Credit cards are a way of life now, and used properly can be valuable tools for managing your finances. They’re also a lifesaver when you’re faced with something unexpected that must be paid for immediately – such as those times when the furnace goes out and it’s 10 below zero outside, or when then transmission goes out of the car and you must have it to get to work.
Teens can, and should carry credit cards – but only with proper parent/guardian supervision. By letting your teen have a low credit limit card and working with him or her each month to plan purchases and budget payments, you’re setting your child up for sound money-management throughout life. Remember, you’ll have to co-sign for a teen card, so a slip-up from your child will be a blot on your own credit scores.
College students should fall into the same category. While many are earning their own money and paying their own bills, this is not a time to run up large debts. College loans are enough to deal with when young people begin their working lives. Keep the credit limit high enough to purchase an emergency necessity – such as a textbook that a professor suddenly requires – but low enough to pay off without spiraling into long-term credit card debt.
Twenty and thirty-somethings should use credit cards to build a solid credit reputation. By using their cards sparingly and paying the balance promptly, their credit scores will build – putting them in a good position for a low-interest home loan.
This is a time when you may be tempted to splurge on a luxury you really can’t afford – because you can put it on the credit card. Resist. You really don’t NEED that fancy stereo system or tickets to that $200 concert. Paying interest on them makes them even less affordable. Wait until you’ve gathered the money, then see if the trade off between having the money and having the item really makes it worthwhile.
If you’re running a business of your own, or if you are reimbursed by an employer for gasoline or entertainment purchases, your credit card can be an invaluable record-keeping tool. Look for a card that gives cash back on the purchases you make most often, then pay the balance in full each month to avoid interest charges. Shun the cards with airline miles unless you really do travel a lot.
During your 40′s and 50′s you should continue to use your cards for record-keeping, and continue paying the balance in full if at all possible. During these years when travel is a favored pastime, using your card can save you money on foreign exchange rates – so be sure to take at least 2 cards along on vacation. And of course, look for a card that gives you cash back – or airline miles if you travel a great deal.
Credit card use among seniors has soared in recent years – primarily as a result of rising health-care costs. If you’re finding yourself taking on more and more debt, it might be time to look into alternatives such as a reverse mortgage.
For those seniors who remain affluent, using credit cards for travel and bookkeeping is still the wise choice.
The Discover® Motiva Card actually pays you for doing something you would do anyway – pay your account on time each month. The Pay on Time Bonus® is equal to one month’s interest, and is automatically credited to your Cashback Bonus® when you pay your account on time for 6 consecutive months.
In addition, it gives you a cash back bonus of .25 % to 1% on all your purchases, plus 5% to 20% cash back when you shop at top retailers through Discover’s® exclusive online shopping site. Plus, your cash rewards are unlimited.
If that wasn’t enough, you can get even bigger rewards when you redeem your Cashback Bonus® for gift cards from over 100 brand-name partners.
The introductory APR on your new Discover® Motiva Card is only 3.99% and applies to purchases and balance transfers made at the time of your application. This introductory rate will expire at the end of the billing period in June 2010, at which time your APR will increase to a variable rate between 11.99% and 19.99%
Cash advances carry a 23.99% variable rate. Variable rates are based on the Prime Rate.
Your due date will be not less than 25 days from the closing date of your last statement, and Discover® will not charge interest on new purchases if your previous statement was paid in full.
Thus, the rewards are great for consumers who routinely pay their balance in full each month. Since The Discover® Motiva Card carries no annual fee, shopping with this credit card can help your dollars go farther by putting cash back in your account each month. Your rewards have no expiration date, as long as your account remains in good standing.
Apply today, and start earning those Cashback Bonuses®.
Do you have a son or daughter in college? If so, they’ve probably been bombarded with credit card offers.
Credit card issuers are offering a variety of incentives to entice college students into opening accounts. They not only mail to them, they set up tables where college students congregate and give everything from stuffed animals to pizza coupons to CD’s to get the kids to fill out an application – right now.
And kids being kids, students often go ahead and do it just to get the goodies. They see it as a no-risk situation. They get the gifts, and after all, don’t have to use the cards when they arrive, so there’s no cost – they think. If they took the time to read the fine print, in many cases they’d learn differently.
Warn your college student about this – because filling out that application form might not be in their best interests. In fact, it could be costly for them (or you!). Some of those cards will come with a hefty annual fee – added as the first “charge” on their new card. Others come with monthly fees – some as high as $20 per month. Some have both.
Your student might be in for a shock when he or she opens the first letter from the credit card company and finds a statement showing a new balance hovering near $100 – in exchange for that pizza or teddy bear.
Having a credit card on hand is often a good thing for a college student, but the card should be chosen carefully.
First, if the card will be in the student’s name only, get a copy of their credit report to see their scores. From there you can determine if they’ll be eligible for a “good credit” card or will have to start with a “poor credit” card. If they’ve had some financial problems, you may have to begin with a secured card, but using it well will help them build a better credit rating.
Once you decide which card is appropriate, do your homework. Or, preferably, get your student to do the homework so he or she will be well aware of the differences and how to make a sound choice.
Compare the annual fee (if any), the monthly fees (if any), the interest rate, the credit line available, and the policies. For instance, do interest charges begin on the day of the charge, or will there be no interest charges when the account is paid in full each month?
After that, look at the rewards – be they gifts for making application, points toward gifts later, or cash back.
Taking charge of your finances has never been easier or more convenient.
The prepaid Rush Card gives you the safety and convenience of a credit or debit card – without the risk of going over limit and paying hefty fees. And, when you have your paycheck or government check deposited directly into your account, you’ll never pay a check cashing fee again.
When you want to load your Rush Card with cash, simply visit one of over 40,000 Money Gram locations, including WalMart and CVS/Pharmacy. You can also transfer from a Pay Pal or bank account, or mail in a check or money order.
Different people use their money in different ways, so the Rush Card offers you two plans to choose from – either the monthly plan or the “Pay as you Go” plan.
But the benefits don’t stop there. The prepaid Rush Card gives you on-line money management tools to help you set up a budget, track spending, and even print your own monthly statements or download them into popular financial software on your own computer. With the instant alert function, you can be notified immediately if you’ve exceeded a monthly budget amount in any category.
Plus, when you sign up for the RushPath to Credit and pay your bills with the card, we’ll automatically report your payment history to Lexis Nexis® and PRBC®, where your positive credit file will begin to grow.
Consumers currently caught in a credit card debt trap are eagerly awaiting the regulatory changes initially set to take effect in July 2010. All signs are good that these changes will take place much sooner.
With that in mind, it’s interesting to look back at regulations that did and didn’t exist in the early days of the credit card industry.
For instance, until the mid-70′s there were virtually no regulations other than those imposed upon members by the industry itself.
Banks eager to cash in on the interest paid on revolving credit card accounts were aggressive in gathering new customers – so aggressive that they mailed active credit cards to consumers who had not asked for them.
Some of those consumers were income-earning adults, but some were not. In fact, it was not unusual during the late 1960′s for college students living away from home to find a shiny new credit card in their mailboxes – just begging to be used.
This practice was banned when the U.S. Congress began regulating the credit card industry in the 70′s. Interestingly, while card issuers are right now scaling back on issuing credit, reports are that they are still recruiting new card members on college campuses.
Because merchants pay the credit card companies for the use of the cards, some merchants wanted to reduce the impact on their profits by either imposing a surcharge on customers for use of the credit cards, or raising prices overall and giving a cash discount to those who did not use them. The credit card issuers said NO.
Consumer groups sued and the card issuers relented. But then consumers asked Congress to step in, which it did. The 1968 Truth in Lending Act (TILA) was amended in 1974 to prohibit customer surcharges, but allow cash discounts. That ban lapsed in 1984 and has not been reinstated.
Meanwhile, until 1996, laws existed that capped the amount of interest and fees that credit cards could charge. Then, in a case entitled Smiley vs. Citibank, the U.S. Supreme Court lifted those restrictions. That’s why late penalties that once were $5 – $15 are now $29 – $39 and even higher. That’s also why you might see an interest rate hovering at 30% if you’re late with a credit card payment.
Another practice that helped consumers become buried in debt was the low minimum payment requirement. Many card issuers required such a low minimum that consumers didn’t pay the monthly interest – causing their balances to grow even with no new purchases added. Guidelines laid out in 2003 now require banks to require a monthly payment that covers the current month’s interest plus at least 1% of the principal due.
This card is not for everyone. In fact, only 1% of all American residents are eligible to carry The Visa® Black Card. The card is not available to non-residents nor to business entities.
This credit card carries the ultimate in rewards, gifts, and 24-hour concierge service. Even the card itself is exclusive – it’s made with carbon and the patent is now pending. When you hand this card to a reservations clerk, they’ll know you’re someone special.
The annual fee of $495 entitles you to the first 6 months interest-free, and a low 13.24% variable rate thereafter. It also entitles you to 1% cash back or points on your eligible purchases. Points can be redeemed for air travel on any airline at any time.
Your 24-hour concierge service assures you a pleasant trip, wherever you may be. Restaurant referrals, reservations and locations, sports events, golf reservations, and shopping location information are all only a phone call away.
You’ll always be up to date on places to see and events to attend when traveling – along with the best places to dine and shop. And when it comes to shopping – whether you’re looking for a tailor or a dog groomer; and whether you want to buy a rare book or a specialty household item, our trained “research shoppers” will help you find exactly what you want.
Of course, if you don’t want to do your own shopping, we can arrange for delivery of gift baskets, floral arrangements, and special occasion gifts of your choice.
Our business services will help you arrange everything from room and equipment rentals to emergency translation and foreign protocol information, while the message service ensures that you’re never out of touch.
When you need travel information – be it weather forecasts, passport locations, flight reservations, limousine services, hotel information, or a location to receive faxes when you arrive at your destination, we’ll have you covered.
And when traveling, your Travel Lounge Priority Pass™ will assure you a warm welcome at more than 500 airport VIP lounges in more than 90 countries world wide.
When you book your travel with the Visa Black Card, you’ll be insured – with $250,000 of travel accident insurance, $300 in baggage delay insurance, and $1,500 in trip delay insurance.
And of course, your eligible purchases are covered up to $500. When you use your Visa® Black Card to purchase items covered by a manufacturer’s warranty, your warranty will be extended up to a full year.
If all that wasn’t enough, when you carry the Visa® Black Card credit card, you’ll receive luxury gifts from some of the world’s top brands.
What’s piggybacking, you say?
A practice that once allowed parents, siblings, or friends to help individuals build their credit scores – but was discontinued due to abuse. Here’s how it works:
An individual with a stellar financial reputation, and thus a high FICO score, simply added another person as an authorized user on their credit card accounts. They didn’t add the person as a joint owner of the account – just an authorized user.
Then the activity on that credit card was reported both to the card owner and to the authorized user. Since the activity was all credit-building, the authorized user’s credit score got a boost.
Piggybacking was a useful tool for parents helping children get off to the right start with good credit scores, and was also used to help loved ones who had poor credit scores and needed help raising them.
Then someone saw an opportunity to make money and began selling authorized user status on high-ranking credit card accounts. Before long, the folks at FICO figured out what was going on, and stopped counting authorized user status when calculating credit scores.
Now it’s back, but with a few changes. Fair Isaac says they have new technology that will allow it to spot abuse and keep the piggybacking benefit in the realm of valid friend and family relationships. They did warn that building credit through piggybacking will take longer than it did in the past.
Other changes in the FICO scoring system, called “FICO Risk Score, Classic 08,” will cause credit scores for as many as half of all consumers to rise or fall by 20 points or more. For instance, if you have one or two minor credit infractions on your credit report, your score could see a boost.
The new model has been adjusted to consider the severity and frequency of credit missteps – so that individuals who have only 1 or 2 small black marks aren’t lumped into the category with consumers who have a string of unpaid collections over a long period of time.
FICO also announced that under the new scoring system collections with an original value of $100 or less will not be counted under the new system. That’s good news for consumers who may have a small account in dispute.
Interestingly, only TransUnion will be using the new method in the immediate future, so your lender may stay with the old system until Equifax and Experian come on board.