Plus, the programs have monetary limits. The Discover program has an annual limit of $2,500 and both the MasterCard and Citi programs, $1,000.

What’s more, consumers often have to jump through hoops to get these perks. With the Discover program, not only do you have to find a lower priced item, you have to submit your Discover card statement showing the entire original purchase price, the sales receipt, and either a copy of the dated, printed, lower-price ad, or a statement, signed by the store manager on store stationery, documenting the details of the lower price of the identical item. The MasterCard program works in a similar way. With the Citi program, you have to register the items you want to price check on Citi’s site, but then the company does that price checking for you.

So is the price-match guarantee worth using?

“There’s not a big downside to the programs other than the time it takes to do them,” says Eric Adamowsky, the co-founder of Credit Card Insider. Citi’s program may be best for people who don’t have the desire to do legwork to find competitive prices, Ewart says. But for those willing to do the legwork, Discover’s program may be best, as it is potentially the most lucrative (since its annual limit is $2,500 vs. $1,000 for Citi and MasterCard) and has the longest period over which it will honor a price match (90 days).

Ewart particularly recommends the Discover It card, which offers up to 5 percent cash back in rotating categories and 1 percent on all other purchases; plus, Discover has its own shopping portal that includes most of the major department stores and gives 10 percent and sometimes more off to cardholders, and has 0 percent APR for 14 months. “It’s a really good card to use for holiday shopping,” Ewart says.

Those thinking about getting a new card that does price matching might want to “compare the value of the price match to that of a sign-up bonus for another card,” she says. “Some cards have a bonus that’s worth the price match, and you don’t have to jump through as many hoops to get the bonus,” she says. And some cards offer both a sign-up bonus and a price-match guarantee.

For example, the BarclayArrival MasterCard has a sign-up bonus worth about $400, which you can get if you spend $1,000 in the first three months of getting the card, and it has a generous rewards program that lets you earn more, she says. Finally, of course, it’s important to remember — price match or not — to get a credit card that makes sense for your lifestyle (if you carry a balance, for example, the first thing you should be looking for is a 0 percent card).

Read More

10 steps to reducing your credit card debt

8:30 AM Credit, reducing, steps No Comments

Business Week | By Bill Hardekopf, MainStreet

Do you owe more money on your credit cards than you have in your emergency savings? You're not alone -- and the situation isn't hopeless.

Credit card debt is a huge weight on Americans’ finances. According to a recent survey, close to half have more credit card debt than emergency savings.

Issuers have added to the problem. Mailboxes have been filled with credit card offers as issuers aggressively market lucrative rewards and balance transfer cards, especially to consumers with good or excellent credit scores.

Consumers need to stop running up large account balances and getting themselves in a financial pinch, like they were in 2008. Here are 10 tips for reducing credit card debt starting now:

1. Know how much you owe for all credit cards debts. Write down a debt summary that includes the creditor, monthly payment, interest, balance due, credit limit and due date for each loan.

2. Contact your creditors to see if you can negotiate a lower interest rate. The less money you pay in interest, the more money you can use to pay off your credit card balance as well as other bills.

3. Pay off the card with the highest APR first. Continue to pay the minimum on your other cards until you pay off the card with the highest rate. Then focus your effort on the card with the next highest rate. After you pay off the card, keep it open, especially your oldest cards. Losing this available credit can lower your debt utilization ratio, which could, in turn, lower your credit score.

4. Pay more than your minimum payment. Your minimum payment is usually only 2 percent to 5 percent of your balance. At this rate, it will take you many years to pay off your debt. Start with the card with the highest interest rate and try to at least double your minimum payment

5. Balance transfer offers are currently very attractive, so consider transferring your balance to a card with a lower rate. If your rate is above 12 percent, look for a card that offers 0 percent for at least 12 months. To take full advantage of this 0 percent interest, pay as much as you can above the minimum payment each month.

6. If you have a credit card balance, stop using that card for anything other than emergencies. Use cash instead. If you carry a balance, you are paying interest for every purchase, including clothing, entertainment or dinner. Factor that in to each purchase. Paying with cash will not only save money on interest, but will also reduce the amount you spend.

7. Pay your bills on time, every time. Not only do you have to pay a late fee, but late payments can also appear on credit reports. Negative information such as this can result in lower credit scores and higher interest payments.

8. Give yourself a realistic timetable to pay off this debt. It took time to accumulate this credit card debt, and it will probably take even more time to pay it off.

9. If you are surprised by your current rates, check your credit report. It may contain an error that lowered your credit score, causing creditors to increase your rates. If you find an error on your report, contact the credit bureau to report it. They must respond to your claim in thirty days or remove the information that is incorrect or unverifiable. You can dispute by mail, telephone or online. If the corrected error results in a higher credit score, alert your creditors to this and ask for a lower interest rate.

10. If you are in danger of missing a payment, or defaulting on your credit card loan, contact your credit card issuer as soon as possible. Your issuer may work out a payment plan with a lower rate or monthly payment if it will help keep your account out of default.

Read More

Do rich people have better credit than you?

3:03 AM better, Credit, people No Comments

Business Week | By Christine DiGangi, Credit.com

Not necessarily. Having lots of money and having good money management don't always go hand-in-hand.

Your credit score isn’t about how much money you have. It’s about how you manage it.

So in answer to this question: No, rich people do not necessarily have better credit than you do. Having a lot of money can be helpful, but it is in no way the secret to a high credit score.

You can be a millionaire and have a terrible credit score. In fact, your income has no direct effect on your credit scores, because they’re based on credit reports, which don’t include income information.

The most important aspects of your financial behavior factored into your credit scores are payment history and debt usage. Debt usage refers to how much of your available credit you use, so if you have a $2,000 credit limit, you want to keep your balance below $600, or at a 30% credit utilization rate. The lower that percentage, the better.

Here’s where income could help: Having more cash at hand means you could qualify for a higher credit limit, meaning you have more room to spend before hitting that 30% utilization threshold. Of course, having money might mean you wouldn’t have trouble paying your bills, which is also important.

Looking at the big picture, states with higher median incomes tend to have higher average credit scores. Household income estimates for 2012 from the U.S. Census Bureau and average VantageScores gathered from Experian-Oliver Wyman Market Intelligence Reports and Experian’s IntelliView tool show a loose correlation between income and credit scores, but there are some notable exceptions. Maryland, which has the highest median income, isn’t even in the top half of states with the highest average credit scores. The VantageScore data (VantageScore is one of the common credit scoring models used by lenders) was pulled from the second quarter of 2013, the most recent data available.

But knowing what you can afford and budgeting for responsible credit card use means you can pay your bills and use a low amount of your available credit, which will improve your credit scores. You can see how your habits have affected your credit scores by looking at your personal Credit Report Card — it’s free and shows what areas of your credit portfolio are hurting or helping your scores. No matter the number on your paycheck, good credit reflects good behavior.

“There are a surprisingly large number of rich deadbeats,” said Rod Griffin, Experian director of public education. He said he’s been asked by consumers with a lot of money why their credit scores are terrible: “It’s because you’re not getting your credit card bill paid on time, or you’re not paying your utility bills on time, and you’re maxing out the credit cards that you have.”

While income has no impact on your credit scores, it comes into play when you’re applying for loans or credit cards. Lenders consider your ability to repay the debt, which is why you’re asked for your income on loan applications. Still, having a chunk of disposable income on your application may not overpower a history of late payments and maxed out credit cards.

“Regardless of your income or assets, the way that you use your credit will determine whether or not you have good credit scores and whether or not you’re a good credit risk,” Griffin said.

Improving your credit score requires a long-term plan, but there are small steps you can take toward better numbers. The biggest thing is to get started on making changes.

Read More

The hidden costs of bad credit

1:00 PM costs, Credit, hidden No Comments

| By Nicholas Pell, MainStreet

Your credit rating impacts many aspects of your everyday life. Here's how.

Sure, you know that having bad credit can mean paying more for a car loan or a mortgage. You know that it means you can pay more to use your credit cards. But did you know that people with bad credit also pay more for their car insurance and sometimes even for rent? There are more costs of having bad credit than you might know.

Increasingly, employers are using credit reports to help make decisions of hiring and firing. Randy Padawer, a consumer advocate with Lexington law states that more than half of all major companies are using background checks as part of a pre-employment screening. "I think it's unfair," he says, but quickly adds "it's something that consumers must remember when they're doing something as mundane as paying a credit card bill."

Gail Cunningham, vice president of membership and public relations for the National Foundation for Credit Counseling points out the reason why credit reports are increasingly used in hiring decisions. "Potential employers might view your credit report as an overall reflection of your responsibility."

What's the cost? Tim Lucas, vice president of mortgage at MyMortgageInsider.com, breaks it down. "Say that you have to take a job that pays $10,000 a year less because you have bad credit," he says. "That's $100,000 over ten years." While the math is obvious, what might not be is that, in the case of employment, you might be losing more than you would because of high interest rates on a mortgage.

"Car insurance is a big one," says Lucas, adding that drivers sometimes pay double what they would pay if they had better credit scores. Why are car insurance companies pulling your credit report to see what you should pay? "Car insurance companies assume that if you're not responsible with your finances that you might not be a responsible driver," Lucas says.

It's not just car insurance, either. "All kinds of insurance companies are pulling credit reports," explains Padawer, adding that "There's a correlation between the number of claims filed and the total cost of these claims and a person's credit report."

Perhaps the worst hidden cost of bad credit is your apartment. Padawer points out that "rentals are just about the only thing that isn't on your credit report." This means that you might be the most responsible person in the world when it comes to paying your rent on time, but your landlord will never know it: your rental history appears nowhere on your credit report.

On the other hand, Padawer is quick to point out that "there are almost no landlords who won't want to look at your credit report." To feel comfortable with renting to you, a landlord might charge you a double deposit -- no small fee, especially in a larger, more expensive city like Los Angeles or New York.

Lucas is somewhat less sympathetic. "If someone doesn't pay their credit card bills and is always late with their car payment, there's a good chance that they're going to be late with their rent," Lucas said.

If you decide that you want to own a home, you can almost always expect to pay a higher mortgage bill every month; your interest rates are going to be higher.

While you might know that you're paying higher interest rates because you have bad credit, you might not know the actual cost.

Cunningham advises clients to sit down with all of their bills and look at what the interest rates are on each of them. Then, look at what you're paying in real dollars every month. "This can add up to hundreds of dollars a month," she says.

Your monthly cash flow can be impacted another way: the cost of getting your utilities turned on. People with bad credit have to pay larger deposits to get water, electricity and heat turned on. Cunningham points out that you might even pay more for your cell phone every month because you have to get a prepaid instead of a regular monthly account.

Padawer and she agree that there's a far more insidious cost to having bad credit: the psychic toll. "Debt is a monster that lives with you 24/7," says Cunningham. "It makes it harder to be a good parent, spouse or employee." Padawer mentions some more concrete matters. "Debt and bad credit often lead to depression, bad self-esteem and even divorce."

The message is clear: if you have bad credit, start working to make it better. If you have good credit, maintain it. It's far easier to lose good credit than to gain it back.

Read More

5 credit tips for college students

3:30 PM college, Credit, students No Comments

| By A.J. Smith, Credit.com

There's a lot to do when you go off to college, and managing credit is usually far down the to-do list. It's important to learn how to use credit cards, though.

There’s a lot to think about when you’re in college. There are classes, friends, internships and parties to worry about. But what many of us probably should have been thinking about a lot more was our credit. In fact, now that we’re older and wiser, there are a lot of things we wish we would have done differently when it comes to our credit.

Unfortunately, there’s no freshman orientation on building credit. So a lot of students fail to grasp the reality of responsibly using a credit card until it’s too late. They might even graduate with a pile of credit card debt on top of their student loan debt. But instead of trying to prevent college students from getting their hands on credit cards, it’s important to teach them about proper use.

Here are five credit tips that every college student should know.

Staying away from credit cards completely won’t help build a strong credit profile. Since a large portion of your credit score is determined by your credit history, the earlier you establish lines of credit, the better.

Whether you like it or not, credit is becoming more and more important in aspects of every day life. Things like mortgages and car loans require good credit, so if you ever plan on buying either of those items you’ll need a good score.

It’s nearly impossible to get approved for a regular credit card if a college student has no income. But it’s easy to be added to a parent’s credit cards as an authorized user. All it takes is a phone call.

This is one of the best ways to establish credit without having to apply for your own card since there’s no credit inquiry and your credit report will reflect the same credit utilization rate as your parent’s card. (Just be sure your parent has good credit.)

Since it’s difficult to get approved for a regular credit card while you’re in school, consider applying for a student credit card. The limits on these cards are low, but they are a great way to establish credit.

Having a student card will also give you an opportunity to learn how to manage your money, pay monthly bills and spend responsibly.

It’s important to realize that your credit card bill should be paid off in full every month. If you can’t pay your balance in full, you’ll start to accumulate interest and fees and that’s what the credit card companies thrive on. Treat your credit card like you would your bank account and don’t ever spend more than you can afford to pay back immediately.

If you want to understand how credit card companies and banks view your credit it’s important that you understand your credit report. You should check your report for accuracy at least once a year in order to ensure that all of the information listed is correct, and dispute it if it is not.

Read More

5 credit card hacks that save big bucks

11:30 AM bucks, Credit, hacks No Comments

| By Paul Sisolak, GoBankingRates.com

Here are some ways to win the processing fee war and use credit card rewards to your advantage.

Want to know how to become a credit card hacker? No, I’m not talking about becoming a member of Project Blitzkrieg and doing something illegal that could land you in the slammer.

What could keep you and your plastic free of unnecessary fees and charges, though, is by becoming a master of credit card hacks. In this case, a “hack” is a loophole — a sneaky strategy, if you will — in your credit card that allows you to get the most out of the rewards and savings they provide. From the grocery store, to paying off debt, to the grocery store again, earn cash back (the best part) with some of these money-savvy money hacks.

As some consumers have discovered, credit card processing fees can be evident when you make a purchase on your line of credit. The result of a recent lawsuit settlement between retailers, banks, and Visa and MasterCard, merchants are allowed to pass along such fees to their customers, according to Consumer World, which can be up to 4 percent.

There are ways to win the processing fee war and use credit card rewards to your advantage. Consider these for a few.

To get discounts at your favorite retailers, buy gift cards through a grocery store using your credit card and save money in the process. “If you have a credit card that gives you something like 3-to-6 percent back on purchases made at the supermarket, you can buy gift cards at the supermarket — and therefore, in essence, save that 3 to 6 percent,” says Melanie Pinola from Lifehacker.

What are some of the best rewards cards for the job? According to Pinola, they include the American Express Blue Cash Preferred, which can offer up to 6 percent back at supermarkets (plus 3 percent cash back on up to $6,000 cash back on groceries spent annually, according to NerdWallet), AmEx Everyday (3 percent back at supermarket), or the grandfathered version of the same card, offering up to 5 percent back at supermarkets and pharmacies.

Another grocery-related loophole, or “credit card hack,” is when you can use the same card to earn rewards at stores outside of the supermarket. What about using that card at Best Buy, Apple, or another retailer? “There are credit cards that offer varying amounts of rewards and cash back depending on where you choose to shop, rather than on what you actually buy,” says My Bank Tracker’s Simon Zhen, writing for U.S. News & World Report. “And since some retailers sell branded gift cards to other stores, you can be earning rewards on purchases that you won’t get if you used a credit card at those stores directly.”

Zhen adds, “A credit card that doles out 5 percent cash back on groceries may be used to purchase a Gap gift card at a supermarket. Effectively, the credit card user earns 5 percent cash back at Gap.”

You heard it right: you can pay off your credit card debt, interest free, with the services of a 0 percent interest credit card. “For this hack,” writes Libby Kane of Forbes, “you need either a respectable credit score in order to apply for a new card, or an existing credit card with zero interest.”

How does it work? For one, most credit cards charge an insane amount of interest — so if you’re in credit card debt, it’s not fun to get slapped with 18-20 percent per month and caught in a debt snowball. Avoiding the interest requires transferring your existing balance to a card that doesn’t charge any interest. “Essentially, you’re paying off the interest-bearing card using the new card, so your balance appears on a new bill, to pay down your debt without interest,” says Kane, who adds that this hacking maneuver could cost you about a 3 percent transfer fee — a small price to pay for resolving debt.

Zhen of My Bank Tracker writes in U.S. News & World Report that consumers with a prepaid American Express Bluebird account can earn cash back, with little spending involved, when they reload their accounts with a Vanilla Reload card, found at supermarkets, pharmacies and the like.

“Those who have credit cards that earn large amounts of cash back at these retailers can proceed to buy Vanilla Reload cards and refill their Bluebird accounts,” he said. “Then the Bluebird account can be used to pay for purchases that don’t earn cash back.” However, according to Zhen, don’t count on this hack to work 100 percent of the time; more retailers are catching on to this card scheme and have adopted a cash-only policy for the reload cards, preventing you from earning points on your card if you can’t use it towards the purchase.

Most credit card reward programs involve earning and using points towards travel miles or retail products. One travel-related benefit most people are unaware of is that you can use your card to get car rental insurance. Most major credit card providers offer their own insurance policies at significantly lower prices than opting for the car rental agency’s insurance packages.

Card Hub conducted a survey last year that ranked Visa’s rental car insurance consumer approval rating at 87 percent. American Express and MasterCard also ranked highly, at 82 percent and 73 percent. When taking advantage of this credit card trick, make sure to first decline the rental agency’s insurance offer and use your credit card’s instead — you’ll need it to pay for the car rental.

It’s not wise to become the type of hacker we think of when we hear about the clandestine antics of groups like Anonymous. But with some of these sneaky — and legal — credit maneuvers, you can circumvent some loopholes to “hack” your credit card to a better, bigger, wealthier savings.

Read More

Should you ever lend out your credit card?

8:30 AM card, Credit, lend out, should No Comments

| By Dawn Papandrea, CreditCards.com

Usually it's harmless, but sometimes there may be costly consequences. Be careful with your cards.

Have you ever lent your credit card to a relative or friend to make a purchase, or bought something using someone else's card?

Perhaps you've punched in someone else's card number on his or her behalf to facilitate an online order. Maybe you've signed your spouse's name on a credit receipt. Doing any of these things is in violation of the credit card agreement, which states that only the person whose name appears on a card can use that account.

Most times, these are harmless actions, but as some experts and card users will tell you, sometimes there are consequences.

"In general, I'm no more likely to loan someone my card than I am my car. Either way, you're accepting liability for someone else's actions," says Liz Weston, a personal finance author.

Issuers ban the practice of letting another person use your card, but if you did so willingly, you are breaking your contract, not a criminal law. If someone uses your card without your permission, that's different: That's fraud. Provided you report the unauthorized use to your card issuer and the authorities, you are not held liable for fraudulent charges.

Even if the use is friendly, not fraudulent, bad things can happen. Chief among them: Charges that result from you voluntarily lending out your card are your responsibility.

To protect yourself when others use your card, don't think so much about the legalities, says Robert Lawless, professor of law at the University of Illinois at Urbana-Champaign, who specializes in bankruptcy, consumer credit and business law. "Instead, protect yourself by preventing problems before it ever gets to that point of worrying about legalities by using good judgment," he says.

For instance, using your elderly parent's card to buy groceries is breaking the card agreement, but it's likely that no one is going to question that type of transaction provided the bill is paid, says Lawless. "As a practical matter there are going to be circumstances that arise when people don't follow the contracts, and there are really no consequences to them."

However, for every innocent incident of credit card borrowing or lending, there are potential problems that can result. Here are a few to keep in mind:

A one-time privilege gets stretched. If you authorize someone to act on your behalf, you can't then go to the credit card company and say you refuse to pay for what was charged, says Lawless. In other words, you will be on the hook for any charges racked up by the person using your account. A sample Capital One credit card agreement, under the section, "Your Promise to Pay" plainly states: "If you let someone else use your Card, you are responsible for all transactions that person makes."

"I've had adult clients who gave their teens a card to go get gas, and then found out they went out to dinner, to the movies, etc.," says Terrence Shulman, founder/director of The Shulman Center for Compulsive Theft, Spending & Hoarding in Franklin, Mich. In some of the more serious offenses, people end up having to file a police report on a loved one to try to recoup some of the charges, he adds.

The person borrowing the card is careless and identity theft results. Whether they foolishly leave the account number sitting on their desk at work, or use the card to make an online purchase on an unsecured site, your account could potentially be at risk when it's out of your control. "Even if I trust the person, giving them my card makes me more vulnerable to fraud committed while the card is out of my possession," says Weston. "When there's a fraudulent charge, the issuers always ask about that, and I wouldn't want to give them any grounds to decide I have to eat the bogus charge."

Embarrassing moments. You're about to make a purchase using someone else's card, and the clerk asks for your photo ID, which of course, should not match. What to do? You'll most likely have to walk away or you can try to plead your case. Aly Walansky, a Brooklyn, N.Y.-based beauty and style blogger, recalls what her mom used to do when they were out shopping together. "When I was a kid, my mom would always use my dad's card. His name is Martin, so they always gave her a hard time. She'd be like, 'It's pronounced Mar-teen. We're French.' We're not," she says.

Getting flagged for fraud. In cases in which the merchant becomes suspicious that you're not the cardholder and you don't have permission to use the account, they can alert the creditor to possible fraud, confiscate the card or, worse, call security. In fact, card companies have a credit fraud alert hotline for just this purpose. For example, MasterCard's website instructs: "Call the Authorization Center and request a Code 10 authorization. A Code 10 authorization request alerts the card issuer to suspicious activity, without alerting the customer ... If it becomes necessary to notify the police, the operator will do so while your employee waits on the line."

As you might imagine, creditors take a hard line on this matter. "Only the person whose name is on the front of the American Express Card may use it," says Elizabeth Crosta, vice president of public affairs for American Express, "but there are other really great options."

For example, many people choose to add a child over the age of 16 or a household employee such as a nanny to their account as an authorized user, she says. It's important to remember that you're ultimately still responsible for any charges authorized card users make, but you can set spending limits on the additional card and be alerted when that limit is reached. "This is especially helpful for a parent whose child is heading off to college for the first time and wants to give the child a safe and convenient way to make purchases," says Crosta.

Another option: Consider getting the person a prepaid, reloadable card so that he or she can only spend up to the amount that's on the card.

As for situations in which something comes up spur of the moment, according to Matthew Towson, senior manager of media relations for Discover, all it takes is a quick call to add someone to your account. "An authorized user is added to the account the moment the request is made, even though it can take a few days for the card to arrive," he says. It's worth noting, however, that a merchant may still decline the purchase if they ask for identification and it doesn't match the name on the card.

Of course, as a consumer, you may have noticed that merchants don't always check IDs or signatures, which may be why people think it's OK to bend the rules. If you decide to do so, just be careful who you trust, says Shulman, since good intentions can quickly go awry. "Fraud by people you know happens a lot more than you think," he says.

Whether or not you want to take liberties with your credit card account is up to you. Just remember that as far as the creditors are concerned, the primary cardholder -- that's you -- is the one who will be expected to pay up.

Read More

Ins and outs of credit card grace periods

10:23 AM Credit, grace, periods No Comments

| By Fred O. Williams, CreditCards.com

Read on for tips to maintain or regain the period when you can borrow for free.

If you use a credit card and don't know the ins and outs of the grace period, you risk taking an awkward financial pratfall.

Capitalizing on the grace period's break on interest charges can save the typical cardholder a couple hundred bucks a year. But the savings aren't automatic and, according to an October 2013 report (.pdf file) by the Consumer Financial Protection Bureau, it's "unclear whether consumers understand" the grace period's wily ways.

"It's basically an interest-free period, but only if you pay your balance by the due date," said Nessa Feddis, general counsel at the American Bankers Association.

What it is: The grace period is the window of time from the end of your billing cycle to the due date for that cycle. Paying your new balance in full by the due date triggers a break on interest on new purchases during the current billing cycle -- if you pay in full consistently. While the grace period is referred to as an interest free period, the break on interest extends to the dates that purchases are made and posted to your balance.

Wiping out your monthly balance sounds simple, but it can be tricky if you don't already make a habit of it. Regaining the benefits of the grace period after even one month of carrying a balance can be confusing. And there are exceptions and pitfalls to watch out for. Paying in full during the grace period doesn't give you a break on cash advances or convenience checks, which, unlike purchases, usually begin building up interest immediately. Some balance transfers may also be excluded from a grace period, depending on the terms of your card.

Credit cards aren't required to provide a grace period, but almost all of them do, with the typical period being at least 25 days -- the norm for major issuers. If your due date falls on a weekend, the deadline extends to the next business day. Cards that do provide a grace period are required to mail your bill at least 21 days before your payment due date, under the CARD Act.

"It's a holdover from the origins of credit cards," Feddis said. "People would make a purchase at the store (on credit), and stores would allow people to pay at the end of the month."

The local grocer probably didn't want to calculate interest with a pencil stub on a brown paper bag, any more than his customers wanted to pay it. These days, calculating a daily periodic rate is a breeze for computers, yet most card companies continue to offer a grace period "because people are accustomed to it," Feddis said.

If you currently struggle to make the minimum monthly payment on your cards, it will take some work on your budget to get to the point where you can pay in full and qualify for the grace period. About 18 percent of Americans pay the minimum due each month, according to an analysis by the credit bureau TransUnion. At the other end of the spectrum, 42 percent regularly pay their full balances, capturing the benefit of the grace period's "free" loan from their credit cards.

That leaves 40 percent in the middle who pay more than the minimum, but less than the full balance. Paying more than the minimum is never a bad idea -- it will always reduce your interest costs. But if your budget allows, paying enough to wipe out your monthly balance entirely will boost your savings quite a bit more.

This is because carrying a balance of any size into the next billing cycle means there is no grace period on your purchases during that cycle. The card company will begin charging interest on your purchases the day you make them. So leaving even $1 in unpaid balance on your card will cost you considerably more than the measly finance charges on that dollar.

To see how this works let's consider an imaginary card user named John. He's so happy he got a new credit card that he charges $1,500 in purchases on the first day of his monthly billing cycle. After the cycle ends, John pays off the entire $1,500 by the due date, wiping his balance to zero. As a result, his purchases during the second month are also free of interest. He has used his grace period wisely to avoid finance charges.

What happens if John leaves just $1 of his balance from the first month unpaid? That $1 begins to accrue interest starting the first day of the billing cycle. It's just $1, so the interest is not a big deal -- but because he used up his grace period without paying off his entire debt, his new purchases during the second month also start to get hit with interest charges immediately, starting the day of the transaction. Assuming he makes another $1,500 in purchases at the average annual interest rate of about 13 percent, that means $16 in finance charges for the month. If John repeats this pattern, the interest costs add up to $190 over the course of a year.

OK, $190 probably isn't going to delay John's retirement -- but why pay if it is avoidable? By just paying a little extra to wipe out his balance month to month, John would keep that $190 in his pocket.

Caution No. 1: If you have been carrying a balance, it may take two months of paying your balance in full to get off the interest treadmill. Some card agreements require two months of payment in full to reinstate the grace period.

"To get a grace period on purchases, you must pay the New Balance by the payment due date every billing cycle. If you do not, you will not get a grace period until you pay the New Balance for two billing cycles in a row," states a Citi card agreement template.

Caution No. 2: If you carry a balance, be aware that trailing interest, also called "residual interest," can build up on your balance before you have a chance to pay it off, even when paying the full balance shown on your statement.

To illustrate, say that John's billing period ends on Nov. 30, and his statement arrives in the mail about four days later showing a balance of $1,500 (made up of new purchases, old purchases and finance charges). Even if he pays the full $1,500 balance listed on the statement right away on Dec. 4, the interest built up during the four days it took him to pay the balance means that he'll have finance charges for those days -- about $2 worth, given his $1,500 balance.

Taking a cash advance can also cause trailing interest, even if you paid your full balance the previous month, because daily interest will build up on the cash advance from the day you take it out.

The CFPB recommends you check your card agreement to understand how to reinstate the grace period. You might find language like this, from Capital One's Visa Signature card agreement:

"Interest charges accrue on every unpaid amount until it is paid in full. This means you may owe interest charges even if you pay the entire 'New Balance' one month, but did not do so for the previous month."

Read More

Are credit cards more expensive now?

10:00 AM cards, Credit, expensive No Comments

| By Janna Herron, Bankrate.com

Three years ago a major credit card reform law was implemented. Has it affected the way you use your cards?

Federal legislation tightening the regulation of credit cards has produced more responsible and satisfied consumers and fewer young people in credit card debt.

The trade-off? More expensive credit cards.

Three years after the landmark Credit Card Accountability, Responsibility and Disclosure Act, or CARD Act, was fully implemented, the credit card world has settled into its new rule-bound reality with mixed results.

Cardholders are making larger monthly payments, and fewer have fallen behind on credit card payments. At the same time, interest rates on credit cards have risen a full percentage point, and annual fees have increased more than 41 percent. Also, credit limits have been slashed.

"This was a well-intended law, and it came at a time when the country was having a hard time economically," says Brian Riley, senior research director in retail and banking at CEB TowerGroup. "There has been more conservative lending, but not everything is bad. It has woken people up about their debt."

One of the most applauded provisions in the CARD Act is the payoff math that must be included on the credit card statement. It shows how long it will take for the minimum payment to eliminate a card's balance along with how much interest will be charged during that time. It compares that with another payment that will get rid of the balance in three years along with how much money a consumer will save on interest.

"It's a real eye-opener," says John Ulzheimer, president of consumer education at SmartCredit.com. "I bet some people think that it's a mathematical error because they can't believe the numbers."

It appears to be working. Survey results released in February this year by Consumer Action, a consumer advocacy group in San Francisco, showed that 45 percent of consumers polled said they paid more each month because of that minimum-payment warning.

And the rate at which cardholders pay off their balances hit an all-time high of 25 percent in May, according to a Fitch Ratings index that measures credit card performance.

"Consumers told us that (the disclosure) scared them," says Ruth Susswein, deputy director of national priorities at Consumer Action, a consumer advocacy group. "Unless you're confronted with this information quite directly, it's easy to not realize how costly these cards can be."

Cardholders also are making more payments on time since the passage of the CARD Act. The percentage of accounts that were at least 30 days past due fell to an almost 23-year low in the first quarter of 2013, according to the American Bankers Association.

According the credit reporting bureau TransUnion, the percentage of accounts more than 90 days past due fell to 0.69 percent in the first quarter, compared with 1.11 percent in the first quarter of 2010. Part of the decline could be attributed to how the act requires issuers to bill their customers. Issuers now must deliver credit card bills to cardholders at least 21 days before the payment is due. The due date must fall on the same day every month, and the cutoff time can't be earlier than 5 p.m. If the due date falls on a weekend or holiday, cardholders have until the next business day to make their payment.

"It adds consistency to the process and makes it reasonable for people to pay their bills in a timely manner," Susswein says.

All this has created better relationships between cardholders and their issuers. The percentage of credit card complaints that Consumer Action's hotline received fell to 4 percent in 2010, the year the CARD Act was implemented, from 12 percent in 2009. And J.D. Power and Associates' credit card satisfaction index reached its highest level this year after rising for four straight years, starting in 2010.

The CARD Act also made it harder for people younger than 21 to get credit cards as a way to curb debt among young adults. That, too, has succeeded. A quarter of students this year reported having a credit card in their name, down from more than third in 2009, according to Student Monitor, a college market research firm. And 28 percent of students carried a balance this year, down from 40 percent in 2009.

Still, the decline of students with credit cards has troubling consequences, Ulzheimer says. Banks are wooing young people with prepaid debit cards, a payment type that isn't regulated as closely. And young people face a harder time building good credit without access to credit cards, one of the easier types of credit to qualify for.

"It's good to have no debt, but it doesn't help you to not have a track record of responsibly managed credit accounts," Ulzheimer says. "It's like having a resume with nothing on it."

That's one of a few negative consequences that came out of the CARD Act, says Ulzheimer. Adding to that, credit card terms are not nearly as attractive as they were before federal regulations kicked in.

The act capped penalty fees, limited how penalty interest rates can be applied, and eliminated certain fees and practices altogether. The rules have hampered how issuers can hedge against lending to riskier borrowers and have slashed profits they make from these consumers.

The average annual percentage rate, or APR, for variable credit cards -- the most popular type of credit card -- has risen by a percentage point to 15.31 percent from 14.3 percent before the CARD Act was enacted, according to Bankrate's weekly interest rate data in August.

Annual fees also have risen. They averaged $113 last year, up from $80 in 2010, says Roy Persson, director of competitive tracking services at Ipsos Loyalty, a research services company headquartered in Paris.

"That's huge," Persson says. "We're seeing annual fees changing rapidly."

At the same time, credit limits on new credit cards have fallen 30 percent since 2008, and limits on existing accounts have dropped 17 percent, says Riley.

"The CARD Act doesn't allow creditors to push the risk toward where the risk is coming from," Riley says. "So everyone has to pay for it."

While the act was comprehensive, it did miss some key areas. For example, consumers didn't have to get 45 days' advance notice if their credit limits were cut, says Susswein. The act requires issuers to give consumers a heads-up if their interest rate rises, certain fees are increased or other significant changes are made to card terms. However, that doesn't include credit limits.

"That can be a rude shock to people who thought they had a higher limit when in fact they didn't," Susswein says.

Ulzheimer also pointed out that the Consumer Financial Protection Bureau had to step in to clear up one provision that made it harder for stay-at-home spouses to qualify for credit cards. The act mandated that issuers must consider an individual's income -- not household income -- to qualify an applicant. The rule was designed to make it harder for college students to get credit cards based on their parents' income. But the rule also kept nonworking spouses from qualifying for credit cards.

After a massive online petition started by a Virginia stay-at-home mom, the CFPB said in April credit card issuers can consider income and assets that a nonworking individual shares with a spouse or partner when granting a credit card or credit limit increase.

The act's consumer-friendly protections also left out small-business credit cards, which typically are personally guaranteed by the cardholder. In the year after the act was put into law, banks introduced more small-business cards or enhanced existing ones to woo everyday consumers.

"If they really wanted to spread the blanket across the entire bed, the act really should have included small-business cards," Ulzheimer says.

Read More

Debit vs. credit: what card should you use?

7:00 AM Credit, Debit, should No Comments

| By Allison Kade, LearnVest

With a credit card, can offer financial benefits and provide a degree of protection for consumers. But in some cases the wiser choice.

"Debit or credit?"

You can hear it at every Office, but like most things, there is no one right answer. Credit might be better for some of us in certain situations. For other people in other situations may debit.

So, how will you know which one is right for you and when? We help you to find out.

No. 1: you want to build credit:The better your FICO credit score, the better your chance of a favorable interest rate on a future mortgage, car loan or other loan to get. A big part of achieving a stellar credit score down and comes to build of a proper credit history.

"To get a FICO score, you must have, with which some credit history the algorithm for the evaluation of the probability that you will pay back various loan commitments of time during", says Frederic Huynh by FICO, the company that developed the popular credit-scoring system. "One way is with a credit card as a means to repay that to build the story."

Concerned that those would you? According to Huynh is something small just by using your credit card every month, such as a pack of chewing gum buy - and then pays off, that free of charge and without delay --enough to build a strong credit history.

No. 2: premiums will be due:Although some debit cards offer rewards, tend to be the perks, the offered credit cards more tempting. "In the General/debit cards are so lucrative for the banks not while credit card business is now hot, so there are premiums and benefits," explains Brian Kelly, who runs credit blog the points guy.

A debit card program, including the rewards could be small, issues-based articles offer you to your account for a short Zeitraum-- but credit card rewards can you up to 3% cash back on certain types of purchases without time limit.

No. 3. You're an avid traveler: while there are many credit cards that reward flights free hotel stays through airline miles or points toward debit cards around travel are few and far between. If you a ton and rank miles until it could travel, with cash worth for a credit card, you can set up miles of the large animals.

Some programs offer a mile for every dollar spent, while the other cards offer 1.5 or even 2 miles per dollar. And that is to let alone sign up bonus, tens of thousands of early can grant of miles, if you a certain amount on the map in the first few months. Moreover, many credit cards offer other perks of traveling like car rental car insurance relief and even a telephone 24-hour concierge service (as long as you paid for the rental with your card).

# 4: Buy desired protection. Some credit cards offer buyer protection if an item that you buy this card gets stolen or damaged - and this protection often 90 days from date of purchase and up to $500 compensation covers you. Other cards are your manufacturer or dealer that extend warranty. And a few trump cards offer price protection: they will refund the difference if you sale elsewhere find the same item for less within a certain period of time after the purchase. Some credit cards offer even return protection-the credit card company will refund you (within the allotted time and weight limits) If you try to give something back and the dealer take back the item.

No. 5. You want to minimize your liability against fraud. If your card is lost or stolen, you may have less grip for a credit card than a debit card. If a thief personally presented your credit card to buy something, you not legally can account for more than $50 and many credit card providers, to forego the courtesy. And if a thief uses your card online or over the phone, you have no liability.

In the meantime if someone fraudulently uses your debit card, you must the lost or stolen within two days after you sign it. If you do so, you shall not be liable, but if you miss this deadline, you are for more than $50 on the hook for $500. And if you receive a statement with the fraudulent withdrawals or fees, but not to the Bank within 60 days to notify themselves, you're responsible for an unlimited period of time.

Read More

Why your credit card was closed

8:30 AM closed, Credit No Comments

| By Susan Lahey, CreditCards.com

Even if you are not in default, an issuer can start at any time.

Maybe you have seen this already: will receive from the cashier, you pull out your credit card, swipe it, and says it will be rejected. You try it again. The same result. So you call the issuer and you find out that the account was closed, despite the fact that you still never too late with a payment. "What still?"

If you're confused, you're not alone. So something happens - and it is completely legal.

New regulations to help anything in this situation. The credit card Act of 2009 to contributed, to increase protection against interest rate increases and overlimit fees. But credit cancellation rules largely unchanged.

"While the current law for consumers has done many great things one of the areas where there was no help, financial statements or the reduction of credit lines," Deputy Director of national priorities for consumer action in Washington says Ruth Susswein, D.C. 'how much consumers will have a line of credit card companies are still in complete control, and how long you keep it.',

Of course, an issuer can cancel your card, if you fail to keep your end of the bargain. To pay, late (or not) exceed your credit limit, the failure to comply with your agreement or application of insolvency are all legitimate reasons for closing an account.

The reasons can however much less obvious than that credit card companies track your take on credit, and if anything the feeling makes them, that their credit portfolios of less are safe, when they want, can they suddenly pull the plug.

Sonya O. Conway, Vice President for public relations and communications at American Express, said in an e-Mail that the company cardholder credit behavior constantly monitored. "We look forward to a wide variety of items, including their history expenditure and payments with American Express, their debt/spending/payment history with other lenders, credit bureau scores and other credit report information", she wrote.

AmEx doesn't like what it sees, can reduce your spending limit or terminate your account. "Our intent is to the right balance between intake of our card members spending needs eliminating credit risk-also prudently to manage, for us and for our members find card", Conway wrote.

A similar policy follows Chase. The company rejected a requested interview for this story. Credit card contract is one of the reasons that your account is in default can apply Chase Freedom says, if the company believes you "can however not willing or not able to pay your debts on time."

Even if you are not in default, an issuer can start at any time. The most common reason is that you not use the account often enough. From the perspective of the issuer, it is better to give to someone who often use the map this credit line and collect interest. "Sometimes we close accounts that are not on your actions, or inaction, but on our business needs," reads the Chase Freedom agreement.

In Philadelphia, a consumer is trying to fight a cancellation, but found no improvement. Paul Dieffenbach Jr. lawsuit against citizens Bank was released from a Court of appeal in February. Judge confirmed the Bank law, Dieffenbach asked card despite the fact that he had never missed a payment and never to an increase in the credit line.

The Bank said Dieffenbach enough points for the assessment of accounts not in his system. The criteria the Bank reached its based on, "payments this month as a percentage of the amount due for the last month, maximum balance as a percentage of the loan limited the account has been opened in the last three cycles, duration and total cash balance as a percentage of total balances in the latest three cycles."

Information Dieffenbach was not to follow.

But because cancel accounts at the discretion of the card issuer, no laws or regulations violated if a bank is like.

Card issuers have not, to alert you if they plan to either cut off your balances. Under the CARD Act rules require the creditors account conditions in writing come to consumers 45 days before a rate increase or a 'substantial change'. Diffenbach tries to argue that a such a significant change was closing his account. The Court agreed with citizens Bank, which it does not.

In fact, creditors according to the equal credit opportunity act may close an account for delinquency, inactivity, or default without notice at all. If you close an account for other reasons, such as for example a negative credit report they must notify the cardholder 30 days after taking the harmful action. Not much good your meal with a map do, pay when you try, which is unexpectedly rejected.

"There is an obvious reason no notice necessary," Susswein says. "they do not dry up and collect a big Bill if you have determined that you're no longer economically viable. "In practice, which can anywhere from real pull, be a real problem."

Read More

Do's and Don'ts to maximize the credit rewards

10:30 PM Credit, Donts, maximize, rewards No Comments

| By Geoff Williams, CardRatings.com

Discipline and a careful strategy can all kinds of freebies to harvest, but make sure that you remember the golden rule: you carry a balance.

Free stuff, free trips and cheap gas. You know you can do it, and you want it. This is understandable, and it may be why you signed up for a credit card in the first place.

But as many longtime credit-card holders know, just because you offered a credit card, the rewards, it doesn't mean that you'll see them. There are right and wrong ways to ensure that you get the rewards that come with the use of your credit card. So if questions, getting the best from your piece of the plastic cake, follow these tips.

Carry a balance.You need to get everything out every month then your card to use, numbers to points against your rewards to get, but the manner which is value your credit card out, these treats. If you carry a balance, what you pay in interest could probably pay for what you in premiums received and the credit cards with rewards have generally higher interest rates.

Miss payments.It is a good way to lose your rewards, you have collected, and, of course, not a good idea for your credit score.

To get spending only to rewards. Yes, it's fun, rewards, but when you consider that a point usually is worth a penny you really don't do yourself any favors if you go that route. The rewards are an economic blessing, if you use them are, if you buy things, you are going to buy anyway, but at the moment that you spend, just to get the reward, you went off the Rails. Really.

Spread out with too many credit cards. If you have a whole bunch of credit cards, you'll probably find that you want to spend a little on a lot of credit cards, i.e. your reward points are distributed, and you'll dilute your premiums. Unless, of course, to be someone like Bill Gates, in this case, you can ignore this advice and, hey, great to meet you and thanks for reading this.

Read the fine printMany credit cards offer their cardholders a range of rewards, some of them quite amazing (you can get lessons with Chase ultimate rewards such as Ninja) and some of them pretty easily (booking facility on gas, that's great, but it's no Ninja lessons), but these rewards landing is more than just spending a lot of money and earn points.

Some credit cards are limited to the amount of the premiums, you able to earn in a given time period. Others have expiration dates to items, so if you do not use it by a certain time, are gone. Offered by some maps airline travel have blackout dates. So read the fine print, and if you really want the rewards you're after, make sure that you select a calendar for important dates, so you know when it's worth is really, use your map, what expenses are met for bonuses and when running certain repayments.

You are looking for ways to get more mileage out of your rewards.Sometimes, credit cards offer to double chances or triple your rewards points, such as, if you can in a hotel while traveling off season, or you find that you can get a money-back return quarterly, if you for certain categories of money. For example, you back may receive more money if you buy gas at a certain period of the year.

Use your credit card online shopping-portal.If you're going to certain things in most cases buying makes sense economically, by the credit card rules to play. For example, if you Citi Citi Bonus Cash Center and shop with her 400 online retailers, you can earn on average 5% cash-back. Discover ShopDiscover, has more than 200 retailers, where you earn up to 20% in cash back.

But don't assume that you're getting the best deal on these online portals. You can be, but if you have a coupon code for an item, online shopping mall to use may not you in the credit card. You have to order and look is to make you a little sure that you get the absolute best price.

Login your card on the issuer website. Yes, your email box is full enough, but you will receive e-Mail notifications about special offers. If you really want to maximize your chances, these offers are very important.

Getting a credit card with reward shows that you actually earn interest. That sounds obvious advice, but you know, it of really easy to read an article like this and get caught up in the excitement of the want to receive discounts on gas and earn this incredible experience, such as VIP access to concerts or going to a wine tasting. But not all rewards programs are the same. Not everyone likes wine or bungee jumping, or to determine that a reward program is better for an experienced world travelers, if all you want is a break from food and gas. Reward yourself, not the credit card company.

Read More

How to improve your credit score

8:00 AM Credit, improve, score No Comments

| By Liz Weston

These simple steps will help you keep to qualify your credit rating and at the best possible prices.

Lousy credit scores, you can a financial cost.

You pay higher interest rates, higher insurance premiums and greater security deposits for mobile phone and utility service. Provided that your applications are not easily denied. Bad credit can you prevent the mortgage, the home or the desired insurance plan.

So troubled results renovation or expansion of credit which pays nothing, from. The following steps can speed up the process:

To kill the lies. Many credit reports contain errors, some of them serious enough to affect your creditworthiness. The only place online to see your free annual credit card is annualcreditreport.com. Don't fall for look-alike or similar locations. Focus on the big mistake that you find, such as accounts, not yours or the payments, which as been reported are too late when they were made in a timely manner.

Some debts disappear making. One of the best and fastest ways to improve the mediocre credit scores is to pay off credit card debt. The FICO credit scoring formula pays a lot of attention to the amount of the credit card that you can use against your credit limits. Balances include more than balances on installment loans (mortgages, car loans, student loans) from the revolving lines (E.g. credit cards).

If you cannot pay your credit cards now below, you should move some of the debt on a personal loan. Credit unions often offer three year personal loans with fixed interest rates and payments.

A different, far more complicated maneuver is credit cards with a 401 k loan to pay off. Loans from the workplace retirement show on your credit report, which is not so it is gone the way of the debt. But if you lose your job and quickly pay off the loan can not, you are a fat tax liability and the future to lose, you could have made tax-deferred returns.

Liz Weston

Use only a fraction of your available balance. A reader emailed me after looking at one of their FICO scores. She said her score was lowered because she are larger than normal credit card had credit. "I my credit card balance completely each month pay!", she protested.

FICO formula it doesn't matter whether you pay full or in instalments. What counts is reports the balance you owe that to the day that your credit card company his accounts to the credit Bureau.

So, if you want better results, you need to charge, how much to limit. You charge the less, the better. With 30% or less of your limit is good, 10% or less is best. FICO "Achievers" - with credit scores above 785-- take on average 7% of their available credit, according to a study from MyFico.com.

Piggybacked onto a foreign good creditworthiness. A foreign credit account can get credited increasing your credit scores, if the other person responsibly handle credit. This doesn't work with all accounts, so that you can check with your card issuer.

And wisely choose your cardholder. An another reader, Tammy, added to her college age son as an authorized user of credit build their credit cards for him to help. She ran into hard times and began, carrying a large balance.

The map "appear on his credit report with a high debt ratio, as no card is his own," wrote Tammy. "Will it hurt his credit score, to remove him as an authorized user of this map? "I want no more damage."

Temporary her son only credit account would in fact more damage. That is his best mixture can add another map, and a map will be secured.

A secured card will receive (and use) You need them some money, typically $200 to $2,000, as pay deposit for the card. To create credit, the account should report all three credit bureaus. You use the card, lightly but regularly and punctually pay the Bill. (Don't expect that your account will be paid from your deposit – that happens only if you default.) Here you will find a good card secured by CardRatings.com, CreditCards.com and NerdWallet, among other sites.

Add a rate loan. Thomas had a good job and no debt. Credit scores were what he did not get his credit history in another country (Holland) was built. He started with the construction got credit with a secured credit card, and then a second, unsecured account. He asked what to do next, to further build his credit, so that he could get a mortgage.

"I am planning my car pay in cash," he wrote "or should I not do that?"

In his case, could it be useful, a substantial down payment and have a relatively short term loan to the beneficial effects of paying off a loan rate to get.

The little things not sweating. Karl was furious, as he a letter from the lender, that it was turned down for an auto loan. The thing was, that he had already bought the car through a loan from his credit union. The second loan application an error was started by the car dealers but never broken. Karl wanted to know what he could do to get the second investigation from his credit report.

Adverse credit requests are annoying, but the damage was probably minimal. The FICO formula counts all auto loan requests within a short time related extends as a single request. Mortgage requests are handled the same way.

Usually a credit score, to 5 points or less, reduced an individual investigation and even the small negative effect fades away completely within a year. She should open a whole series of new accounts in a short time, but you have to take care also no single request overly.

Neither must you keep obsessive over your notes, as soon as you FICO of 750 reach levels or so. In addition, you gain greater access to credit or lower interest rates higher values. Only balances responsibly to use, and you should be the best deals available.

Note to readers: after Sept. 30, my latest column and blog posts will no longer appear on MSN Money. You can still follow me on my site, ask Liz Weston, or connect with mean on my Facebook page.

Read More

Why credit card rates didn't fall along with mortgage rates

7:00 AM along, Credit, didnt, mortgage, rates No Comments

| By Mitch Lipka, MSN Money

To put it simply, credit card lenders have much more to lose when borrowers default on debt.

Since the financial crisis of 2008, interest rates have fallen sharply for all kinds of financial products: mortgages, savings accounts and corporate bonds, just to name a few. Yet as the Federal Reserve has held rates at unprecedented low levels, one type of loan rate has been seemingly impervious to change: Credit cards.

"The rates on credit cards remain stubbornly high because they should be higher," said Daniel Ray, editor-in-chief of CreditCards.com. "They'll never fall to the levels that mortgage rates enjoy, and they shouldn't."

At the same time mortgages were hovering in the mid 4% range, credit cards interest rates were averaging close to 15%. It might not seem like it makes much sense for the rate on one type of loan to plunge while the other doesn't, but credit card experts explain there are quite a few reasons, starting with the most fundamental.

A mortgage -- and a car loan -- are secured by property. Fail to make your payments and the lender can repossess the home or car and sell it to recoup some, or all, of its losses. Fail to pay your credit card and the bank can put you in collection, but taking back its card isn't going to pay their bills. That means the lender is taking on a much greater risk, particularly when you consider that some credit card limits can be more than what many people pay for their cars.

"Lenders always feel more comfortable with secured loans, but the recession helped boost the spread," Ray said. "Today's mortgages are, on average, about 10 percentage points less expensive than the average credit card loan, and even with recent increases in mortgage rates, that 'spread' is still near a record size. One big reason is that the Federal Reserve stepped in after the recession to prop up the home-lending industry. It offered no such rate-tamping help to the credit card industry."

It is possible to find a lower interest rate credit card if you're among those who have the best credit scores. But, for the most part, they'll be nothing like the rates people get for their mortgages or car loans.

The credit card industry also has to factor in a considerable amount of fraud it must contend with and balancing its losses by taking on a broad spectrum of consumers against the rates it charges to its best customers. In addition, consumer protections put in place by the Credit Card Act of 2009, which took away some of the freedom card issuers had to assess fees, forced an increase in interest rates immediately before the law took effect.

While higher rates are with us those reasons, you'll still see plenty of teaser rates of 0% -- of course you can't get lower than that -- but they are introductory offers that typically expire in 6-18 months and then convert to something typically north of 10%.

"The lowest rate I've seen on a card --other than the promotional rates of 0% -- is 5% on the Speedway SuperAmerica Credit Card," said Bill Hardepkopf, CEO of LowCards.com.

But, for the most part, cards considered low interest hover in the 10%-12% range. A few dip below, such as the Barclaycard Ring Mastercard, which has been offering an 8% rate, according to LowCards.com.

The credit card business is highly competitive, Hardekopf said, allowing consumers -- particularly those with the best credit -- to shop around to find a combination of features that suit them best. That could include a low interest rate, rewards or other perks.

Just don't expect your credit card rate and mortgage rate to match.

Read More