A credit card is a card which allows people to buy items without money. What it does is that it charges the money needed to their bank account, so the person will pay later.
A universal payment method that allows the cardholder to make payments for goods and services and receive cash not only through the cardholder’s own account resources but also through credit from the card-issuing bank.
A credit card is a system of payment named after the small plastic card issued to users of the system. A credit card is different from a debit card in that it does not remove money from the user's account after every transaction. In the case of credit cards, the issuer lends money to the consumer (or the user) to be paid to the merchant. It is also different from a charge card (though this name is sometimes used by the public to describe credit cards), which requires the balance to be paid in full each month. In contrast, a credit card allows the consumer to 'revolve' their balance, at the cost of having interest charged. Most credit cards are the same shape and size, as specified by the ISO 7810 standard.
Monday, March 3, 2008
The History of Credit Cards
Credit Cards Replacing Paper Money
A credit card is a small piece of rectangular plastic that is no thicker than a sheet of paper, though it cannot be folded. Initially credit cards were metal tokens in the shape of coins, then they changed to metal plates to celluloid then fiber and now plastic with perhaps a photo of the holder and a magnetic strip on the reverse containing security information such as a personal identification number enabling the card to be used at money dispensing machines (ATM’s) and merchant establishments.What is meant by ‘Credit’?
Credit is the system of buying some produce or service without having to pay for it at the time of the transaction. The payment is made at a pre-determined later date with the addition of a fee to the bill amount. This is like loaning someone money to buy something without actually giving them the cash but instead giving them the product they want to buy. So, the system of credit is not new to humanity in fact, it is as old as civilization itself or perhaps even older. The entrepreneurs of the inhuman kind have been proclaimed responsible for identifying human needs and wants as a rollicking business, and so they invented the credit card system. Though, disputed by many, The Diners Club is credited to be the ones to invent the credit card in 1950.Computers Promoted The Use Of Credit Cards
In the beginning there were no computers to record the credit card transactions and the process of verifying the credit balance of the card was done manually through a regularly updated credit card directory, much like a telephone directory. This system was time consuming and tedious and provided many loop holes for credit card fraud. Today, with computerization, the use of a credit card is instantaneous. All one needs to do is to ‘swipe’ the card through a slot machine and the amount entered. If there is adequate balance in the account of the holder the transaction is completed and the customer billed a month later. Usually credit cards allow for a 50 day credit free period. If the outstanding bill is paid during this time the customer does not have to pay any interest on the transactions, else there is a whopping 2.9% charge per month on the bill amount.When Were Credit Cards Invented?
In contradiction to the theory that ‘The Diners Club’ started the credit card system, the Encyclopedia Britannica records the origin of credit cards www.onlinecreditcardsinfo.com in the United States as far back as the 1920’s. During this time firms such as oil companies and hotel chains started issuing credit cards to their regular and valued customers who were free to use their services and pay them at a later date. These cards were only useful for purchasing goods and services from the companies and establishments that issued the card. However, references to credit cards have been found as early as 1890 in Europe. It was only in the late 1930’s that companies started accepting each other’s credit cards and this is when things began to get complicated for accountants.Who Issues Credit Cards?
Banks and financial institutions are the main issuers and promoters of credit cards. The invention of the first bank-issued credit card is credited to John Biggins of the Flatbush National Bank of Brooklyn in New York. This was the year 1946 and Biggins did not know at the time that he had hit upon an idea that would take the world of credit by storm in times to come. From this first credit card called “Charge-It” many cards have flooded the market such as the all famous “American Express” credit card and the Diners credit card. The Bank of America issued the BankAmericard in 1958. This card is now known as the “VISA” card. Around the same time the popular MasterCard came into being. These are the two prevailing cards being used today. The era of plastic money had begun.
How credit cards work
A user is issued credit after an account has been approved by the credit provider, and is given a credit card, with which the user will be able to make purchases from merchants accepting that credit card up to a pre-established credit limit. Often a general bank issues the credit, but sometimes a captive bank created to issue a particular brand of credit card, such as Chase, Wells Fargo or Bank of America issues the credit.When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates their consent to pay, by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a Personal identification number (PIN). Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a Card not present (CNP) transaction.Electronic verification systems allow merchants to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment terminal or Point of Sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip on the card; the latter system is in the United Kingdom commonly known as Chip and PIN, but is more technically an EMV card.Other variations of verification systems are used by eCommerce merchants to determine if the user's account is valid and able to accept the charge. These will typically involve the cardholder providing additional information, such as the security code printed on the back of the card, or the address of the cardholder.Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. After receiving the statement, the cardholder may dispute any charges that he or she thinks are incorrect (see Fair Credit Billing Act for details of the US regulations). Otherwise, the cardholder must pay a defined minimum proportion of the bill by a due date, or may choose to pay a higher amount up to the entire amount owed. The credit provider charges interest on the amount owed (typically at a much higher rate than most other forms of debt). Some financial institutions can arrange for automatic payments to be deducted from the user's bank accounts, thus avoiding late payment altogether as long as the cardholder has sufficient funds.Credit card issuers usually waive interest charges if the balance is paid in full each month, but typically will charge full interest on the entire outstanding balance from the date of each purchase if the total balance is not paid.For example, if a user had a $1,000 outstanding balance and pays it in full, there would be no interest charged. If, however, even $1.00 of the total balance remained unpaid, interest would be charged on the $1,000 from the date of purchase until the payment is received. The precise manner in which interest is charged is usually detailed in a cardholder agreement which may be summarized on the back of the monthly statement. The general calculation formula most financial institutions use to determine the amount of interest to be charged is APR/100 x ADB/365 x number of days revolved. Take the Annual percentage rate (APR) and divide by 100 then multiply to the amount of the average daily balance divided by 365 and then take this total and multiply by the total number of days the amount revolved before payment was made on the account. Financial institutions refer to interest charged back to the original time of the transaction and up to the time a payment was made, if not in full, as RRFC or residual retail finance charge. Thus after an amount has revolved and a payment has been made that the user of the card will still receive interest charges on their statement after paying the next statement in full (in fact the statement may only have a charge for interest that collected up until the date the full balance was paid...i.e. when the balance stopped revolving).The credit card may simply serve as a form of revolving credit, or it may become a complicated financial instrument with multiple balance segments each at a different interest rate, possibly with a single umbrella credit limit, or with separate credit limits applicable to the various balance segments. Usually this compartmentalization is the result of special incentive offers from the issuing bank, either to encourage balance transfers from cards of other issuers, or to encourage more spending on the part of the customer. In the event that several interest rates apply to various balance segments, payment allocation is generally at the discretion of the issuing bank, and payments will therefore usually be allocated towards the lowest rate balances until paid in full before any money is paid towards higher rate balances. Interest rates can vary considerably from card to card, and the interest rate on a particular card may jump dramatically if the card user is late with a payment on that card or any other credit instrument, or even if the issuing bank decides to raise its revenue. As the rates and terms vary, services have been set up allowing users to calculate savings available by switching cards, which can be considerable if there is a large outstanding balance (see external links for some on-line services).Because of intense competition in the credit card industry, credit providers often offer incentives such as frequent flyer points, gift certificates, or cash back (typically up to 1 percent based on total purchases) to try to attract customers to their program.Low interest credit cards or even 0% interest credit cards are available. The only downside to consumers is that the period of low interest credit cards is limited to a fixed term, usually between 6 and 12 months after which a higher rate is charged. However, services are available which alert credit card holders when their low interest period is due to expire. Most such services charge a monthly or annual fee.
Types of Credit Cards
Standard Credit Cards
Standard credit cards are the most typical type of credit cards. These are unsecured credit cards that are readily available from most banks and financial groups. These types of cards vary in how the annual percentage rate (APR) is offered or calculated. Here are several examples:
Low Interest Credit Cards offer either a low introductory APR that changes to a higher rate after a certain period of time or a low fixed rate APR. For example, you may get an introductory APR credit card with an interest rate of 5% for the first six months and 10% thereafter. Then, for the first six months, any purchases or balances you carry will be only charged a 5% annual interest rate. However, any new purchases or balances that carry over after the six-month period will now be subject to a 10% APR.Many people take advantage introductory APRs to make larger purchases, so that they can take several months to pay them off. Low APR Credit Cards can help save consumers a lot of money on interest charges. However, be sure to read all the terms and conditions of the reduced introductory rate, so that you will not be penalized by fees or accumulated interest.
Credit Cards with Rewards Programs
Credit Cards with Rewards Programs usually "reward" the card holder incentives, rebates and even cashback rewards for purchases they make on their credit card. You can get additional airline miles, cashback rewards or discounts on merchandise for each dollar charged on such a card. Rewards Cards usually require better than average credit for approval.
Cash back credit cards give you cash rewards for making purchases with the card. The more the card is used, the more cash rewards you usually get. Most cash back rates are around 1% of your total purchases, excluding interest and finance charges. However, some cards offer a higher cashback percentage with increased usage while still others offer a higher cash back percentage at select merchants or for particular types of purchases. Since cash back programs are costly to the credit card companies, some cash back credit cards also have an annual fee, which can vary from $50 to $100. This type of card is particularly good for people who are faithful about paying off their balances each month. If used appropriately a cash back credit card can earn the cardholder a significant amount of money over time.
Reward Credit Cards
Reward credit cards are similar to cash back cards in that you can accumulate points towards a reward structure, which is based on how much you use the card over a period of time. Credit cards offer different reward programs and promotional offers often change, so be sure to thoroughly look over the card’s terms and conditions of each specific card before applying.
Typical rewards include:
Gasoline rebates
Entertainment rewards
Store discounts for specialty store cards
Reward programs are costly to the credit card companies; therefore, many reward credit cards also require an annual fee, which could vary from $50 to $100. This card is particularly good for people who are faithful about paying off their balances each month. By minimizing their finance charges, such individuals will reap greater benefits from the associated rewards credit card.
Credit Cards for Bad Credit
Bad Credit and/or Credit Repair Credit can easily go from good to bad with poor judgment, mismanagement of credit cards or simply a change in job or financial situation. This does not mean you cannot get a credit card. There are several options available for people who have had bad credit in the past and for those who are currently trying to repair their credit.Depending on your specific situation, debt consolidation, use of introductory APRs on balance transfers or other options may be the best choice. However, if you still need credit or want to start repairing your credit by proof of action, there are several credit cards designed to help "rebuild" poor credit histories.
Secured credit cards require collateral for approval. With secured credit cards, a security deposit of a predetermined amount is needed in order to secure the credit card. Generally, the security deposit needs to be of equal or greater value to the credit amount. Collateral can come in the form of a car, a boat, jewelry, stocks or anything else of monetary value. Secured credit cards are for people with either no credit or poor credit who are trying to build or rebuild their credit history.Often, cards that help to rebuild credit come with low credit lines ($250 or so) and additional fees may apply (application fees, etc.). Be sure to read over any terms and conditions for these add-on services before applying. Be certain of any fees you may incur before proceeding with the application process. If you use the card responsibly and pay all of your bills on time, however, you can ask for a credit increase down the road. The extra fees and low credit lines will be worth it if a secured credit card helps you get your overall credit back on track.
Prepaid cards are, in fact, not credit cards at all BUT rather are used just like credit cards, wherever credit cards are accepted. The advantages of prepaid cards is that there are no finance charges and they help you avoid debt, in that all purchases are paid for beforehand. With prepaid cards you determine the credit line. Generally speaking, a cardholder's credit line depends on how much money he/she transfers to the card. Therefore, there is little risk of running up credit card debt, while budgeting is made easier.Although most prepaid cards do not charge finance fees, other fees may apply, including: monthly fees, startup or application fees, overlimit fees, ATM fees and more. Be sure to thoroughly look over the terms and conditions for each specific card before applying.
Specialty Credit Cards
Specialty credit cards are for individuals with unique and special needs for their credit use. Examples of these types of cardholders include business users and students. These credit card programs are designed specifically to meet the needs of these particular groups.
Business credit cards are available for business owners and executives and have many of the same features as traditional credit cards: low introductory rates, cashback rewards, airline rewards, etc. However, business credit cards can also have many additional benefits in comparison to traditional credit cards.
Some of these bonuses include:
Business expenses kept separate from personal expenses
Special business rewards and/or savings
Expense management reports
Additional cards for employees
Higher credit limits
Every credit card is a bit different and promotional offers often change, so be sure to thoroughly look over the terms and conditions for each specific card before applying.
Students generally have little or no credit history. Because of this quandary, students may often find it difficult to get approved for a traditional credit card. Luckily, student credit cards do exist. This type of credit card is set up to help students build up the credit history that most of them don't already have.Student credit cards are often scaled back in terms of rewards, features and other benefits, but they can still be a valuable commodity. If used wisely, a student can take the first step towards building a solid credit history with a student credit card
Standard credit cards are the most typical type of credit cards. These are unsecured credit cards that are readily available from most banks and financial groups. These types of cards vary in how the annual percentage rate (APR) is offered or calculated. Here are several examples:
Balance Transfer Credit Cards
Balance Transfer Credit Cards are designed to allow consumers to transfer a higher interest credit card balance onto a credit card with a lower interest rate, thus saving them money in interest charges. For example, if you transfer a balance to a credit card with a low introductory APR of 0%, the APR for this balance will typically stay at this 0% interest level for a specified period of time, thus potentially saving the consumer hundreds of dollars in interest charges. The terms of balance transfer credit cards can vary between offers, so be sure to thoroughly read the terms and conditions for each specific card.Low Interest Credit Cards offer either a low introductory APR that changes to a higher rate after a certain period of time or a low fixed rate APR. For example, you may get an introductory APR credit card with an interest rate of 5% for the first six months and 10% thereafter. Then, for the first six months, any purchases or balances you carry will be only charged a 5% annual interest rate. However, any new purchases or balances that carry over after the six-month period will now be subject to a 10% APR.Many people take advantage introductory APRs to make larger purchases, so that they can take several months to pay them off. Low APR Credit Cards can help save consumers a lot of money on interest charges. However, be sure to read all the terms and conditions of the reduced introductory rate, so that you will not be penalized by fees or accumulated interest.
Credit Cards with Rewards Programs
Credit Cards with Rewards Programs usually "reward" the card holder incentives, rebates and even cashback rewards for purchases they make on their credit card. You can get additional airline miles, cashback rewards or discounts on merchandise for each dollar charged on such a card. Rewards Cards usually require better than average credit for approval.
Airline Mile Credit Cards
Put simply, airline mile credit cards or frequent flyer credit cards give you airline miles credits (or frequent flyer miles) whenever you use your card. Typically, you as the cardholder accumulate "points" based on the dollar amount of your credit card purchases over a period of time. Based on a predetermined point level, you can then redeem those points for airline travel (much like frequent flyer miles).Each airline mile credit card is a bit different; therefore, be sure to read the fine details in the card’s terms and conditions to find out how many airline miles you gain for every dollar spent in purchases. Also, watch out for how many airline miles you will need to accumulate before you qualify for a free airline ticket. Finally, find out whether or not airline miles expire if you do not use them within a specified amount of time. Because airline mile reward programs can be costly for credit card companies, many airline mile credit cards come with an annual fee. These cards are great for people who frequently travel or for those who want to use their cards to plan vacations, but the associated fee might make them impractical for other types of cardholders.Cash back credit cards give you cash rewards for making purchases with the card. The more the card is used, the more cash rewards you usually get. Most cash back rates are around 1% of your total purchases, excluding interest and finance charges. However, some cards offer a higher cashback percentage with increased usage while still others offer a higher cash back percentage at select merchants or for particular types of purchases. Since cash back programs are costly to the credit card companies, some cash back credit cards also have an annual fee, which can vary from $50 to $100. This type of card is particularly good for people who are faithful about paying off their balances each month. If used appropriately a cash back credit card can earn the cardholder a significant amount of money over time.
Reward Credit Cards
Reward credit cards are similar to cash back cards in that you can accumulate points towards a reward structure, which is based on how much you use the card over a period of time. Credit cards offer different reward programs and promotional offers often change, so be sure to thoroughly look over the card’s terms and conditions of each specific card before applying.
Typical rewards include:
Gasoline rebates
Entertainment rewards
Store discounts for specialty store cards
Reward programs are costly to the credit card companies; therefore, many reward credit cards also require an annual fee, which could vary from $50 to $100. This card is particularly good for people who are faithful about paying off their balances each month. By minimizing their finance charges, such individuals will reap greater benefits from the associated rewards credit card.
Credit Cards for Bad Credit
Bad Credit and/or Credit Repair Credit can easily go from good to bad with poor judgment, mismanagement of credit cards or simply a change in job or financial situation. This does not mean you cannot get a credit card. There are several options available for people who have had bad credit in the past and for those who are currently trying to repair their credit.Depending on your specific situation, debt consolidation, use of introductory APRs on balance transfers or other options may be the best choice. However, if you still need credit or want to start repairing your credit by proof of action, there are several credit cards designed to help "rebuild" poor credit histories.
Secured credit cards require collateral for approval. With secured credit cards, a security deposit of a predetermined amount is needed in order to secure the credit card. Generally, the security deposit needs to be of equal or greater value to the credit amount. Collateral can come in the form of a car, a boat, jewelry, stocks or anything else of monetary value. Secured credit cards are for people with either no credit or poor credit who are trying to build or rebuild their credit history.Often, cards that help to rebuild credit come with low credit lines ($250 or so) and additional fees may apply (application fees, etc.). Be sure to read over any terms and conditions for these add-on services before applying. Be certain of any fees you may incur before proceeding with the application process. If you use the card responsibly and pay all of your bills on time, however, you can ask for a credit increase down the road. The extra fees and low credit lines will be worth it if a secured credit card helps you get your overall credit back on track.
Prepaid cards are, in fact, not credit cards at all BUT rather are used just like credit cards, wherever credit cards are accepted. The advantages of prepaid cards is that there are no finance charges and they help you avoid debt, in that all purchases are paid for beforehand. With prepaid cards you determine the credit line. Generally speaking, a cardholder's credit line depends on how much money he/she transfers to the card. Therefore, there is little risk of running up credit card debt, while budgeting is made easier.Although most prepaid cards do not charge finance fees, other fees may apply, including: monthly fees, startup or application fees, overlimit fees, ATM fees and more. Be sure to thoroughly look over the terms and conditions for each specific card before applying.
Specialty Credit Cards
Specialty credit cards are for individuals with unique and special needs for their credit use. Examples of these types of cardholders include business users and students. These credit card programs are designed specifically to meet the needs of these particular groups.
Business credit cards are available for business owners and executives and have many of the same features as traditional credit cards: low introductory rates, cashback rewards, airline rewards, etc. However, business credit cards can also have many additional benefits in comparison to traditional credit cards.
Some of these bonuses include:
Business expenses kept separate from personal expenses
Special business rewards and/or savings
Expense management reports
Additional cards for employees
Higher credit limits
Every credit card is a bit different and promotional offers often change, so be sure to thoroughly look over the terms and conditions for each specific card before applying.
Students generally have little or no credit history. Because of this quandary, students may often find it difficult to get approved for a traditional credit card. Luckily, student credit cards do exist. This type of credit card is set up to help students build up the credit history that most of them don't already have.Student credit cards are often scaled back in terms of rewards, features and other benefits, but they can still be a valuable commodity. If used wisely, a student can take the first step towards building a solid credit history with a student credit card
Make Money With Cash Back Credit Cards
Cash back credit cards are a great way to get some of your money back that you spend using your credit cards.With plenty of credit cards issuers offering this to the credit card customers now, to entice hem into spending more, there is one thing that I would say though, is only take out a cash back credit card if you can pay your credit card bill off in full at the end of each month, if not then you could be holding a credit card that is charging you a higher rate of interest, costing you more for your borrowing than it should and could be.Cash back credit cards are more suited for those who keep a clear balance each month and so need not have to worry about the level of APR that the credit card is charging as you will be keeping your balance clear, so looking for the best cash back deal possible, couldn’t be any easier.Most credit card companies will offer you a cash back percentage of 0.5% or 1%, but if you search hard enough you may find one that is willing to give you a cash back offer of 2%, though this may be for an introductory period only and will revert back to a standard 0.5% or 1%.If you do spend heavily on your credit card through the month and meet your payment in full each month and on time (this is also vital), then lets for talking sake that you spend £1,500 each and every month, so by using your cash back credit card, which is giving you 1% back on your spending, will see that you are £15 better off each month and will give you £180 a year back on your spending, just for simply using a credit card that you will use anyway.What you will have to resist, is the temptation of knowing that if you use your credit card for an item that costs more than you can afford to pay back at the end of the month, to gain the cash back will only cost you more in interest charges, than you would make from your cash back facility, as the standard APR on a credit card roughly 16.9%, with your cash back card being maybe higher than that, then for the 1% you make in cash back, you will lose almost 1.5% or more in interest charges, defeating the purpose on why you have the card in the first place.
Rebuiling Your Bad Credit With Secured Credit Cards
Secured credit cards can rebuild your bad credit only if you show a historical improvement to your payment history. A secured credit card is one that is prepaid; as long as you maintain a positive balance then a positive history is created.Can a credit card improve bad credit? Can something inherently bad become something good? However, the consensus of most honest financial advisors is that debt is a disease. An ongoing radio commercial announced that credit card debt is the third largest debt growth area amongst Americans. It states that the average credit card debt is $10,000. Apparently Americans have a serious disease and it is not getting better. Some advertisements promise debt consolidation, whereby a large amount of credit card debt from many credit cards are rolled into one credit card debt. The only improvement is that there is one address to send monthly payments.There is nothing really good about debt. Americans have been convinced by retail salesmen and the banks that to have good credit one must have a solid credit history through credit cards or credit accounts. A solid history means more than the fact that you have consistently made payments on time without failure. The credit card companies and the banks evaluate your spending tends, the debt load over time, your savings history, checking deposit history and actual check spending history. This personal information is felt by these institutions to be proprietary, belonging to the institution because of their unique methods of collection, rather than belonging to the individual who creates this activity. Debt is bad because it gives total strangers control over your life. It teaches you that spending all of your cash assets is fine, there is no limit or bounds to spending, it is acceptable to owe vastly more money than you make or will ever make.A credit card, if it is the only credit card you possess, could start improving a portion of bad debt only if you liquidate your current debt in a steady, reliable manner. This will only show a history of reliable payment. As I have already stated banks and credit card companies are not interested only in your reliability, they want the "juice" off of the advanced credit you have obtained. This means they only want you if they can get their interest in a regular and steady mannerThis is not the same as pay your debt regularly until it vanishes. They want you to remain indebted permanently but repaying them in a timely manner. If you are debt free you may not be judged to be a good credit risk. This is the state that underage children and young adults find themselves whenever they attempt to secure a credit card. Simply stated, good credit doesn't mean what it did just fourteen years ago. The protections afforded the consumer since the Depression of 1929 no longer exist.The Financial Laws passed through Congress in 1992 allowed banks, insurance companies (especially health insurance companies) investment firms to handle banking, insurance and investment operations. Laws passed after 1929 had prevented banks from insurance and direct stock exchange trading, likewise insurance companies could not pursue banking operations or stock exchange nor could stock exchange companies pursue insurance or banking operations. This freedom was granted without the subsequent protections of the consumer included in these new laws. There currently exists no single body of consumer law. The private citizen must fight the triumvirate of bank,insurance and stock exchange through the court system for his own right to privacy. Remember a credit card is not the way to improve bad credit; it is a quick way to obtain bad credit!
"Bad Credit" Credit Cards: How You Can Avoid High Fees
Individuals with problematic credit histories often suffer unfairly from high mortgage, insurance, and car loan rates. On top of that, they have difficulty getting approved for credit cards. The whole situation can get extremely frustrating. Frequently, I get emails from consumers wondering what they can do to rebuild their credit. The first thing I tell them is to get a credit card designed for people with bad credit. The second thing I tell them is written in bold: READ THE FINE PRINT.There are only a limited number of credit cards for individuals with bad credit. At first glance, many look the same. They all help build and rebuild your credit by reporting to the major credit bureaus on a monthly basis. They all provide you with the Visa or Mastercard you need to make many purchases. And they are all necessary evils that can save you thousands of dollars in mortgage and car loan rates in the future. However, you must read the fine print before applying for one of these credit cards, as they often charge high yearly fees, set-up fees, and even monthly fees. Here, I will examine a few examples of charges current “bad credit” credit cards bury in the fine print. Of the three major cards I will examine, only one stands out as consumer-friendly.Bad Credit” Credit Card #1: This credit card charges a very low interest rate for an unsecured credit card. However, your first fine print glimpse reveals that there is a one time setup fee of $29. Not too bad. So far, since the next charge is a one time fee of $95. So far, we’re up to $124 in expenses. That’s got to be it, right? No. Add in another $48 for the annual fee and $6 per month in account maintenance fees. That’s brings the cost of your new credit card to $244 the first year, and $120 each additional year. This is no small change, and a card such as this should be considered only if you cannot be accepted for a better unsecured credit card for bad credit.“Bad Credit” Credit Card #2: This credit card charges a very high interest rate for an unsecured credit card. This can’t be good. But the setup fee is only $29. Maybe this card isn’t so bad. There is that pesky monthly maintenance fee of $6.50 per month which brings the cost of this unsecured credit card to $107. Maybe we’ve found a bargain. Not quite. The annual fee is a whopping $150. Yes, $150 every year. That not only brings the initial cost up to $257, but you will also pay $228 a year just to maintain the credit card. There has to be a better offer.“Bad Credit” Credit Card #3: This credit card is available as both a secured and unsecured credit card, based on the issuer’s review of your credit history. The interest rate is average, even competitive. Now, the fine print reveals that there is a one time setup fee. However, based on your credit, this fee can be as low as $0 or as high as $49. So far so good, especially if your credit is not that bad. But, there must be a huge annual fee. Not exactly. The annual fee for a secured credit card is only $35, and for an unsecured credit card, this fee can be as low as $39 or up to $79. So far, the cost of this card ranges from $35 to $128. Now its time for the monthly maintance fee. This one has to be huge. Or not. Its $0. That means the most you could possible be charged to obtain this credit card is $128, about half of what competing cards are charging.Clearly, there are substantial difference between “bad credit” credit cards. Of the three offers we have examined, only one doesn’t take you to the cleaners. In fact, “bad credit” credit card #3 provides great value. All positive changes to your credit history and credit score will translate into lower loan rates, lower credit card interest rates, lower insurance rates, and ultimately, thousands of dollars in savings. The path to rebuilding credit has its costs, but in the long term, rebuilding your credit with a “bad credit” credit card is the fastest and most cost-efficient way to correct the often unfortunate circumstances that have damaged your credit in the first place.
Virtual Credit Cards
Cardholders can sign up for the free program at their credit card company's website. When they want to make an online purchase, they receive a 16-digit number, randomly generated by the credit card company. This temporary credit card number can be used once or sometimes repeatedly at the same online store. virtual prepaid credit card numbers were initially designed for Internet shopping, but can be also used for purchases made over the phone as well as through the mail. However, they cannot be used for in-store purchases or whenever a traditional plastic credit card is required for payment. The virtual credit card technology has been around for six years, but according to consumer advocates the technology has not been very popular with consumers. Interest in virtual credit cards seems to be increasing, though, thanks to recent headlines regarding identity theft breaches. A major benefit of virtual card programs is that personal information is concealed during the transaction. A recent study found that 46% of credit card fraud victims had no idea how fraud occurred, but 21% said they believed their credit card number was stolen off the Internet. Obviously, card issuers hope that virtual card programs will help address such concerns. The virtual card program is simply an extra layer of security to protect the credit and identity of consumers who choose to buy online, much like installing a home security system helps to protect a home from intruders
Student Credit Cards
Various people have different needs. So the credit card suppliers too have designed different type of cards. Besides the normal credit cards, there are small business cards for small business and then there are student credit cards which are designed especially for students.Now, what is different about the student credit cards?You could say not much, since all credit cards work in pretty much the same way and are used for more or less same purposes. However there are 2 main differences with the student credit cards and these differences are on the 2 main aspects i.e. Credit limit and APR.You could say not much, since all credit cards work in pretty much the same way and are used for more or less same purposes. However there are 2 main differences with the student credit cards and these differences are on the 2 main aspects i.e. Credit limit and APR.The credit limit for student credit cards is generally very low. This typically ranges from $500 to $1000 per month. Some people might argue the reason for such discrimination. Well, the reason is very clear and obvious. Most of the students applying for these credit cards have never used a credit card in their life so neither do they have a credit rating and nor the knowledge about credit cards. While the former is what the credit card suppliers look for before supplying the credit card, the latter is what the credit card holder would like to acquire. Both the purposes are met by keeping a lower credit limit. The credit card supplier reduces the risk that they are taking by issuing a credit card to someone who has never used one and has no credit rating. It’s good for the credit card holder too since this reduces their risk of damage which can be caused by limited or no knowledge of credit cards and by bad spending habits. Moreover, this credit limit would be sufficient for the needs of a student in general.The APR on the student credit cards is generally higher than that on the normal credit cards. Again the reason for this is same as that for lower credit limit i.e. the credit card company or the credit card supplier is after all into business and has to take steps to mitigate any possible risks including the risk arising from issuing a credit card to someone who is naïve in terms of credit card knowledge.The credit card companies might also keep some stricter terms and conditions on the student credit cards and generally require a parent or a guardian’s signature as a guarantor.Since credit cards are more of a necessity than a convenience in today’s world, the student credit cards are much recommended, especially as a learning tool in getting the students prepared for the life. Due to their inherent characteristics of low credit limit etc, student credit cards cannot lead students into a totally irreversible debt situation. Students should read all the instructions supplied with their student credit card. This first credit card will teach them how to protect themselves from credit card fraud, where all to use their credit card, how to control their spending, what the various membership benefits are etc. The earlier they learn these things the better it is.Moreover, the student credit card will also help you in developing a good credit rating. You shouldn’t take the student credit cards lightly. If you overspend on your student credit card or default on your credit card bill payments, you will not only end up paying interest on your credit card balance but also spoil your credit rating. Remember that a bad credit rating will not only hamper your chances of getting another credit card later in your life but will also lead to problems in approval of your mortgage/car-loan applications etc.So student credit cards are a surely a good way for students to start with credit cards.
Prepaid Credit Cards
If you have a history of bad credit and are unable to obtain a mainstream credit card, then prepaid credit cards may be just the answer you are looking for.First of all, although prepaid credit cards are accepted at any retail outlet where the credit card logo is displayed, strictly speaking they are not a ‘credit’ card, as the issuer provides no credit facility to you. Rather, your spending limit is determined by how much money you have on the credit card at any given time.Once the amount on the card has been spent, the cardholder can either buy a new prepaid credit card or elect to transfer money on to the existing card, depending on the card program.Although prepaid credit cards sound very like debit credit cards, the two should not be confused. In the case of debit cards, any purchase for goods or services you make will automatically be charged to you bank account – for which the debit credit card has been issued. However, purchases for goods or services made on prepaid cards goes off the balance already on the card.Because of the prepaid nature of these cards, they have several benefits, such as:no interest is charged they give people with a bad credit history the option to use a credit card the ‘credit’ line is variable depending on the amount on the balance of the card
That said, you still need to review the terms and conditions of the application form carefully as prepaid credit cards can havea monthly membership fee.
an application fee
a purchase fee
a monthly transaction limit fee,
i.e. if you spend over a fixed amount each month you are charged a fee for any additional transactions a fee if you use the card to make ATM withdrawalsNonetheless, the card is a superb option if you either cannot obtain a regular credit card or are tired of all the fees and interest charges that are normally associated with standard credit card.
That said, you still need to review the terms and conditions of the application form carefully as prepaid credit cards can havea monthly membership fee.
an application fee
a purchase fee
a monthly transaction limit fee,
i.e. if you spend over a fixed amount each month you are charged a fee for any additional transactions a fee if you use the card to make ATM withdrawalsNonetheless, the card is a superb option if you either cannot obtain a regular credit card or are tired of all the fees and interest charges that are normally associated with standard credit card.
Secured Credit Cards
Who should consider a secured credit card?Someone who has no credit history.Someone with a damaged credit history.What is a secured credit card?Secured cards are credit cards opened with a deposit into a savings account, money market or certificate of deposit. The amount of deposit required varies from card to card, but generally minimum amounts range from $250 - $500. These funds are considered your security and will even earn a little interest since they are being held in a savings account. Your credit limit is determined by the amount you deposit into the savings account. Sometimes the limit will be for the full amount of the deposit; other times it will be a percentage of the total.It is important to keep in mind that a secured card is a credit card, not a debit card. If full payments are not made each month, then interest is charged on the outstanding balance. And the lending institution uses the security money to pay off the debt only as a last resort. Even though the card is secured, it is still possible to damage credit.What are the benefits of a secured credit card?Establishing credit. If you have never had a credit card, a good first step in establishing good credit is applying for a secured credit card. Assistant Professor of Economics at Austin Peay State University in Clarksville, TN, Jerry Plummer says, “A secured card is most useful for the person starting out on their credit history, since it says that the person is willing to take the extra step to establish credit.”Reestablishing credit. If your credit history is damaged, you may only be able to qualify for a secured credit card. Using this secured card appropriately and within the set parameters will help rebuild your credit and qualify you for an unsecured card. If you have had to file for bankruptcy, however, you may not qualify until it has been discharged.Preset limit cannot be exceeded. If poor spending habits were part of the cause for bad credit, then a secured credit card will help keep spending in check.Useful for transactions that require a credit card. Hotels and car rentals require the use of a credit card. If you don’t qualify for an unsecured card but you do for a secured card, then you are still able to make the transaction.What should I look for or avoid when shopping for a secured credit card?Fees. This is the area you will really want to research when shopping for a secured credit card. Some cards will come with fees that run into the hundreds of dollars, eating away much of the credit you secured with the savings account. Professor Plummer says a card with no fee is the best, but a small one-time fee can be okay. Annual fees for attractive secured cards typically range from $20-$35. Be sure to watch out for hidden fees such as “registration charges” and “setup fees.”Interest Rate. Just because you have no or poor credit doesn’t mean you have to settle for the highest interest rate. Interest rates for attractive secured cards should not exceed 19%. Shop around and get the most competitive rate available.
Sunday, March 2, 2008
Small Business Credit Cards
A lot of people associate credit cards with just personal credit card which an individual posses and uses for shopping etc. However, there is another category of credit cards and that is called small business credit cards. As suggested by the name itself, the small business credit cards are meant for small businesses or people running small businesses.So how does the small business credit card differ from the other credit cards in general?The very obvious difference is that small business credit cards have the credit account in the name of the small business and not any individual, though the benefits indirectly accrue to the business owner. The other difference is with the terms and conditions that come with the small business credit cards. Finally, there are some subtle benefits with small business credit cards which would not be applicable to personal credit cards. Let’s check all these things one by one.We know that the credit cards provide a lot of convenience and security for an individual and a lot of other benefits too. Most of the benefits related to personal credit cards apply here too. What is interesting here is the indirect benefits that ensue from using a small business credit card.The indirect benefits associated with small business credit cards are so great that it makes them almost indispensable. The most important benefit is that you can easily segregate your business and personal expenses. So if you have been wasting a lot of time keeping track of your business bills and trying to keep them separate from personal bills, small business credit cards could help. You just need to ensure that you always make all your business payments using your small business credit card. When the credit card bill comes at the month end, you will have itemized account of all the business expenses as a single document. Thus small business cards reduce (and in some cases completely remove) the need for bookkeeping for a small business. The credit card company does that for you for free, although indirectly.Another important benefit comes from rolling credit. If you have to pay for your purchases upfront and still invoice your clients later (a situation faced very often with small businesses), you can roll the credit, you are providing your client with, to your credit card. Moreover, since these purchases are mostly urgent, arranging for money immediately can sometimes be a problem. In such cases, the small business credit card is the one which can bail you out. Well, if you are thinking that your personal credit card could do the same for you, you are a bit off the track on two fronts. Firstly, you want to keep your business expenses separate from your personal expenses and secondly, the APR on business cards is generally lower as compared to personal credit cards. A lot of the small business credit cards don’t require you to pay an annual fee even.So if you run a small business but haven’t got a small business credit card yet, it’s about time that you considered this wonderful option.
Airline Credit Cards
If you've been using credit cards for a while now and have a good reputation for paying your bills on time, it's time to consider applying for a high-tier credit card with rewards and incentives, like frequent flyer miles! And luckily you have dozens of options for custom cards designed primarily for travelers. A variety of airline credit cards are available. Depending on the frequency that you travel and your uses for credit, you're sure to find a plan that's just right for you. Simply investigate your options and explore the details of the various offers out there! Here's an overview of the offers you might find appealing. After you've chosen one that you like and reviewed the terms and conditions, you can even apply online for credit card deals and sometimes receive instant online approval to boot.The Value Miles Platinum Visa Credit Card earns you one Value Mile for each dollar you charge on the card. Once you've accumulated 24,000 value miles, you've earned an airline ticket to any location in the continental United States. You may also receive other benefits, like travel insurance and emergency cash. The Citi Bank PremierPass Card boasts 0% APR for 12 whole months, and you can earn points for purchases and flying. You will also receive free online services. The Miles Card from Discover doesn't have an annual fee, guarantees you 5,000 bonus miles after you make your first purchase, and then gives you one mile for every dollar you spend from thereon. There are also more plans under this card that offer different rewards and features! The Continental Airlines World Mastercard awards 15,000 bonus miles after your first purchase and like with the other cards, it gives you a mile for every dollar purchase.Blue Sky from American Express allows you to redeem points for airline, hotel, rental car, and cruise purchases. Every dollar you spend earns you a point. There is no annual fee and you will even benefit from introductory 0% APR. Other benefits of Blue Sky are travel accident insurance and return protection. These cards are just some of the more moderate plans you can apply for. United Mileage Plus Platinum Visa Card offers as much as 17,500 bonus miles, two miles for every dollar spent, free travel certificates and all the benefits of a Platinum Business Card. If you're looking for a way to save money on airline travel, then look no further than these credit cards! Why not apply? Credit card offers like this are enormously beneficial. Certainly each card will get you different mileage, so you'll simply have to consider how high an interest rate you are willing to pay and how much traveling you plan to do.
Disney Credit Cards
You can turn your daily purchases into a fabulous Disney vacation. Bank One offers a new Visa Disney credit card that provides you and your family with great Disney rewards in exchange for making your everyday purchases using your travel credit card. You could turn your credit card debt into a fun-filled vacation or even valuable Disney merchandise. What could be better? Simply use your card at all the places you normally shop, including grocery stores, drug stores, and gas stations, and you can earn points that are redeemable for Disney vacations or theme parks. This is a travel credit card for the entire familyHow does it work?When you buy products or services with your Disney credit card online or in person you automatically earn points, or Disney rewards that accumulate with each purchase. As you earn more and more points, you hit certain point goals that allow you to shop the Disney Store, Disneyland Resort, Walt Disney World Resort, Disney Cruise Line, the Disney catalog, or DisneyStore.com for merchandise like DVDs, Disney toys, or other fun Disney items like clothes and collectibles. But as a travel credit card, the Disney card also allows you to trade in your reward points for vacation packages to your favorite Disney theme park, including parking permits, admittance to the park, and discounts on Disney hotels and resorts.
Benefits
* The Disney credit card is a great way to put your credit card debt to work for you. As a travel credit card, the Disney offer makes your credit card balance an asset toward your future planning. In essence you receive a discount on everything you buy. But the discount does not come out of the purchase price of the products or services. Rather, it accumulates in a special reserve, your reward account, for your dream Disney vacation.
* When you wish to redeem your Disney reward dollars for a vacation, you can do so at any time. There are no blackout dates for vacation packages earned.
* A Platinum card comes with an array of specific benefits, all of which are included in the Disney Visa Platinum Card.
* There is no annual fee for the use of your Disney credit card. You can accumulate points, receive great deals on Disney merchandise, and plan for some fun-filled time with your family, all at no extra cost to you.
* The Disney Visa offers a very reasonable interest rate that will vary according to your credit rating.
* One of the best perks of the card is the trial period that Bank One offers where you are charged no interest for six months on several travel packages. This is very advantageous for people with credit card debt already accumulated on their card. They can purchase travel packages without having to add to their balance with interest charges. Instead, they can pay out the cost of the trip interest free.
* When you qualify for a Disney Visa card you will receive opportunities to save on Disney merchandise and travel packages, discounts only available to card members.
Benefits
* The Disney credit card is a great way to put your credit card debt to work for you. As a travel credit card, the Disney offer makes your credit card balance an asset toward your future planning. In essence you receive a discount on everything you buy. But the discount does not come out of the purchase price of the products or services. Rather, it accumulates in a special reserve, your reward account, for your dream Disney vacation.
* When you wish to redeem your Disney reward dollars for a vacation, you can do so at any time. There are no blackout dates for vacation packages earned.
* A Platinum card comes with an array of specific benefits, all of which are included in the Disney Visa Platinum Card.
* There is no annual fee for the use of your Disney credit card. You can accumulate points, receive great deals on Disney merchandise, and plan for some fun-filled time with your family, all at no extra cost to you.
* The Disney Visa offers a very reasonable interest rate that will vary according to your credit rating.
* One of the best perks of the card is the trial period that Bank One offers where you are charged no interest for six months on several travel packages. This is very advantageous for people with credit card debt already accumulated on their card. They can purchase travel packages without having to add to their balance with interest charges. Instead, they can pay out the cost of the trip interest free.
* When you qualify for a Disney Visa card you will receive opportunities to save on Disney merchandise and travel packages, discounts only available to card members.
Gas Credit Cards
A gas credit card, also called a gas rebate card, is a type of credit card that offers rebates on gas purchases. Available from both major credit-card companies and specific fuel companies, gas credit cards offer account holders the chance to save money each time they fill up at the gas pump. Though gas credit card holders typically save only small amounts with each gas purchase, the money saved can amount to significant savings over the course of a year.
You can find gas credit cards for just about any major - and some minor - gas companies. These gas credit cards are easily found online. One site we perused, for example, told us about several different gas credit card offers. It told us how to find gas credit cards for Marathon, Hess, Phillips 66, Citgo and Conoco. A few of the gas credit cards featured allow you to purchase any brand of gas you wish from any station.One of the gas credit cards they talked about, a Chase PerfectCard, offers a rebate of six percent for the first 90 days you use it. This rebate is good on any purchase of gas you make at any gas station.
Once the initial ninety days is up you still will realize a one percent rebate on purchases at restaurants, dry cleaners, grocery stores and clothing retailers as well as gas stations.Not only that, your gas credit card rebates will get credited toward any purchase you make in the future with this card.After the introductory period, you'll earn a 3% rebate at ANY gas station on all gas purchases. Not only do you have a quick, easy payoff with this gas credit card but your APR is also fixed at zero percent on any balance you transfer to the card for up to nine months. You can earn a rate under 14 percent depending on your credit, and the first year you will be charged no annual fee.
Once your first year is up, all you will have to do to have your annual fee waived is to make nine purchases total with the gas credit card for the year.Marathon gas credit cards offer a big ten percent rebate on Marathon Midwest and Southeast gas stations the first sixty days you use your card. After that you'll realize a five percent rebate continuously.This gas credit card also gives you a one percent rebate off any other purchases that you can put towards Marathon gas purchases.
This MasterCard gas credit card charges no annual fee your first year and, if you make nine purchases with this gas credit card for the year, you won't have to pay the $20 annual fee the subsequent year either. For the first nine months you own the card there is no fee and zero percent APR on any balance transfers.The rate on this gas credit card can be as low as 13.99 percent depending on your credit.Hess gas credit cards offer you rebates for free gas and merchandise at every Hess, Hess Express and Wilco Hess location. The first ninety days you will earn a ten percent rebate. Subsequently, every Hess purchase with your gas credit card will net you a five percent rebate, while any purchase elsewhere will give you one percent back.With Hess platinum gas credit cards your introductory APR is zero balance and can last up to six months. With this gas credit card there is no annual fee ever.
You can find gas credit cards for just about any major - and some minor - gas companies. These gas credit cards are easily found online. One site we perused, for example, told us about several different gas credit card offers. It told us how to find gas credit cards for Marathon, Hess, Phillips 66, Citgo and Conoco. A few of the gas credit cards featured allow you to purchase any brand of gas you wish from any station.One of the gas credit cards they talked about, a Chase PerfectCard, offers a rebate of six percent for the first 90 days you use it. This rebate is good on any purchase of gas you make at any gas station.
Once the initial ninety days is up you still will realize a one percent rebate on purchases at restaurants, dry cleaners, grocery stores and clothing retailers as well as gas stations.Not only that, your gas credit card rebates will get credited toward any purchase you make in the future with this card.After the introductory period, you'll earn a 3% rebate at ANY gas station on all gas purchases. Not only do you have a quick, easy payoff with this gas credit card but your APR is also fixed at zero percent on any balance you transfer to the card for up to nine months. You can earn a rate under 14 percent depending on your credit, and the first year you will be charged no annual fee.
Once your first year is up, all you will have to do to have your annual fee waived is to make nine purchases total with the gas credit card for the year.Marathon gas credit cards offer a big ten percent rebate on Marathon Midwest and Southeast gas stations the first sixty days you use your card. After that you'll realize a five percent rebate continuously.This gas credit card also gives you a one percent rebate off any other purchases that you can put towards Marathon gas purchases.
This MasterCard gas credit card charges no annual fee your first year and, if you make nine purchases with this gas credit card for the year, you won't have to pay the $20 annual fee the subsequent year either. For the first nine months you own the card there is no fee and zero percent APR on any balance transfers.The rate on this gas credit card can be as low as 13.99 percent depending on your credit.Hess gas credit cards offer you rebates for free gas and merchandise at every Hess, Hess Express and Wilco Hess location. The first ninety days you will earn a ten percent rebate. Subsequently, every Hess purchase with your gas credit card will net you a five percent rebate, while any purchase elsewhere will give you one percent back.With Hess platinum gas credit cards your introductory APR is zero balance and can last up to six months. With this gas credit card there is no annual fee ever.
Advantages of Credit Cards
There are many evils associated with credit cards, but there are benefits that are hard to ignore. One benefit is having the credit card company act in your behalf to recover funds from a disputed transaction. Under the Fair Credit Billing Act the credit card company has to investigate the dispute and either take the charge off your bill or explain why it is correct. Even better, you don't have to pay the portion of the credit-card bill or related interest charges while the dispute is being investigated.The types of blling disputes/errors covered by the Fair Credit Billing Act are:Charges that list the wrong date or amount.Charges for goods and services you didn't accept or weren't delivered as agreed.Math errors.Failure to post payments and other credits, such as returns.Unauthorized charges.
Before you dispute any of issues you must first contact the retailer and try to settle the dispute. If they ignore you, or the dispute is not settled then contact the credit card company. Usually you need to have your dispute in writing to the credit card company. The address for billing disputes is different then the address to send payments. The billing dispute address can be found on the back of your monthly statement. If it cannot be found, call the credit card company's customer service for the billing dispute address. You usually only have a certain number of days to dispute the billing error so make sure you mail in your dispute before the deadline.
Before you dispute any of issues you must first contact the retailer and try to settle the dispute. If they ignore you, or the dispute is not settled then contact the credit card company. Usually you need to have your dispute in writing to the credit card company. The address for billing disputes is different then the address to send payments. The billing dispute address can be found on the back of your monthly statement. If it cannot be found, call the credit card company's customer service for the billing dispute address. You usually only have a certain number of days to dispute the billing error so make sure you mail in your dispute before the deadline.
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