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.
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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.
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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.
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Business Credit Cards are not just for large corporations, they can be used by any size business. A business credit card enables even small companies to purchase goods and services on credit, with the promise to pay at a later date. Business credit card issuers differ greatly in their products. The fees, interest rates and terms for business credit cards vary greatly and comparing companies and cards can be very important. Here are some tips on getting the best credit card for your business.
Tip Number 1 – Credit Report
Often the interest rates and terms for a business credit card will be dependent on your personal credit rating. If the business is new, or it is a small business, the issuer will look at your personal credit rating. So the first step in shopping for a business credit card should be making sure that your credit report is correct.
Pull your three credit reports for free and make sure the information on them is correct. Try https://www.annualcreditreport.com/cra/index.jsp. This is a central site where you can request your free credit report on an annual basis. This site will provide the 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.
Tip Number 2 – Secured Business Credit Card
If you have bad personal credit it might be difficult to get a business credit card. There are things you can do to improve this standing so that eventually you will be able to get a business credit card or business loan. One of the options is to apply for a secured business credit card. You can apply for one online or through many financial institutions. A secured card will require you to make a security cash deposit that is equal to the credit limit you are asking for.
Once you get the secured business credit card, you can use it for your expenses. It will allow you to make online purchases, pay for travel and be utilized as you would any business credit card. Then as you make your monthly payments, you will rebuild your credit history. Make sure you choose a provider that reports your business credit success to the reporting services.
Once you’ve had the secured card for a year, you can request that your status be upgraded to a non-secured account. Some of the credit card issuers will do this automatically, but make sure you understand the guidelines for your upgrade.
Tip Number 3 – Compare the Business Credit Cards
All business credit cards are not created equal. Terms, interest rates, rewards and other options vary greatly. You need to make sure you compare all the information. Some cards have annual fees, and the annual fees can vary greatly from $75 or so a year to several hundred. The same thing is true with interest rates. They can vary by double digit percentage points so make sure you evaluate all the options. If you are comparing introductory offers for business credit cards, make sure you know how long the introductory offer is for, and what the terms and conditions are once the introductory term expires.
Besides comparing the basics, consider how you will use the card and make sure to look at the extra fees and benefits. 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? The conversion fee can vary from 0% to 3% and higher.
Don’t forget to look at the rewards programs. Do you get cash back? Or points for travel and other purchases? To utilize these rewards do you have to hit a specific threshold? For instance, there is one business credit card out there that requires you to make $100,000 worth of purchases in a year before you can really utilize their rewards.
Summary
With so many options out there it is well worth spending the time to research the different cards and card issuers. Things change fast, and there are new cards and options coming out all the time. Do a comparison of any business cards that you have at least once a year to make sure you are still getting the best deal, best service and have the right business credit card for your company.
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A business credit card enables companies to purchase goods and services on credit, with the promise to pay at a later date. There are several types of business credit cards and business credit card issuers often offer several different business products within their brand. Choosing the right card for your business can be difficult. Here are some answers to basic questions about business credit cards.
How big does my business need to be to qualify for a business credit card?
The answer to that question is there are no size limitations. In the past business credit cards were only issued to large companies and corporations, but today you can get a business credit card even if you are a home-based business owner with only one employee. The business credit card would have your company name printed on the card and come with many of the benefits that larger corporations enjoy.
If your business doesn’t have a credit history then the personal credit of the owner will be used to determine whether or not you get a business credit card and what the limit for that card will be. It is important to ensure that the owner’s personal credit report is correct. To do this, utilize one of the online credit review sites like www.annualcreditreport.com to get a copy of all three of the credit reports and challenge any discrepancies before you shop for a business credit card.
If your personal credit history won’t allow you to get a business credit card, there are options to help you build credit and have a credit card that you can used to make business purchases. This is called a secured credit card.
A secured business credit card is available for those companies or personal owners with either bad credit history or no credit history. You get a secured credit card by applying for it, and then submitting a security deposit to the account. The amount of security deposit will mirror the amount you are given as a credit limit. If you make your payments on time, a secured business credit card works to rebuild your credit. Once you’ve made payments for a year, the credit card issuer will re-evaluate your credit history with them and should issue a regular business credit card without the security.
Why does my small business need a business credit card?
The advantages for a small business owner start with helping to establish credit for the business, versus your personal credit rating. Your business expenses will be separated from personal purchases, making bookkeeping and tracking expenses for tax reporting easier. Often the annual summary will break your expenses down and categorize them for you, which will help you budget specifically for your business.
There seem to be a lot of reward business credit cards, are they really worth it?
The answer to this question depends on your business and how you utilize the business credit card, it also depends on the terms and conditions for the specific reward card. Often the business rewards credit cards have higher interest rates than non-rewards business cards. They often charge an annual fee for reward cards, while non-reward cards usually have no fees.
So check the differences between card types very carefully. If you plan on paying off your charges each month in full to avoid the interest costs, it might be worth it. Or if you can get a business credit card with awards at a similar rate to a non-reward card it can provide some definite benefits.
A quick perusal of award cards showed that there are options like 3% cash back from gas stations and office supply stores, with 1% cash back on other purchases. Some of the card issuers allowed redemption of awards for as little as $50 in reward money, while others had much higher reward limits. As with any credit card, you need to understand the benefits and the costs and then compare these benefits to your estimated spending patterns.
Summary
There are so many options available for business credit cards. It is important to take the time to understand what those options are and compare the fees, interest rates and benefits of the cards you are interested in. There are several online comparison websites that will help you do that. To find one, search – business credit card comparison.
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