Everything About Credit Cards

You’re out of it – home free – right?

No, wrong. If you both signed the application forms for credit cards, if you both signed for the purchase of that car, or installation of that TV satellite, or that home mortgage, you’re both on the contract and you’re both liable.

Credit issuers don’t care what a judge says about who is responsible. When you signed the application or the agreement, they treated you as an individual person, and they still consider you an individual person – one who owes them money.

If the judge decreed that one of you must pay a debt and you don’t do it, the other can haul you back into court for more proceedings. But in the meantime, the creditors want to be paid. When they aren’t paid, the report goes to the credit bureaus, and both you and your spouse will see your credit scores decline.

So what can you do? If you can deal with each other in a civil manner, you can divide your debt. You can each get new credit cards, in your name only, and transfer the appropriate portion of your old balances to your new cards.

If you were listed only as an authorized user, your spouse’s debt will not be your responsibility, but it will still show up on your credit report. If that’s the case, ask your spouse to remove your name. If he or she does not, and it shows up on your credit report anyway, you can contact the credit bureaus and let them know that this is not your account. You’ll probably have to file a dispute, but you can get it off your report.

Because you are responsible for any accounts you hold jointly with anyone – be it your spouse, your child, your sibling, your parent, or even a friend – you should think twice before entering such an agreement.

And, if you are about to marry a person whose outlook on financial responsibility is different from your own, you should take care not to be added as a joint card holder, or even an authorized user. Get your own cards, in your own name. Consider these same consequences when you decide to purchase a car or a home.

As long as you don’t mix your finances, one of you can still maintain a good credit rating, even if the other does not. That could be beneficial to you as a couple – and will definitely be beneficial should you divorce.

First, investigate your alternatives. Read all the fine print in the offer you received, even if you need a magnifying glass to do so!

Then, considering what kind of credit card you need or want, click the links on this page to compare the cards available to you.

Once upon a time, credit cards were all pretty much alike, but no more.

If you’re looking for a rewards card, you can choose from a wide variety – getting back cash, merchandise, or airline miles. And each offers their own version of when you’ll be rewarded.

Some will give you a rebate for every purchase. Others will reward you for buying gasoline or eating out or using an airline. Student rewards cards often focus on book store purchases, pizzas, video rentals, or movies.

So first decide what you want and how you’ll use the card. Choose the one that will reward you for the most frequent use.

If you’re looking for an “emergency” card to use after you’ve had credit problems, choose the one that costs the least in annual or monthly fees. If you’re trying to rebuild your credit, you aren’t going to be using it often or carrying a balance, so the annual percentage rate isn’t as important to you. But some “poor credit” cards charge a fee each month even when you don’t use them. Again, read and compare to get what’s best for your own situation.

When your credit scores are high, you can probably choose any card you want, so consider how you’ll use the card. If you think you’ll need to carry a balance, go for the card with the lowest annual percentage rate – and check the fine print to see how long that rate is guaranteed. If you’ll pay the balance in full each month, then search for a card with the greatest rewards.

You can actually make money using your credit card if you get cash rewards and pay the balance each month – as long as you aren’t paying an annual or monthly fee to carry the card.

You’ve come to the right place to make comparisons, so start searching for your perfect credit card right now!

Credit card companies are working to entice their favorite kind of customers: those who carry a balance of $5,000 or so, run it up occasionally, and then pay it back down. That keeps interest payments coming in regularly without exposing the card issuer to too much risk.

To keep these customers happy, and to gain more like them, credit card companies have been using rewards programs. Now they’re offering savings plans as well.

Some cards automatically deposit a percentage of your monthly usage into a savings account. Other, such as Discover, offer rewards for paying down your debt.

Under one of their programs, customers who make 6 on-time payments in a row are rewarded with cash back in an amount equal to the next month’s interest.

Not surprisingly, polls taken on behalf of the credit card industry show that up to 75% of all consumers prefer cash back to merchandise, hotel discounts, or airline miles.
The new cash back offerings are an attempt to establish customer loyalty by giving them what they want on a consistent basis.

So how can the credit card help me get out of debt?

First, choose a card with no annual fee, a reasonably low interest rate, and cash back on all your purchases.

Next, ask for a credit line equal to at least twice the dollars you intend to spend monthly. This is to keep your debt to available credit ratio down. If you can, that will allow you to charge all your monthly expenses without going beyond 30% of your available credit.

Now, use that card, or a combination of cards, for all of the purchases you would normally pay by cash or check. This includes gasoline, groceries, drug store purchases, clothing, etc.

Next is the tough part: Resist the urge to let a balance ride. Pay that bill in full, on time, each and every month. Remember, you won’t have been spending any money out of your checkbook aside from things that can’t go on the card – such as your mortgage.

If your monthly bills total $2,000 and you get 1% back, that’s $20 extra that you can apply to your mortgage or your car loan – or to some other credit card that you need to pay down.

You may be worried about job loss in the future, or if the state of your health is questionable, you may worry about being unable to work due to illness.

Those worries could cause you to consider opting in to a credit card protection offer from your credit card issuer. But think twice and do your research before you make the decision. If you know your company is about to announce widespread layoffs, it might be a good idea – but only if you’ve read the fine print and know that the coverage will actually be there when you need it.

Some plans require that you’ve been employed for a set length of time, that you’ve had the coverage for a set length of time, and that you’re a full time employee. They may also state that the coverage doesn’t extend to existing medical conditions.

Many programs require you to wait for coverage until you can show that you’re receiving unemployment benefits. And that, as you may know, takes a couple of weeks. If you’re off work due to illness, the coverage may require you to send in a monthly note from your doctor.

Job loss from disability may be non-existent, due to the fine print in some plans. These state that you must be physically unable to perform any work for pay. So, if you make your living climbing tall structures as a steel worker and you suffer from a broken leg, you may be out of luck. Why? Because that broken leg wouldn’t prevent you from taking a job as a bookkeeper, a telemarketer, or anything else you could do while seated.

If you read all the fine print and determine that yes, the coverage is genuine, then you need to consider the cost vs. the risk you face.

Credit protection plans can effectively increase your overall cost of credit by more than 100%. The offer is presented to look inexpensive – only 99 cents per $100 per month.

That doesn’t sound like much, until you apply it to your entire balance and compare it to your interest charges. Say you’re carrying a balance of $2,000 at 9.9% interest. Your interest charge is about $16.50 per month. Now add the fee of 99 cents per $100. That’s 99 cents times 20 – or an additional $19.80. Ninety-nine cents per months translates into 11.88% per year if you were calling it an interest charge.

Some card issuers charge less – perhaps 50 cents per $100 – that’s still an additional $10 per month that you could be using to pay down the debt instead.

BestRateforCreditCards.com your resource for credit cards, business credit cards, student credit cards, secured credit cards, and prepaid credit cards. We also provide a weatlth of information about the importance of having credit cards and how they will benefit you.

If you’ve applied for a new credit card and been told that you don’t qualify because there’s a problem with your credit scores, a collection agency’s dirty tricks may be the source of that problem.

Some collection agencies are now specializing in dirty tricks, and thousands of unsuspecting consumers are falling for them – and paying debts they do NOT owe!

First is the one that will hurt your credit scores. It’s attempt to collect on debts that were either discharged through bankruptcy or are so old that the statute of limitations passed years ago.

Here’s how it works: At one time, those collection agencies “purchased” the debt. They paid pennies on the dollar for the right to pursue collection and, hopefully, make a very large return on their investment.

Now, even though those debts have become legally un-collectable, they’re still there, hanging around in a moldy file. So, a debt collector can pull them out and start causing trouble. We’ve heard reports of debts discharged 20 or more years ago being used to try to extort money from consumers.

They know that calling isn’t going to get them anywhere, so they file a lawsuit. Then, even though it’s illegal, they use what’s called a “gutter” process server to deliver the notice to you. It’s called gutter, because they “toss the paperwork in a gutter” and it never gets to you. So you can’t go into court and show the judge that you don’t owe the money.

Thus, they win by default, and the notice of judgment goes on your credit report. Then the debt collector sits back and waits until you need to use your credit and find out your credit rating has been trashed.

Unless you check your credit report regularly, you won’t know it’s there until then. At that point, many consumers rush to pay the debt and get it cleared from their credit reports.

And so, collection agencies collect money that isn’t owed.

If this happens to you – don’t pay them. Send them a certified letter with proof that you don’t owe the debt. Then contact all the credit bureaus and fill out the appropriate paperwork to have the information cleared from your records.

Getting this straightened out may delay you getting a new credit card, or even a car or a house. But unless the amount is so small that you’d rather pay the bill than spend the hours to have it removed, you shouldn’t let them get away with this.

These people are just common crooks – and they don’t deserve your money.

By using your credit card each month and paying the balance in full as soon as the statement arrives, you’ll slowly build a reputation for on-time payments, which will raise your credit scores.

You should also be careful never to exceed 30% of your allowable credit limit during any one statement period. And, in the interest of your own finances, you should not allow yourself to carry a balance. The interest rate on poor credit credit cards is high.
The Applied Bank® Secured Visa® Gold Credit Card offers the best terms, with a $50 annual fee and only 9.99% interest, while New Millennium Bank offers a card with a $59 fee and 19.5% interest.
A third choice would be the Total Visa card with a $48 fee and 19.92% interest.

Thus, the only purpose in obtaining such a card should be to build or re-build your credit.

As you continue to make on-time payments in full, and assuming that you have no other ongoing credit issues, your credit scores will gradually build until you become eligible for a card with no annual fee and a smaller interest rate.

If you have some cash on hand, another choice is the secured credit card. These also require an annual fee and high interest, but they also will help to build your credit.
Pre-paid cards, on the other hand, will do nothing to help your credit scores.

First, the big benefit to using your cards: You’ll get the best exchange rate available.

While taking your traveler’s checks to a currency exchange counter or an overseas bank, you’ll be charged high retail exchange fees, plus additional fees. When you use your cards, you’ll get the wholesale exchange rate reserved for big banks and corporations.

The caution: Watch out for fees from your own bank and card issuers. Visa and Mastercard charge a 1% fee, and most banks will pass that on to you. But some will tack on their own charges as well and that could add up to an additional 2%.

Before you go – or before you choose a new card – learn the policies. Call each of your card issuers and find out their fees, then choose the two with the lowest exchange fees. Always take 2 cards, just in case one is lost, stolen, or damaged.

Since many credit card issuers are now trying to protect card holders, call each of them before you leave and let them know your travel plans. Let them know the travel dates and the countries and cities you’ll be visiting. Then the card issuer will know it’s you and not a thief.

If you fail to do this, the card issuer could put a freeze on your account – leaving you with no funds while you’re traveling. That would put a definite damper on your vacation.

While you’re talking to them, ask for an international contact number. You won’t be able to use their 800 numbers once you’re outside the country, so you need a working number with an actual area code – just in case your credit card is lost or stolen.

Do the same with your bank. Ask about their exchange fees, and their ATM fees. Since fees of $2 to $5 per use can make ATM withdrawals expensive, try to limit the number of times you use them. Make one large withdrawal to last a few days rather than using the machine each day.

Be sure to tell the bank about your travel plans and get their international contact number as well.

Test your ATM card before you leave home and if your PIN number includes letters, get it changed to 4 numbers. Many ATM’s outside North America don’t have letters on the keyboard.

If your plans change and you extend your stay overseas, be sure to use those international contact numbers to let both your credit card issuers and your bank know. Otherwise, when they see charges from Paris when you’re supposed to be back in Houston or L.A., they’re apt to freeze your account.

BestRateforCreditCards.com your resource for credit cards, business credit cards, student credit cards, secured credit cards, and prepaid credit cards. We also provide a weatlth of information about the importance of having credit cards and how they will benefit you.

The choice, of course, depends upon the purpose of the card.

If you are getting the card for the purpose of building your credit, get a secured card or a high interest card. If you wish to give a gift, get a prepaid card.

Secured credit cards are treated just like unsecured cards in the eyes of the credit bureaus, and your balances and payment record will count toward building a credit score. Prepaid cards are not reported at all, so are not a tool in building credit.

The choice of a secured card or a high-interest credit card might depend upon your cash on hand or the help available to you.

A secured credit card is a tool that enables a relative or friend to help you build your credit without risking their own. If you don’t have the cash available to set up a secured account, they can make a loan to you for the amount needed to deposit in the secured account.

Once you establish a good record of minimal use combined with prompt payment, your own credit scores will rise and you’ll be eligible for a low risk, lower interest card of your own. At that time, the secured account can be converted to an unsecured account, and the deposit will be returned to you, with interest. Then you can repay the relative or friend who helped you.

Of course, as with any credit card, running the balance too high or failing to make every payment on time will have a reverse effect – it will lower your credit scores.

If you have no one to offer this kind of assistance, consider getting a high-interest card and using it so wisely that you’ll soon qualify for a lower interest card. Some of these cards do require an annual fee, and that fee varies widely from card to card, so read all of the offers carefully. Don’t automatically assume that the best card is the one advertised in that offer in your mailbox. In all likelihood, that is the worst one!

Because they are all high interest, plan to use the card very little and pay the balance in full each month. Use it for a purchase you would have made anyway – such as a bag of groceries. Be sure to stay under 10% of your available credit and mail your payment the same day the statement arrives in your mailbox.

All of the earliest credit cards were “closed loop” cards. That meant that a three-way relationship existed between one specific bank, the consumer, and the merchant.

Diners Club and American Express cards, for instance, were issued to a select group of consumers and could be used only at merchants who chose to participate in the program. Early cards issued by banks were available only to that bank’s customers and were good only at local establishments.

While Diner’s Club remains in the closed loop, American Express has chosen to join the open loop system, which requires interbank cooperation and funds transfers.

Discover Card, first introduced at the 1986 Super Bowl, also began as a closed loop card. Originally a part of the Sears Corporation, Discover Card Services sought to create a new brand with its own merchant network.

These three, in an effort to boost revenues, expanded into the open loop network, but not without some trials along the way. Although these cards were gaining merchant acceptance, individual banks were locked into an exclusive agreement with Visa and MasterCard.

Finally the U.S. government and the Department of Justice became involved, and a 2004 antitrust court ruling against Visa and MasterCard allowed banks and other card issuers to provide customers with American Express and Discover Cards.

Not all establishments choose to accept American Express and Discover because of the additional set up and maintenance fees. But consumers carrying these cards can rest assured that their cards will be accepted anywhere the logos are displayed.

Now, although Visa still holds over 50% of the market share of credit card transactions, Discover Card is a major player in the Open Loop credit industry. Discover boasts a wide variety of cards for consumers with poor to excellent credit and offering a variety of rewards cards for students, businesses, frequent travelers, and more.

So who offers “Closed Loop” cards?

Gas companies and retailers such as Sears, Staples, and others whose cards are accepted only at their company outlets. These closed loop cards can be beneficial to both the stores and the consumers who use the cards regularly. The rewards, which can be substantial, give added incentive to use that brand rather than another.

For instance, Staples offers a rewards program (for those cardholders who apply) which gives money back on purchases – and gives extra when Staples own brands are purchased.

Back in the dark ages of credit card purchasing, merchants taking your card had to worry. Would the charge be approved, or would it be rejected?

If the person taking your card was an employee at a store and your charge was rejected and charged back to the store, would the employee be fired? They could be, if they had failed to follow procedure. Back then, merchants received a little booklet, printed on flimsy paper, that listed the account numbers of cards that they would not honor. Clerks were supposed to check to make sure your account number wasn’t listed in that book before they let you walk out the door with a purchase.

If your purchase was over a set amount – as I recall it was $50 – they were supposed to call in for approval.

Talk about a cumbersome process – and a frustrating one if other customers happened to be waiting in line behind you. Sometimes they didn’t bother, and sometimes it cost them money. Oh, they could try to collect from you, but if the amount was small it wouldn’t be worth the legal fees and hassle, and if you’d left town… The worst they could do to you was destroy your credit, which didn’t get their money back.

Next came the little “swipe” machine that took your number, checked it, and either approved or disapproved. It took a few minutes, but was easier than looking up numbers and making phone calls.

But now – all that happens in a matter of seconds.

When you hand your card to a clerk to swipe, or swipe it yourself at the check-out counter, the machine instantly sends a message to the merchant’s bank. That bank then instantly sends a request to MasterCard or Visa – who instantly sends a request to your individual card issuer. Assuming the charge is approved, those instant messages go back through the same route, you sign the charge slip, and go on your way with your purchase.

This all happens so quickly that you don’t even notice a delay, and no one behind you is left twiddling their thumbs.

When you order over the phone, the process takes a second or two more, because a human has to key in the information that you provide.

But convenience isn’t free. Your merchant pays a monthly fee for the privilege – even if no customers use a charge card in a given month. That’s why it’s more cost-effective for many small businesses to use a service like Pay Pal – they take a higher percentage of each transaction, but there’s no monthly fee.

Merchants also pay a percentage of each transaction. For most mid-size merchants, the fee is about 2%. It can be higher for small businesses that use the service less frequently.

So, while you’re standing there waiting to sign your receipt, three different banks are “talking about you behind your back.” It’s nice when they’re only saying good things!