Archive for the ‘Credit Cards’ Category

Credit After Bankruptcy? Seriously?

Wednesday, July 1st, 2009

Have you been through a bankruptcy? Think you’ll never qualify for credit again?

Well, don’t think like that … of course you’ll be able to get credit (you always will be)! How, you ask? Well, a number of banks offer “secured” credit cards, in which a debtor has to put up a certain amount of money (as little as $100 in some cases) into a separate account at the bank to guarantee payment. Usually the credit limit is equal to the security given, and is slowly increased as the debtor proves his or her credit-worthiness. Two years later, debtors are then eligible for mortgage loans on the same level as those with normal credit (who have never filed for bankruptcy).

The size of your down payment and the stability of your income is much more important than the fact you filed bankruptcy in the past! Although the fact that you filed for bankruptcy will stay on your credit report for 10 years, it will become much less significant the further in the past the bankruptcy date is.

Plus, you’re probably much less of a credit risk after your bankruptcy than before it, when you were struggling to pay all of your growing bills! This should give you some hope for the future. Good luck!

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A Catch 22 for Today’s Graduates Seeking Credit

Friday, May 8th, 2009

Most new graduates don’t have an established credit rating yet. This is a problem for those who are actually trustworthy individuals, but do not have the credit score to reflect that reality.

To add to the confusion, most debtors are not willing to take a chance on lending money without a good indication of creditworthiness. Although it may not seem fair, this makes perfect sense from the lender’s standpoint. After all, would you honestly take a chance on an unknown borrower when there are millions of other people applying for loans with clear credit standings and strong histories of repayment?

Fortunately, for these young people, there’s an practical method of building a credit history. It begins by applying for a secured credit card (one that reports to credit bureaus). Instead of basing credit limit on credit history, it bases it on a one-time deposit. This card can then be used for staple purchases, such as groceries and utilities, and as long as the individual repays this credit card back in full or at least stays on top of minimum payments, it will reflect positively on a credit history and will make it much easier to be approved for future loans!

The idea of building credit from scratch may seem discouraging to students and recent graduates. However, it must be done in order to have the best chance of growing their credit the right way. If a positive credit history is sought, then a little planning and time can certainly make it happen!

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Cash Back Credit Cards are Great (If Used Responsibly)

Friday, April 3rd, 2009

Credit cards are the most valuable to those who know how to use them. How to use them properly: 1) by never leaving a monthly balance on the card, and 2) by making payments on time. If you can follow these two simple rules, then a cash back credit card is perfect for you.

First, choose a card type that will work to your advantage. Everyone has a certain type of credit card that they can profit from the most. For instance, a gas card will profit those the most that drive a lot of miles each month, and need to maintain a car. This is because the points that are given for your purchases can be used toward your purchases of gas. Some gas cards will even give you points for car maintenance expenses, and possibly the points may even be applied toward buying another car. A card that is selected for your greatest monthly expenses will give you the most benefits.

Also, see how much of a percentage of cash back is given toward your more ordinary purchases like food, medicine, and gas (you’ll want the highest percentage you can get). This feature is especially important if you have balances on other credit cards. You can transfer them to your new cash back credit card and enjoy a 0% APR balance for up to 15 months. This gives you great savings in interest and can help you to reduce those other credit card debts.

Of course, the best thing for you to do is to choose a cash back credit card with a low interest rate, no annual fees, or hidden charges. In addition, remember that by using it right, you also are building up a credit score — one that will allow you to buy the big-ticket items (especially if all of your credit cards aren’t currently maxed out).

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What to Look for in a Credit Card Company

Wednesday, February 25th, 2009

Choose wisely. When selecting a credit card, you should shop around for the best deal. Compare different cards based on your own situation, and try to look for the following benefits:

• A low annual percentage rate (APR). The lower the rate, the less interest you have to pay.
• The interest calculation method. This affects how much interest you pay, even when the APR is identical.
• Low or no annual fees. If the issuer charges an annual fee, ask them to waive it.
• All other charges (i.e., late payment fees, transaction fees, over the limit fees, etc). These can really add to the total cost of your charges.
• A grace period. Some credit cards charge interest from the day that the charges appear on your account. Other cards offer a grace period for you to pay off your balance before interest charges begin to accrue.
• The credit limit. Keep your credit limit low (about $500 or less) to make sure you don’t get in over your head.
• Wide acceptance. A major credit card is convenient, and easier to manage.
• Services and features, such as cash rebates, frequent flyer miles, extended warrantees, etc. Think carefully about the true cost of these programs when you consider interest and other charges.

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Charge Only What You Can Afford

Tuesday, February 24th, 2009

If you can’t afford a luxury item, don’t buy it until you have the money. If you can’t pay off the minimum balance every month on your credit card, then you are probably overspending. If people have been telling you the same thing lately then you better use the following guidelines to help determine if you should or shouldn’t be charging things on your credit card at this time:

• You have money in the bank to cover the purchase. If you have enough cash in the bank to make a purchase, then go ahead and charge.
• You don’t have enough cash, and the item is not for an emergency. If you don’t have enough cash to purchase the item or service, don’t charge it. Instead, save your money in an interest-earning savings account until you can afford the purchase.
• You can’t afford the item or service, but you need it right away. If you can’t afford an item or service, but need it now, go ahead and charge it but at the same time, make a plan to pay off the balance over time.
• Don’t charge something if it won’t exist when the bill comes. A good way to cut down on credit card debt is not to charge anything that won’t exist when the statement arrives. By paying cash for these kinds of things, you’ll save your credit for true necessities.

There you have it: the perfect plan for steering clear from credit card debt!

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Building Credit with a Secured Credit Card

Monday, February 23rd, 2009

This article is for those who want to establish good credit.

First of all, most people start establishing their credit by first obtaining a secured Visa or MasterCard. With these cards, you deposit a certain amount of money (ex. $100) to so called CD account and you then receive a credit card with $100 limit. The banks that offer these cards all report to the 3 credit bureaus (some report as a secured credit card account & some do not).

After a year, the bank then returns the deposited money and the account becomes unsecured, with the limit that you originally had. However, it is always a good idea to increase the limit before the year ends, so you will end up with higher limit card. There are a lot of good websites out there that offer both secured cards, regardless of your credit standings, employment or income. You can visit these sites and apply for a one, or maybe even sign up for a few cards to increase your credit score faster and higher.

Each credit account is considered as a trading reference: the more credit you have established, the more you’ll get from other creditors. Just remember to always make your payments on time and pay down little more than the minimum amount. Good luck!

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How to Separate the Good from Bad Credit Card Offers

Thursday, February 19th, 2009

Ever wonder how you get targeted for all those pre-approved offers you’re getting bombarded with everyday in the mail?

The fact is, the credit bureaus have nothing to do with lending decisions directly. It’s the folks who purchase the data from the credit bureaus who are having a bigger and bigger impact in your life. Because this rich database of consumer information is readily available to Marketing Risk Managers, a whole world full of opportunities and offers will beat a path to your door!

The key is to separate the best offers, those that could truly be beneficial to your life, from the worst offers — designed to make a quick killing. Offers with integrity and value will lead to a long term customer relationship. Companies that pursue you for the quick kill may make some money off you in the short term, but that’s it. It’s the difference from establishing long term customer relationships and one-time customer relationships.

My advice: research, research, research … that’s it! Do this enough and no one will ever be able to pull the wool over your eyes ever again (you can take that to the bank).

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Out: Budget. In: A Spending Plan.

Wednesday, February 18th, 2009

What comes to your mind when you say the word budget?

Do visions of cheap motels, eating out less, and other unpleasant restrictions come to mind? Often the word “budget” leaves a very negative impression on most people, so why not call it a “spending plan” instead. A spending plan is a very positive concept and a powerful tool.

A spending plan allows you to better prepare, so you can enjoy the things you want while staying within your means. So when you spend money going to the mall, or going on a romantic date, you’ll be safe in knowing that you won’t be spending more than you should (which is very liberating, to say the least).

People are in control of their finances when they can account for all their money. These people plan ahead when it comes to needing cash and reserve money for planned and unplanned expenses. The sad truth is that most families live paycheck to paycheck with no extra spending plan, no monthly accountability, no savings plan, and no idea of how or when they are going to get out of debt.

A good spending plan depends on thorough planning and understanding your individual needs. Start now by evaluating your personal and family financial records so you know how much you have been spending and where you have been spending it. Determine your total income and total expenses. If your income exceeds your expenses: good for you. However, you can still improve your financial stability, and reduce debt quickly, through an effective spending plan.

To have an effective plan, you will need to develop good money management habits which will take a great deal of effort in the beginning, but in the end you’ll be on the path to financial freedom!

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Breaking Down a Credit Card’s Numbering System

Thursday, February 12th, 2009

For those of you who don’t know, the 16 numbers strewn across a credit card are not put there at random. There’s actually a system in place to give the people you do business with some very valuable forms of information, pertaining to your specific card.

The following is a general breakdown of this very system:

The first digit of your credit card number is the Major Industry Identifier (MII), which represents the category of entity which issued your credit card. Different MII digits represent the following issuer categories, for example: American Express, Diner’s Club, and Carte Blanche are in the travel and entertainment category (which is a 3) VISA, MasterCard, and Discover are in the banking and financial category (either a 4 or 5) and SUN Oil and Exxon are in the petroleum category (a 7).

The first 6 digits of your credit card number (including the first MII digit) form the issuer identifier. Some of the better known issuer identifiers are listed in the following table: American Express = 34xxxx, 37xxxx; VISA = 4xxxxx; and MasterCard 51xxxx-55xxxx.

Digits 7 to (n - 1) of your credit card number are your individual account identifier. Since the initial 6 digits of a credit card number are the issuer identifier, and the final digit is the check digit, this means that the maximum length of the account number field is 19 - 7, or 12 digits. Note: each issuer has a trillion possible account numbers.

The final digit of your credit card number is a check digit, sort of like a checksum. The algorithm used to arrive at the proper check digit is called the Luhn algorithm, after IBM scientist Hans Peter Luhn who was awarded a US Patent for it in 1960!

So there you have it: a credit card broken down by the numbers. Now you’re in the know!

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