One of the true facts of our times is that all credit cards are not created equal. The fees and interest rates and terms for credit cards vary so widely that comparing companies and cards can be a real feat. But you have to do it to get the best credit card for you.
Tip Number 1 – Start With Your Credit Report
Often the interest rates and terms for credit cards will be dependent on your credit rating. Getting the credit card is definitely dependent on your rating and the information on your credit report. So the first step in shopping for a credit card should be making sure that your credit report is as clean as you can make it.
Go to one of the services that allow you to pull your three credit reports for free and take a look. Try https://www.annualcreditreport.com/cra/index.jsp. This is a central site where you can request your free credit report, once every twelve months. You will get information from all three of the consumer credit reporting companies. These three nationwide companies are Equifax, Experian and TransUnion. This site will also allow you to submit almost all of the changes or discrepancies online.
It isn’t unusual to have erroneous information on the credit report and often you can send in the discrepancies through an online process. It will take about ten minutes online to get the reports, a few minutes to an hour or so to scan the reports and verify information, and up to thirty days for the incorrect information to come off.
Tip Number 2 – Compare and Contrast
Start with the basics. Is there an annual fee, and how much is it? What is the interest rate? If you are comparing introductory offers for credit cards, make sure and take that next step and compare how long the introductory offer is for, and what the terms and conditions are once the introductory term expires.
As you are comparing the basics, take a minute and consider how you will be using the card. For instance, if you travel a lot, does the card provide flight insurance or car insurance on rental cars? If you travel overseas, what are the fees to convert charged purchases from the currency of the country you are in, back into US currency? This fee can vary from 0% (Citibank Visa) to 3% and over.
Tip Number 3 – All Visas Are Not Alike
Nor are all MasterCards. These cards are offered by different banks, credit unions, etc and each offering is going to be different. For instance, my credit union Visa has a 9.9% interest rate that hasn’t varied in over five years. The bank down the street has a 13.9% interest rate, and an offer I received in the mail today for a new Visa Card…17%.
What does stay the same is American Express. They have different types of cards, but they all come from the one company and the interest rates and fees are set by product and your credit rating. The same with Discover Card. You get the Discover Brand Credit Cards from Discover, not a plethora of banks and other financial institutions.
So you can pretty much go to Discovercard.com and AmericanExpress.com and look at all their offerings and compare their cards features, rates and terms side by side. But to compare Visa’s and MasterCards you need to make a spread sheet and include where the Visa or MasterCard is coming from. There are online card comparisons that you can utilize for this. Do a search on the internet for credit card comparisons and see what you come up with.
Just a hint, these comparisons usually don’t include your local banks or credit unions. So don’t forget to go to their websites or call them for the information to compare services.
With all the new rules and regulations, it might pay you to compare any credit cards you already have to what is available now. And keep up. Do a comparison once a year to make sure you are still getting the best deal, best service and have the credit cards that work for you.
loading...
Related Links:
The first credit cards were proprietary cards issued by department stores and gasoline or oil companies in the early 1900s. There have been many changes since those days. Choosing a credit card can be a complicated process and there are so many choices of card and issuer.
The most frequent questions these days have to do with the changes to the laws governing credit cards. These changes are being phased in with everything in affect by August 2010.
How will the changes to the credit card laws affect me?
Many of the changes have to do with restricting the amount of interest that can be charged. It also means the terms and statements will be easier to understand. The changes are also supposed to keep companies from arbitrarily changing the interest rates and then charging consumers the new rate, retroactively.
Or the card issuer makes changes and then sends a notice that most people can’t understand. The companies that issue your credit cards will now have to inform you before the rates are changed, in clear and obvious language what those changes consist of.
Some of the credit industry’s biggest card issuers and credit analysts foresee that these changes will mean that many cards will go back to charging an annual fee for the card. Since the interest rates that can be charged are now restricted, there will be larger upfront fees.
These same analysts believe that awards programs will start to go away and that the credit card bills will become payable immediately instead of having a grace period of thirty days on new charges before they start charging interest.
Because of the new regulations, credit card companies can no longer mail the bill and have it due three days later. The issuer has to give you twenty-one days from the date the bill is mailed or received before it is due. They have to give you advance notice of changes, and that notice has to come 45 days in advance of a change, if they are going to change the credit card’s terms.
You now have the right to “opt out” of certain changes. This will give credit card holders the chance to say no to the change, cancel the card and pay the bill off under the old terms. You have to make minimum payments on time, and you have to pay off your balance in three years, but you don’t have to accept the changes in term. The 45 days’ advance notice of changes is supposed to give you time to look for a new card to replace the one you’ve got.
There are also certain features that you need to “opt in” for. An example of this type of feature is over-limit fees. The card holder has to “opt in” in order to be able to go over their limit and pay a fee to do so. If you don’t “opt in,” to use this feature, then if you go over your limit, the transaction will be denied.
Is it true that my college student won’t be able to get a credit card anymore?
For the most part, yes it is true. If your student is under 21 years old, they will only be able to get a credit card account if they have adult co-signers on the account that can prove they can and will assume the responsibility for the debt.
Another change for students is that the credit card companies can no longer market on campus if they offer promo items. Like free pizza or gifts if the student fills out a credit card application.
If I am late on my other bills, will that raise my credit card interest?
The answer is yes. The term for this is Universal Default. Credit card companies can look at your credit report, see that you have late payments with someone like your utility company, and then raise your interest rate based on this information even if you’d never made a late payment to the credit card company. The difference under the new credit regulations that take full effect in August 2010 is that now they have to give you 45 days notice of the fact that they are changing your rate and why. Before they could just do it, and in fact some changed the rate retroactively.
loading...
Related Links:
For the first time in decades, there are some big changes coming in credit card interest rates, fees and credit terms. These changes started to take effect in 2009, but they will fully take effect by August 2010. These changes have come about because of a federal credit card law.
These laws and regulations aren’t just for new credit cards, they will change things on the credit cards you already have. It’s important that you understand what the changes mean to you. We are going to review the highlights of the changes and what your rights will be.
Limiting Interest Rate Hikes
Credit card issuers can only raise their interest rates under limited conditions. Condition examples include after a promotional rate ends, if there is a variable rate stated for the card, or if the consumer makes one or more late payments. Otherwise the interest rates can only go up after the first year. If the rate does go up, or there are any significant changes to the terms governing the credit card, the card issuer has to give at least 45 days advance notice of those changes. This time frame is meant to give the cardholder plenty of time to shop for a new card.
Consumer Opt Out Rights
If you don’t like the changes a credit card company has notified you of, you can now reject some of those changes. If the changes the card company wants to make are unacceptable to you, this means that you will agree to close your account, not make any new charges and under the old terms of the agreement, pay off the remaining balance. By law you get at least five years to pay off your balance, but you have to make the minimum payment due under the old agreement.
More Time To Pay
Card issuers now have to give consumers “a reasonable amount of time” to make their payments on the credit card bill. This translates into payments that can be due anytime after 21 days from the time they are mailed or delivered. This came about because some due dates were moved up without notice and the payment would be due a couple days after the consumer got the bill. This caused a significant amount of late fees.
The new law also governs cut-off times. Instead of setting arbitrary deadlines for the company to receive payments, the new law sets the cut-off time after 5pm on the due date. If the date and time falls on a weekend, holiday or anytime the card issuer is closed for business, then the issuer can’t start assessing late fees until the next time they are open for business.
Clear Consequences of Minimum Payments
The credit card issuer now has to tell you the consequences to making only the minimum payment on the account. This means they have to tell you how long it will take you to pay off your entire balance if you only make a minimum payment. The second piece of information that they are now required to give consumers – is how much the payment would need to be each month if you wanted to pay the entire balance within three years. They also have to tell you the total amount of interest you will pay if you pay the bill off with minimum payments.
Highest Interest Paid First
Does your credit card charge different interest rates for different things? For instance, charging a higher rate of interest for cash withdrawals. Then according to the new law, any payments made on the account that are over the minimum payment amount, now have to go towards first paying off the balance for the amounts being charged the highest interest rate. Before this new law, industry practice had the amount over the minimum payment going to the balance with the lowest interest rate.
There are only a few of the changes. There are many more and they are well worth reading and understanding so that you know your rights and privileges as you are dealing with credit card companies. Some of the new changes only affect student credit cards and some only affect credit cards that are given to lenders with low credit ratings. But there are many additional changes that affect all credit cards so make sure you understand what they are.
loading...
Related Links:
Credit cards have become a part of everyday life. These small plastic cards enable the holder to purchase goods and services on credit, with the promise to pay at a later date. The issuer of the card can be a bank or other financial institution, or the cards can be issued by the retail store or service company for their specific product. The card issuer will set a limit or assign a line of credit to the card holder.
Credit Card versus Charge Card
Credit cards differ from charge cards, although the terms are often intertwined and used to describe either one. A charge card means that the total balance of money charged to the card has to be paid at the end of the month. An example of this would be the traditional American Express Green Card where you have to payoff the total balance each month.
A credit card allows the holder to pay anywhere from the minimum monthly payment, to the full amount on the months balance. With a credit card, interest accrues each month on the balance left over after a payment is made.
Getting a Credit Card
To apply for any type of credit card generally means filling out a credit application and getting approval. The approval is usually based on your credit rating. Some stores will issue you their card without a separate approval if you already have one of the major credit cards. A major credit card is generally thought to be American Express, Visa, MasterCard, Discover and Diners.
Once you are approved, you will be given a limit that is usually based on your credit rating, your income and your ability to pay. Your ability to pay can be based on the other loans or credit card limits that you have. Sometimes credit card companies will start you with their minimum limit and then increase this limit over time, based on if you make your payments on time. They may also increase your limit based on if you pay more than the minimum payment each month.
Using a Credit Card
Major credit cards have the most flexibility. Most retailers and service organizations in the US will take all or most of the major cards. Again, the major credit cards are traditionally considered to be American Express, Discover, MasterCard, Visa and Diners.
But you can get the cards from a number of different sources. My credit union has a Visa card, but the charges and fees for this Visa card are totally different that the fees for a Visa card from another bank. If you plan on applying for a major credit card, do a little research. There are some exceptions to their acceptance and they vary greatly in fees. For instance, if you travel overseas, the Citibank Visa card is the only credit card that doesn’t charge a currency exchange fee. Many restaurants and overseas businesses will take the Diners credit card, but most retail stores and service organizations in the US don’t take Diners, especially if you aren’t in one of the major cities.
Some organizations will advertise that they “only take Visa,” or Discover, etc. They do this because they get some type of bonus or discount on their credit fees for specifying only one card. So before you make a choice on cards, look around and see what card(s) are accepted at the businesses you frequent.
Charges and Fees
Don’t forget to check out the charges and fees for a specific card issuer. Some cards have an annual fee, some don’t. The interest rates, late fees, and other charges vary greatly from company to company. And this means if you check on the charges for a Visa from one bank, they most likely will not be the same charges and fees as getting a Visa card from another bank. Just because it’s a Visa, doesn’t mean the charges are the same across all issuers.
loading...
Related Links:
Credit card companies may have a number of fees or other costs with which they may charge you with or without notice. One of these charges refers to rates. The surprise rate element is that they can double or even triple rates on consumers, but they have to give you a two weeks time notice.
Another problem is with the credit limits. They have been cutting credit limits, but more than this they cut them as much as they can possibly can, reaching to just $2 or $ 3 over your outstanding balance. This way you can easily go over your credit limit and thus pay an extra fee. Also this affects you credit score because you are using a larger percentage of your available credit. Concerning that 30% of your credit score is based on the percentage of the credit that you are using, this will have an impact on your future loans, or mortgage. You have no prior notice of this action so you can only find it in your statements.
International fees are also surprise fees, so to say. These fees are charged when you make acquisitions over seas and not only when you are traveling but also when you make online purchases. These fees also grew from 1-2 % to 3% at almost every bank.
Finally beware of protection plans. They are supposed to be a safety net in case you are fired, but the reality is that they are going to freeze your account and charge you $1 a month for every $100 balance that you have. This adds up and than your interest rates will grow with 50-100 %.
loading...
