Credit

How to manage multiple credit cards like a pro

carol — Fri, 31 Aug 2018 07:20:40 +0000

How to manage multiple credit cards like a pro carol Fri, 08/31/2018 - 07:20

If you own multiple credit cards and use them periodically, you are one of the 33% of US citizens who use multiple credit cards.

A credit card is a powerful tool which people should use carefully and responsibly. But unfortunately, most card users usually don’t know how to manage multiple credit cards.

As a result, they fall into debt and eventually file for bankruptcy. If you want to avoid this situation while having more than one credit card, you might need to follow some serious financial steps.

Why do people use multiple credit cards?

There are numerous reasons when someone chooses to use multiple credit cards. Usually, the main reason is to get a particular product or service, with different credit cards designed to suit specific needs. If you have multiple credit cards with different banks, then you must know which cards you should use to get the most out of each of them. Getting the highest benefits may depend on the different situations when you use a specific credit card for payment.

Specific reasons for using multiple credit cards are:

a) Earning rewards points from reward programs

b) Getting the bonus point offers

c) Earning different complimentary bonuses with premium credit cards

d) Getting 0% transaction fees on international purchases.

e) Using balance transfer with a 0% transfer rate

f) Getting the advantage of a 0% purchase rate offer

g) Paying 0% fees on the foreign transactions while traveling

h) Comparing benefits between the top credit card providers like American Express, Visa, MasterCard, Chase, Discover, Capital One, etc.

Now, let’s focus on our main discussion and find effective ways to manage multiple credit cards.

Check out the important steps you may follow to manage multiple credit cards.

1. Avoid credit cards with annual fees

If you want to use multiple credit cards, then you should avoid cards that charge annual fees. There are many cards which do not charge an annual fee. Cards with annual fees may offer you big reward programs, but do not get excited about it. It might happen that you need to pay more than what you actually get as rewards.

2. Estimate the spending limit on each card

Credit cards can be beneficial when you are out of cash and need to make urgent payments. But, they are also able to increase your debts if you don’t use them responsibly.

You should develop a budget and estimate how much money you can use from a credit card without carrying a balance. Once you start carrying a balance on your cards, you have no other option than paying interest on it.

Before using all your credit cards together, make sure you've full control over your spending habits.

Credit card companies may offer you high credit limits due to your high credit score and lure you to spend more. But if you use your credit cards beyond your affordability, your credit report will soon show you a picture of your drowning credit score.

You should use your credit cards as much as you have in your bank account. However, it doesn’t mean you have to sacrifice all the benefits added with multiple credit cards. You can easily use the 0% APR card for making a necessary big amount purchase. But try to keep yourself in control and don't spend more than you can afford to pay in a month.

3. Determine when to use each specific card

You must determine which credit card you will use and for what purpose. Choosing the perfect card can get you the greatest benefit from each account.

Suppose you have one low rate credit card. The best way to use that card is to make payment for a big purchase. As the rate of interest is low, you can afford to pay off the balance after few months. On the other hand, you may use a business credit card with high benefits to make payments for frequent professional expenses. A no annual fee credit card is best for not so frequent personal usage.

Now the problem is how to remember so much about your multiple credit cards. Very simple. Keep a monthly record in a spreadsheet about your cards’ fees, terms and conditions, expiry dates, credit limits, available balances, etc.

You can prepare a monthly credit card usage plan by considering these details. You know the interest rate for each of your card. So, now you can select a card which will be less costly to carry a balance. You can also list up and use your reward programs benefits as per their expiry dates.

4. Remember your important dates

There are a few important dates that every credit card user should remember.

You might have started tracking your credit card details for each card. Try to note down these important dates along with other details. This will help you to solve issues with managing multiple credit cards. Practically, there are 3 main dates you must remember for every credit card:

a. Monthly statement closing date

Your credit card usage in an entire monthly statement will reflect in your bill. Remember the statement opening and closing dates. Try to make most of the purchases within the first 15 days of this period. This way, you’ll have enough time to pay your bills.

b. Your payment due date

This is the most important date in every month for credit card users. Try to pay off your credit card balances every month before this date. If you miss it, the late fee and interest may be charged against your account.

To avoid any hassle, you can initiate autopay services by calling your bank. Every month, on a fixed date, the credit card bills will be paid automatically from your bank account.

c. The first month of the cardmember year

You must remember the first month of your cardmember year. That is the date when credit card companies charge the annual fee on your premium cards. This date is also significant as some annual benefits may expire.

It is the perfect time to reconsider your card's benefits. Before end of this month review each card and downgrade to a no annual fee card before the date.

5. Make on-time payments

Make sure you pay your balances on time every month. You know the importance of a due date, so keep in mind that anyhow you must make the payments before that date.

Initiating automatic payment system is one of the best methods for managing multiple credit cards at a time.

If you somehow miss any payment, call your card issuer immediately and ask for a fee waiver. If it is your first late payment or you are using a brand new credit card, the card issuer company might do the same happily. But remember, do not make this your habit.

6. Check your credit card costs regularly

Managing multiple credit cards at a time might get expensive if you have to pay annual fees, interests, and other costs for all of your cards. So, you should manage time and regularly review your accounts. It will help you to evaluate your card benefits along with the fees you are paying annually.

If you see that some of your credit cards are too much expensive and you are not getting enough benefits from them, consider canceling them asap.

7. Keep an eye on your credit score

Your FICO credit score depends on few important factors, they are :

Your payment history - 35%
Amount you owe - 30%
Length of your credit history - 15%
Your new credit lines - 10%
Types of credit line or credit mix - 10%

Do you have any idea that having multiple credit cards can affect your credit score?

The third item of the above-given factors i.e. the length of your credit history may get affected if you close any of your old credit cards with long credit history. If you want to close some of your expensive or unused cards, consider the newer ones if possible.

The fourth item of the above-given factors i.e. the number of new credit lines may also prevent you from applying for new cards. Shopping for too many new credit cards may cause you several hard inquiries, and apparently, your credit score may decline.

Conclusion

When someone asks you how to manage multiple credit cards, it might seems easy to answer. But practically, managing multiple cards at a time is a daunting task. If you follow the above-given tips and set up a budget plan, understand your cards’ terms and conditions, and sort out a payment method, it is sure you can easily get the most out of your multiple credit cards.

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Credit

Why do store cards have more chances of defaults?

carol — Fri, 03 Aug 2018 05:24:56 +0000

Why do store cards have more chances of defaults? carol Fri, 08/03/2018 - 05:24

Do you know when was credit card first introduced into the world of commerce and business? And, on what ethical terms were those cards introduced?

Once you get the answers and understand the real meaning of credit, you are bound to realize the serious mistakes you have done in the name of credit!

The first credit card was in the form of small metal plates, introduced by big departmental stores for customers who were regular buyers at the stores, and those who can be trusted!

The store owners issued such cards for loyal, trustworthy, permanent, and honest customers! These customers could buy products from that specific store with the help of these cards, on credit!

But things changed as credit card industry progressed! People started to misuse them so much, that right now our nation is standing under huge pressure of debt!

Still, as per the recent statistics, store credit cards or retail credit cards carry the highest percentage of debt among all form of credit cards!

What makes store credit cards so vulnerable to debts than other ‘bank issued’ conventional credit cards?

Usually, store credit cards like Nordstrom cards, Amazon cards, etc, are meant to push sale the company’s products.

Consumers get attracted to these cards, and are thereby enticed to buy more goods at more discounts!

But unlike bank credit cards, the rules are a bit loose with these cards, and eventually, people take them very lightly.

Customers believe that the retailers won’t sue them like creditors and banks usually do to the credit card holders.

To some extent, this fact is true that retailers are lenient with store credit cards. But should you take advantage of it?

Before you know it, departmental stores and retailers will put down heavy laws and rules for debtors:

Initiations are going on to improve debt collection techniques to pull back amounts owed on retail credit cards.

All big retail stores are planning to merge their credit card business with banks, and factor in other security protocols.

So, you can be pretty sure that you will not be able to evade store credit card payments so easily, as you can do now!

I believe, it’s soon going to be a big time myth that only traditional credit card holders can be sued. As in the upcoming age, all credit cards will be unified. And all will bear the same circumstances, on balances not being repaid in time!

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Credit

What happens to credit score when you do a balance transfer?

carol — Fri, 06 Jul 2018 12:50:55 +0000

What happens to credit score when you do a balance transfer? carol Fri, 07/06/2018 - 12:50

The credit score is probably one of the biggest concerns for us, the consumers. No matter whatever credit activity we initiate, we always want to make sure that our credit score remains intact!

Undoubtedly, credit score is the single most driving factor in deciding whether or not we qualify for good loan terms! That’s the reason why clearing debt becomes important, as doing so will help you to achieve better credit score, and in return, a chance for you to get hold of better loan standards in the future!

Our central question for this post is a little different. Often times, people take up credit cards and are later not able to pay off the due balances.
Because of this, many go for a balance transfer method, where they try to bring all their existing credit cards’ balances into one single card!

Once, all the existing debts get accumulated in a single card, and the debtor now has only this card to deal with!

Pretty good to hear that! But just like every other magical thing in this universe, balance transfer also has its dark side! The side most of us generally overlook while in a hurry is to pay off our debts!

What is the dark side of balance transfer method and how does it affect your credit score?

In most of the cases that I have seen, especially from my experience with clients, people unknowingly hurt their credit score using balance transfer!

Usually, as soon as they transfer their balance to one card, they close the previous credit card accounts! Now, that’s what I really believe to be a grave mistake!

No matter how many credit card accounts with zero balance you have open, closing all of them instantaneously, will bring your credit history to a halt, and will negatively impact your credit score!

Sometimes you can even expect a drop of more than 200 points or so if you close multiple accounts at the same time!

Plus you already have that hard inquiry done by a bank for the new balance transfer credit card to add up to your score drop!

Summing up few negative factors that can hurt your credit score:

Once you take out your new balance transfer credit card, the bank does a hard inquiry, which practically speaking, does impact your credit score!
If your credit score is already poor due to existing debts, then this hard inquiry can be a real sabotage to your credit score!

If you close your previous credit card accounts randomly, then your credit history suddenly gets scrapped, and it will definitely hurt your overall credit portfolio! Once this diminished credit history starts to appear in your credit report, it will also start to get reflected by your poor credit score!
If you take out a card for balance transfer that does not have a good credit limit, then your credit utilization ratio will fall abruptly, which can bring tears to your eyes!
Nevertheless, one usually takes up a card with a high credit limit for balance transfer. But without proper estimation and calculation, paying off debts via balance transfer might turn out to be a menace!

But what’s the bright side of a balance transfer and its positive effect on credit score?

Obviously, if something has a dark side, it also has a bright side. The balance transfer is a sure shot success for people who are adamant and energetic in clearing their debts!

Handling only one credit card is much easier than 3 or 5 cards, no matter whatever the amount is!

So, if you can take out a card, for the balance transfer, that has a pretty high credit limit, has the capacity to shed all your existing balances, and on top of that offers a 0% APR introductory period, then you are in command, man!

A high credit limit means a good chance to lower down your utilization ratio. Once the ratio is lowered, your score will shoot up, as this ratio makes up nearly 30% of credit score!

Also, show your creditors that you have cleared the balances on the respective cards, by keeping the accounts open for a significant number of months! Keeping those cleared accounts open will boost your credit history, and you might actually end up seeing an overall increase in your credit score!

So, it’s completely up to you now, if you want to go for a balance transfer. But, whatever you do, don’t make blind aims, and be sensible in utilizing your credits, if you really want a good score!

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Credit card payment systems - Learn more to avoid transaction decline

carol — Fri, 22 Jun 2018 14:23:17 +0000

Credit card payment systems - Learn more to avoid transaction decline carol Fri, 06/22/2018 - 14:23

From the customers' point of view, a transaction process of a credit card looks simple. We swipe the card, put authorization PIN and the payment is done within a few seconds. But behind every swipe, there’s a lot of thing happening which we don’t know.

It is a very complex process. We can only see the initial and the last steps of a credit card transaction. But we usually don’t know what was going on within the last few moments. And that is the reason, sometimes our payment gets denied.

There are multiple steps and process working behind a successful credit card transaction.

You might think, if we can’t see the in-between process, then what’s the need to know it now?

Why are we discussing it even?

Actually, having a good knowledge of the credit card transaction process is very important for every customer. With the detail knowledge, you can find out the issue that causes your payment denial,

Apart from that, from a small business to a big organization, business owners also try to confront the cost of credit card payment processing.

So, to justify that cost, we should know what is going on in the process after every swipe.

First, we need to know about the parties involved in a credit card transaction

Before plunging into the process of a credit card transaction, first, let’s know how many parties or key players are involved:

a. Card owner – There might be two categories of card owners. First one is the person who pays the balance in full; the second one is who pays only a portion of the balance.

b. Business merchant – Merchant denotes the party who receives the money. Normally it is the vendor or store which provide services or sell something to us.

The merchant conveys the card information to the card issuers bank for payment authorization.

c. Merchant’s bank – This bank receives the payment authorization request from the merchant. This bank also channels that request to the credit card issuer bank. Merchant’s bank also sends the status message about the payment to its merchant.

d. Credit card issuer bank – Act as a financial institution and issue credit cards to its customers for making transactions.

As a key party of the credit card payment process, issuer bank receives the payment authorization request through the network and accepts/declines the card transaction.

e. Credit card network – The network operators who process worldwide credit card payments and also regulate interchange fees.

For example - Visa, MasterCard, Discover and American Express.

Now it’s time to understand the types of credit card payment systems.

We’ll primarily talk about 3 types of credit card payment systems which are quite popular in the industry. These payment systems process multiple types of transactions. Customers also prefer a variety of payment modes to ease up their shopping.

So, the payment systems are:

Standalone terminals
Virtual terminals
Cellphone processing solutions

Standalone Terminals

Terminals are the magnetic ports or readers where we swipe or slide the card while making the payments.

So, standalone terminals mean the devices we see at retail stores.

When a merchant swipes the card in the “terminal”, your card information is received and sent to the bank through a phone network connection or via a high-speed Ethernet network cable. If the payment is accepted, then the money is credited to the merchant's account.

Terminals are designed as a plug-and-play device, which can be easily plugged into a computer and they become ready as part of the system.

What can a standalone terminal do?

A standalone terminal can primarily process:

Credit card payments – You can make payments of your purchases by using a credit card.
Gift card payments – While buying something you can redeem the gift cards and make the payments.
Check verification – A customized terminal that can be used to verify checks.
Check conversion - Merchants may perform check conversion by using point-of-sale (POS) terminals. A specific routing number and account number is printed on paper checks by magnetic ink. Those checks can easily be read by check conversion machines.

Virtual terminals

Virtual terminals are used for making online credit and debit card payments and money transfer.

It is widely used by the people who buy some commodities online through monthly installments.

People can access a virtual terminal from anywhere and can make online money transactions via a PC or cell phone.

It can be used anywhere on the planet where there is an Internet connection.

Cellphone processing solutions

Merchants who provide mobile business services, such as, pizza delivery guys, goods delivery drivers, or an antique dealer, may use this terminal for accepting payment.

These terminals are designed to work using Wireless Application Protocol (WAP) technology.

Merchants use a WAP-enabled phone to receive your credit card information and send it to the processor.

The network connection is totally based on the satellite connection. So the merchants prefer using that terminal in areas like big cities, towns, where they can get that signal easily.

Now let’s go deep into the credit card transaction process.

Credit card transaction process:

There are multiple platforms which are being used to process credit card transactions. Whenever you swipe your card and get the money receipt, the total process takes just 2 to 4 seconds. But if you check, there are 3 important stages through which the credit card transaction takes place.

Authorization

In this stage, the merchant gets the approval for payment from the issuing bank. When the cardholder presents the card to the merchant, the merchant swipes the card using the point of sale (POS) terminal. The card details are sent to the concerned bank through the internet connection. The bank then forwards the details to the credit card network for clearing. The issuing bank receives the request for payment with these details:

◦ 16-digit credit card number

◦ The expiry date of the card

◦ Billing address

◦ 3-digit CVV number

◦ Payment amount

Authentication

The issuing bank receives the details and verifies the validity of the card, address, available funds, and CVV number. After the verification, the bank may accept or decline the payment with proper feedback. The response is sent back through the same medium.

Clearing & settlement

After the payment is done, the payment is posted both in the cardholder’s monthly credit card statement and the merchant’s bank statement. Merchant normally sends total approved authorizations in a batch to the acquiring bank. The bank transfers the batch to the credit card network for settlement.

Through the credit card network, each payment request goes to the concerned issuing bank, and within 24 to 48 hours, the merchant receives the payment excluding the “interchange fee” (2.35% plus $0.15 per swipe), markup charge over the interchange fee (between 20% to 25% of the total card processing cost), and “merchant discount rate” (between 2% to 3%).

The payment cycle is complete, and the merchant gets the payment.

Transaction details are listed in the merchant’s bank account and also to the card holder’s account. Now the ball is in the cardholder’s court. He/she will have a certain period (approx. 40 days) to pay the credit card bill.

A customer may dispute a charge on his/her credit card billing statement within 60 days of the date of statement generation.

It is treated as a complaint against the merchant, so the issuing bank will charge $10 to $50 as a penalty to the merchant. If the merchant fails to attend the “retrieval request”, additional fees may be charged to them.

We have talked about the parties involved in a transaction and discussed the system and process and explained the fees, now, let’s talk about the final matter!

When your credit card transaction gets declined and how to avoid it

There are two types of credit card declines.

1. Soft declines - When the issuing bank approved the fund but the transaction fails due to another reason.

2. Hard declines - When the issuing bank rejects the payment process totally.

There are few critical reasons due to which your credit card issuer may decline your transaction:

a. Your card has expired - People sometimes forget to remember their credit card expiration date. Once it is expired, you won’t be able to use it for transactions.

Solution - Track the expiration dates of your credit cards well in advance. Send a renewal request to your credit card issuer company. Ask them to issue another one if they can’t renew the card.

b. You’ve finished your available credit - If somehow you reach your credit limit, and you need to make further payment, your transaction will be declined automatically.

Solution - You must keep a track on your spending. Normally it is suggested that you must cap your credit usage below 30% of your credit limit. If you’ve reached your limit already and still want to use the card for payment, you should pay off some balance or ask your credit card issuer to increase your credit limit.

c. You’ve forgotten to pay credit card bills - Missing payments on your credit card is not good for your credit history. But do you know that if you are too busy to pay off your monthly credit card balances, someday your transactions might be declined when you are in the middle of an emergency situation? And it’ll take time to reboot the payment system again.

Solution - Always pay off your dues on time. Set reminders for credit card payments. Keep auto-payment system active in your bank account to pay off the credit card bills.

d. Your transaction was suspicious and triggered fraud protection - Suspicious activities can block your card. For example - if you buy a large number of jewellery or similar electronic goods in a bulk, it may trigger a fraud alert. Your unusual spending pattern may influence the credit card company to put your payment on hold.

Solution - Don’t worry. You can still buy a large amount of gold or your favorite electronic goods at a time. You just need to inform your credit card company and authorize the purchase.

e. Your credit report has taken a hit - Drop on your credit score is terrible! Your financial habit somehow may influence your credit score. Even if you are current on your credit card payments, other financial aspects of your life may hurt your credit score badly. With a bad credit score, credit card issuers may reduce your credit limit, and your card may get blocked. Being a risky customer your credit card interest rate can also be increased.

Solution - Change your financial habits. Pay bills on time, use credits as low as possible, use cash to buy things, avoid luxury items, and most importantly...pay off your old debts as soon as possible, starting with the higher interest debts!

f. You are trying to make a purchase from a foreign country - Last minute booking for a foreign country shopping may cause you a freeze transaction. Online purchase from an international brand may also stop the transaction.

Solution - Always call your credit card issuer before making such purchases. Alert your bank before going abroad . Take a prior authorization before buying foreign brands online.

So, in this discussion, you have known all about credit card payment systems, why your credit card payments might decline, and what you must do to avoid such problem.

One more thing I would like to add.

If you are an authorized user of a credit card, and the primary user such as your partner, or your father, or husband make changes in the account, your card might be deactivated without your concern.

So, keep the communication alive so that you’ll know such information prior to humiliation.

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Credit

Killing the myths about credit and collection agency!

carol — Fri, 08 Jun 2018 05:54:32 +0000

Killing the myths about credit and collection agency! carol Fri, 06/08/2018 - 05:54

In today’s world, we can’t think of a life without taking credits.

The reason behind this is that credit cards are taking over every single mode of transaction these days.
Going shopping? Use these credit cards as they may offer discounts.. Wanna eat out?? This restaurant gives 20% off on selected wines if paid with credit cards, and so and so.

Even though it’s way more convenient and hassle-free to use credit cards every day, still one big problem is inevitable. YOU MAY FALL INTO DEBTS!!

But today we won’t be discussing those age long topics of how to clear debts and debt relief options; instead, we will be reviewing the various misconceptions surrounding credit and collection industry.

Common credit and collection industry misconceptions:

Only credit cards are considered as credits:

This is the most common myth, while the scenario is, any money that you borrow is a credit. Be it a personal loan, car loan, mortgage, credit cards, payday loan, etc.

Always remember that whenever you go with the concept of “Pay later”, it is credit.

It’s okay to hang around with debts as everybody does:

Actually, it’s not okay to hang around with debts. Debts are hungry as hell; they keep on growing in interests and when you realize that, you are in deep problems.

With debts around you, you can never live freely, there’s always bindings. So, try to pay off your debts as soon as possible. There’s no such saying that what everybody does is correct!

Our country is already in a topsy-turvy state of the debt crisis, where the total debt amount has crossed trillions. You could at least be one responsible citizen among the many fools.

Debt settlement companies are fake:

This is a big myth and it is keeping debtors away from a debt-free life for a long time.

I can’t deny though that some settlement companies are fake. But most of them are not. They are in this business to make money by helping people come out of debt.

If by settling huge amounts for you, they can make a profit of a few bucks, why not give them the opportunity! I mean you are also being helped significantly, isn’t it?

So if you have big debts and you believe settling them might save you many dollars, then go for a trusted settlement company without much brainstorming.

Debt snowball is the best method to pay off debts:

Dave Ramsey said that debt snowball is an effective method to pay off debts. It helps you to clear out the lowest debt first and give you a momentary emotional boost to clear your rest of the debts.

But he never said that it is the best method to pay off your debts. It is no doubt that snowball is efficient in handling 2 or 3 debts where the interest rates are moderate and the debt amounts are manageable.

Now, if the debt amounts are high, and the interest rates are troubling, then you must target the one with the highest interest rate.

This process is debt avalanche, which you can google for more details.

You can never have a good credit score because you don’t earn much:

Another absurd thought that demotivates people a lot.

You must understand that credit score is all about your credit portfolio. The credit scoring model is concerned about how much money you borrow and how you pay it back. That’s all!

Still, there’s one small thing called the credit-to-income ratio, where your income is taken into account. But I would say, if you can maintain your debt payments regularly, and don’t incur too much of debts, then you can have a good credit score without much problems.
Collection agencies are goons:

When a debt is handed over to an agency for collection, it’s not that the agency will use all the worst means to collect the debt.

You should understand that there are two types of collection agencies; one is the in-house agency and the other is the third party collector.

If a bank or an institution uses its own professionals to collect any debt from you, then those are in-house collectors. But if the bank hires a group of professionals that are not associated with the bank, then these are third-party collectors.

Now, these agencies are not here to fight and quarrel with people. They have dignity and are very well trained. They will try their best to help you with the repayment options. They don’t want to waste time only with your case as they have other clients too.

So, if you cooperate with them, then they are helpful.

You can do nothing against the collection agencies.

Practically you can do a lot of things.

The Fair Debt Collection Practices Act (FDCPA) has laid down many rules and regulations that every third-party collection agency should follow.

The rules are very straightforward that no collection agency can use violence or threats, or obscene languages, to collect the debt from a consumer.

Also, they can only call a debtor from 8 am to 9 pm.

You can always refer to the FDCPA guidelines to understand whether or not any collection agency is breaking the rules and how.

If you find out by any means the agency is breaking the rules, then you can sue the agency in a state court or a small claims court, and with the help of attorneys, you can surely win the case.

The agency is liable to pay compensation charges that can reach up to $1000 in total.

That was all I could have said in a concise article like this.

This post is meant to turn you into a more credit-efficient person with more knowledge in the world of credit.

But, as the last reminder I want to say, always stay away from credits. It’s not that credits are bad, but at the end of the day, you are borrowing it. The creditors always have an upper hand over the debtors, because you are taking hold of his money forcefully.

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Evaluate attractive credit card offers - Why and how to do it

carol — Mon, 21 May 2018 05:23:03 +0000

Evaluate attractive credit card offers - Why and how to do it carol Mon, 05/21/2018 - 05:23

Why should you compare credit card offers?

When you’re getting a new credit card, it’s important to verify all the offers available in the market. After all, it’s your money, you should ensure that you are getting the best available deal along with the card.

But first...do you know how to evaluate credit card offers without missing important aspects? No??

Here are the steps you should follow every time while picking up a credit card.

Consider your usage

You need a credit card, that’s cool! But what for?

Do you want to use it for emergencies? Or do you like to make regular purchases? What is your monthly spending towards shopping? Will you use the card for travel too?

There are several questions like these that you need to answer yourself. Once you get the answers, you’ll easily find the actual type of a credit card you need the most.

Match your requirement with the offers and evaluate correctly.

But remember! Try to avoid credit card offers from the companies you aren’t familiar with. Scammers may also be looking for you, as you are looking for a good deal.

Apart from that, unknown sources aren’t always giving you the cheapest deals considering your choices.

2. Consider the type of card you require

Credit cards can be categorized into 4 lineups. It is up to you which one you need the most. Here are the types of credit cards and their specifications:

Balance transfer cards – Ideal for consumers who already have credit card debts. Interest rate of this card is relatively low; so consumers can transfer high-interest credit balances into this one and save a lot. Balance transfer cards charge a fee to transfer a balance, but normally comes with a 0% introductory offer.
Reward cards – This card is specially designed for consumers who make full credit card payments every month. The reward cards have special discounts, cash back benefits, points or miles rewards for the consumers. New cards also have some signup bonus rewards. Attractive bonuses are also available for the cardholder when he/she reach a certain spending limit.
0% APR cards – It’s best for those credit card users who tend to carry balances on their cards and pay less or minimum amount. These credit cards with 0% APR offers 0% interest on every purchase they make and also 0% interest on balance transfer for the next 12 to 18 months.
Secured credit cards – This card is best for consumers with bad or poor credit score. These cards are quite similar with prepaid cards as they require a cash deposit, sometimes equal to its credit limit. But unlike the prepaid cards, the consumer needs to pay off the bill. The credit bureaus will use data from your activity on that card to determine your credit score.

Once you identify the card types, you can compare credit card offers with your requirement and pick the right cards for you.

Consider introductory offers and reward programs

If you ask yourself, “Why do you compare credit card offers? What for?” The answers would be simple...offers, rewards, bonuses, cashback, free miles, and many more would be on the list.

What should you check about reward programs?

In some cards, the rewards will be available to you after you reach a big balance amount. Some reward cards provide special bonuses on typical purchases like groceries or gas. Few others provide good discounts for travel with good mile rewards. You can even redeem your credit card rewards in form of cash, travel miles, gift coupons, merchandise and many more things.

Don’t forget to compare the interest rates of credit cards with the benefits you are getting. Selecting a card with high interest but with zero bonus/rewards will be a loss of your time and money. Drop the idea of getting a card that has greater interest or charges than offered bonuses.

Credit card companies will lure you with great introductory offers. Don’t fall into the trap. Check out for the charges they’ll levy at the end of the introductory period.

If the charges suit you and you are getting more benefits later, just carry on with it. But if the charges are too high to adapt, make sure you have the permission to cancel the card without any penalty.

Try to do it before the introductory period ends.

Compare APRs of each card you are interested – One of the best ways to compare credit card offers is comparing APR (Annual Percentage Rate). Credit card companies may apply different APR’s on different cards.

APR rates do not apply to every purchase you make.

So, you need to understand all the details of the card to make sure that you are comparing offers with credit cards with similar features.

Check out the method used by the credit card companies for calculating balances

Your credit card company will charge you based on the balance of your credit account.

You should know that different companies use 4 different methods to calculate your balances.

Average daily balance method – The credit card balance is calculated on daily basis. The interest is charged on the average of those balances.
Previous balance method – The interest is charged based on the previous month's balance.
Adjusted balance method – If you make any payment during the current billing period, the credit card company may subtract that amount from the previous billing period balance. This may happen just before the previous bill is generated and is sent to you. It is the best among the 4 methods, beneficial for consumers.
Two-cycle average daily balance or two-cycle billing – The average of your current and previous months’ balances will be used to calculate the charges.

6. Consider the fees applicable and their value

You know what!! All credit cards come with multiple fees. But you must know them well, pay them if necessary or just avoid them if possible. Let’s have a look at the most common credit card fees:

Annual fees – It is charged for the facility you are using in form of the credit card. An annual fee is charged once in a year. If you apply for a credit card with annual fees, you might get great rewards and higher sign-up bonuses along with it.
Late payment fees – Fees applicable to late payments may vary depending on the credit card company. Consumers can avoid this fees by making ontime payments every month. To ease up the process, you can set up automatic payment system by coordinating with the bank.
Cash advance fees – It is a fee charged by a credit card company on the cash advance you’ve taken out from your credit card account. Few credit cards have options to withdraw cash via ATM or bank. Consumers need to pay this fee along with the borrowed money and it has no grace period for making payment.
Foreign transaction fees – If you make any foreign transaction through your credit card, then you have to pay this fee. It is based on the amount you’ve spent overseas. Credit card company normally charge 3% to 4% as a foreign transaction fee.

As a consumer, you must try to avoid all the fees at all costs. But you may ask yourself how to avoid credit card fees? You can do it by practising good spending habits and saving cash for emergencies. However, while comparing credit card offers, you can choose a credit card with less or zero fees.

Check how many retailers accept your card

Every single credit card is associated with few major payment networks like Visa, MasterCard, Discover, and American Express.

All of these cards are may be accepted by your local retailers, but the situation might not be the same if you travel abroad.

Visa and Mastercard are accepted worldwide but the other network cards might not.

So, you should check the acceptance of your card with your local retailer network before opting it.

It is wise to get a card that has worldwide acceptance.

Other additional things to consider

You can easily get those credit cards which come within your credit score range. So, if your credit score is law, go for a card with a low credit limit.

If your credit score is good, you have the option to choose from multiple high credit limit cards.

Your income may be another factor to consider while picking up a credit card. Choose low limit cards if you have low income, whereas with a high income you can get a higher credit limit card, even if it has a good annual fee.

So, these are the steps you need to follow while evaluating credit card offers. Additionally, check out the credit cards’ terms and conditions before signing up the documents. Credit card companies are bound to reveal all the hidden charges in the documents, so check the details carefully.

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Your reasons for why you need to take credit rating seriously!

carol — Fri, 04 May 2018 12:40:34 +0000

Your reasons for why you need to take credit rating seriously! carol Fri, 05/04/2018 - 12:40

Nowadays credit rating is known by another name, credit score. Even a few years back the credit bureaus used to give out a summarized result of your credit history which they called credit rating!

Credit rating somewhat looked like a report card, full of initials and numbers. You can easily mistake it for a puzzle game. Its job was to determine how efficient you are at handling credits!

But things have changed, and now credit bureaus publish your unique credit report and attach a credit score beside it!

You can surely call this combination of credit report and credit score your overall credit rating!

It’s pointless to argue why you should take credit rating seriously. Not only because it will help you get better loan terms, but also better career opportunities. Your credit score can be anytime used in job interviews, analysis of criminal records, visa approval, etc!

A good credit rating is an essential component of your credit portfolio:

Credit diversification or mix is something you could have been hearing lately. To break the ice, your credit score is pretty much comprised of overall credit mix!

The more positive credit accounts you have, the better are the chances of future credit approval from lenders, you have! Your credit portfolio is dependent mostly on your credit rating (aka credit report and score). On your credit report, you have a listing of all your credit accounts.
When a lender approves you a loan, he will scan your credit report thoroughly.

Guess you don’t want to give an impression of bad credit rating. A good credit portfolio is what a lender looks for in a potential borrower.

A summary of why credit rating is important

Good credit rating means good credit rates:

With a nice and clean credit rating, you really have nothing to worry about interest rates. You can easily get the ball in your court while taking out credit cards or loans.

When the lender sees that you have a nice credit score or a credit report, you are definitely going to be offered low-interest rates with the best terms and limits!

Credit rating influences career opportunities:

These days, credit score and credit reports are verified by employers when you apply for job interviews and especially for jobs related to management and commerce.

A good credit score speaks a lot about a consumer’s character, spending habits, and lifestyle. So take credit rating seriously if you want to get hold of better jobs!

Credit rating is mainly used in the field of business and investments:

As said earlier in this post, traditional credit rating is no more used for individual consumers. We now use credit score and respective credit reports usually from the three major credit bureaus, Experian, Equifax, and Transunion.

But credit rating plays a major role when it comes to investment vehicles.

Investors and businessmen buy debentures, securities, bonds, funds or debts, by looking at the credit rating of the respective product.

The rating is usually from ‘AAA’ to ‘CCC’, that is ‘lowest risk factor’ to ‘highest risk factor’!

Discussing credit rating for investment products and their evaluation is not meant to be covered in this post.

But if you are planning for investments, then you seriously need to understand how credit rating is used in this field.

End note:

Credit score and credit report are for general consumers and individuals. Reports are delivered by the three credit bureaus, Experian, Equifax, and Transunion.

In the contrary, Credit rating is provided for investment vehicles and other financial tools. It determines the risk factor of an investment product. The ratings are given by three credit rating agencies, Moody’s Investors Service, Standard and Poor’s, and Fitch Ratings!

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How to start building credit being a new teenager

carol — Fri, 20 Apr 2018 00:00:24 +0000

How to start building credit being a new teenager carol Fri, 04/20/2018 - 00:00

Your teenage years are the best time for building a strong credit history.

At first, you’ll not have a credit history until you start maintaining a credit account in your name. So, when you first open a credit account such as a credit card, or when you are added as an authorized user of your parent's credit card, your credit report will be created.

For teenagers, a good credit history and a good credit score are very essential. But having a good credit score is not at all easy. Being a teenager, you might have to work hard before building a good credit score.

Teenagers might think that people who use credit cards are only adults or those who can't manage cash while purchasing things. but this isn’t the reality. The young generation is well capable of using credit cards responsibly.

But first, you need to keep in mind 2 basic requirements before you apply for a credit card:

1) Having a job - As per law, credit card providers must check the income for card applicants below the age of 21. Additionally, the applicants must have a steady income source to afford the credit card payments.

Teenagers can’t show their pocket allowance as income. So, you should have a good income source to afford your monthly credit card bills, unless you might have to depend on your parents’ income.

2) Having a savings or checking account - You need a good banking history for a strong financial profile. A good financial profile can help you build a good credit history and a high credit score. As a teenager, open a bank account and try to deposit money on a regular basis. This will create a good saving habit, too.

Once you open a checking account, ask your parents to give you suggestions on wise spending. Finally, avoid overdrafts as much as possible.

Now, your next step should be forming the strategies to build a good credit score:

Get a low limit credit card initially

Being a teenager you can start building your credit history by getting a low limit credit card. A credit card is a very good option for building a credit history if you use it responsibly.

A low limit credit card will keep you away from overspending and get you into the habit of wise spending. Start paying off your low limit card on time. It will also a good way to build a credit history.

Gradually you’ll set up a spending limit and by default start paying the balance in full. This is important to keep your credit in good shape. Additionally, you’ll be far, far away from paying late fees and interest charges.

Ask parents to add you as an authorized user

Most of the prime credit card companies allow parents to add minors as an authorized user. As per CreditCards.com, 5 major card issuers including Bank of America, Capital One, and Chase, have no age limit for kids for being an authorized user. But most other companies allow a minimum age, typically between 13 to 16.

As per CNN, if kids are added to their parents’ account as an authorized user, that account's information is immediately added to the kids’ credit score, as soon as they turn 17.

But if the parents fail to pay the monthly bills on time, the negative impact of the account will also be added to the kids’ credit score.

Talk to your cell phone company

Teenagers must have a cell phone number in their name to build a good credit history. Being a teenager, you are using a company’s services and need to pay them in return within a due date. This would build your credit history. The more you pay your phone bills on time every month, the more you make a good credit history.

So, don't forget your monthly cellphone bill payments! But make sure the bill is in your name, not your family. It’s very easy if you can just remember your due date and amount. You can also set up an auto debit option.

Apply for a secured credit card

Secured credit cards require a deposit that'll be used if you fail to pay bills on time. For example, your secured credit card might require a $1000 deposit from you, which is your credit limit. You can add more to increase your limit as and when required. However, most of the companies require a minimum deposit of $300 or $500.

If you make payments on time and manage the account seriously and responsibly, it will build a good credit history.

Remember your student loans

Your credit score is calculated using your credit utilization and credit history. The better your credit history, the higher your score will be.

Being a teenager, your student loans are the biggest debt you might have right now. So, if you can play nicely and manage your student loans responsibly, it might give you a great credit boost.

So, what do you need to do?

Make your student loan payments on time, each month.
You can opt for student loan refinancing to make your loan more manageable.

You can set up automated payment instructions with your bank so that not a single payment would miss.

Don’t forget to check your credit report once a year

You might know about the three major credit bureaus - Experian, Equifax, and TransUnion, and what they do.

These credit unions will provide you a free report once in every 12 months. You can also visit www.annualcreditreport.com and get your free credit report.

Checking your credit report is very important. You can not only know your financial standings but also identify the bad items listed in the report. Apart from that, you’ll know how many credit accounts you have in your name.

Sometimes scammers and fraudsters may open credit accounts in your name illegally, without your knowledge. That credit account(s) will also be reported on your credit report. So, if you check your credit report regularly, you’ll know about such scams sooner and can fix it.

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Closing your credit card? Here are the dos and don’ts!

carol — Fri, 06 Apr 2018 13:04:27 +0000

Closing your credit card? Here are the dos and don’ts! carol Fri, 04/06/2018 - 13:04

Closing down your credit cards might seem to be a very fruitful decision as you just want to cut down a big liability.

We believe that unused credit cards are a burden, and it’s better to get done with them for good.

But is it really that sensible to close the card you don’t use? “Think twice” is the phrase that comes to my mind whenever I want to close mine.

The subject of today’s article is common. Most of us have come across several pages showing the “Dos and Don’ts of closing credit cards”. But we only get confused the more we read.

So, I will try to simplify this post as much as possible, and even see it for myself, how to successfully close a credit card.

There are many factors that work behind the scene when it comes to credits and debts. Needless to say, we have the big determiner called credit score.

The credit score speaks about our credit behavior, and having a blank record of consumer credit will highly affect the score! So, if you close your card, then the credit report will not show any continuing credit line on your credit report, and that will be seriously reflected by your credit score!

Why should you keep at least one open credit card account?

Many financial professionals argue that it is good to have at least one credit card account open, which is reported periodically to the credit bureaus.

The most obvious reason behind this is that it helps to maintain a proper credit profile for you. A good credit account report influences your credit score.

Consider maintaining your payments on a regular basis and try to keep your credit utilization ratio low.

So, if you have only one credit card with you, then probably closing it is not a good idea. Rather you should use it sensibly and see that the utilization ratio for it is not exceeding 35%.

The utilization ratio is a percentage calculated by the balance due on credit accounts divided by total available credit.

So, if you have one credit card with a limit of $5000 and your outstanding balance is $2000, then the ratio is 2000/5000, which is 40%.

That was just an example. Your target should be to keep this ratio between 30-35%.

The credit utilization ratio is a big contributor to credit score and closing the only account you have will result in 0% ratio, which might have a negative impact on your credit score.

Why should you keep your oldest credit account open?

Another aspect to keep in mind is to have your oldest credit card open, as long as you can, unless another card of yours has the potential to replace it!

Our credit reports are made up of credit history. Every lender will have a look at your past to see how responsible you can be with a new line of credit in the future.

If your credit report displays a credit account with a good and long credit history, then you will have more advantage while taking out a new loan.

But the only thing that’s important is that the record of this old credit line should be noteworthy and clean!

If you believe that this old card is a nuisance and you don’t have any decent record to show off with it, then probably closing this credit card is a better idea!

What is residual interest and how can it be a problem?

You should clear your balance in full before you close your credit card. It’s so because you will otherwise have a balance with no available credit limit, which might sound you have maxed out your card!

Here comes the point of residual interest. It is the interest that gets accrued on credit accounts even for a small period of time, like say for one minute as an example?!

Suppose today your credit account bill has been issued and it stands at some $500 balance. Then by tomorrow, your bill will slightly increase, and no matter how hard you try, you can’t pay off the account in full, as interest will grow even for seconds. This is called residual interest.

Hence before you close your card, ask the company’s REP and your due balance on the specific date you will payoff your card debt and close it permanently!

Here are the dos and don’ts of closing credit card:

Do see that you’ve paid off the balance in full with the residual interest in mind and then close the card.

Do see that it is well reported to the credit bureau that your account is closed with a good marking.

Don’t close the oldest credit card, if it is not much of a hassle for you, and if it doesn’t inflict your lifestyle and financial liabilities.

Don’t close the only credit card you have, as if you manage it responsibly, it might help you have a good credit score and credit profile.

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Credit card fraud - Types and characteristics you need to know

carol — Fri, 23 Mar 2018 11:28:40 +0000

Credit card fraud - Types and characteristics you need to know carol Fri, 03/23/2018 - 11:28

Credit card fraud can happen in various forms. The prime reasons for credit card fraud may also be different. Some of them are planned to steal funds from accounts, while some of them are functioned to buy goods without paying the money.

Furthermore, it is important for you to realize that credit card fraud is related closely to identity theft.

As per the FTC (Federal Trade Commission), the population over the age of 16 is the prime victim of identity theft and credit card frauds cases. The numbers are great; nearly 5% of them are currently affected by credit card fraud.

So, It is important to remember that hackers and identity thieves are becoming more tactical while doing this kind of criminal activity. So, you should be aware of the different types of credit card frauds that affect people’s financial data online.

Below are the most common credit card frauds that you can experience these days.

Application fraud

Application fraud is another part of the identity theft. It happens when a fake person applies for a new credit card by someone else’s name.

The scammers will steal your personal documents, and use them to support their application.

Fraudsters often call people as telephone employers to confirm their identity. If anyhow the customer reveals his/her personal details, those fraudsters forge documents and provide false telephone numbers to authenticate the card.

Presently, banks have taken numerous safety measures to stop this type of fraud from happening.

Documents are checked through various processes and only original documentation are taken into consideration.

Fake cards

It takes quite a bit of effort and time to make fake cards, but once it is done, it can steal a good amount from you.

A credit card contains the magnetic strip, the electronic chip, and holograms. It is difficult to make a fake card, but a skilled conman can forge this type of cards easily if somehow he/she can manage to get the original names and numbers.

Fake cards can be made using fake names and numbers, too. The fake card isn’t actually linked to an account; so, the credit card company will not take the liability to settle the payments for the transactions since they cannot link it to a genuine customer. By that time, the fraudster will be out of your reach with the purchases.

Electronic or manual credit card imprints

Another advanced form of credit card fraud is making credit card imprints.

This technology helps somebody to fetch information stored on the magnetic strip of your credit card.

By using your card information, criminals may encode a fake card to perform fraudulent transactions.

Counterfeit card fraud

Counterfeit card fraud is normally done through skimming. The criminal might get hold of a fake magnetic swipe card containing all of your actual card details.

This fake card then might be used in the place of a fully working card, as it is an exact copy of your original card.

So, the fraudsters may swipe the fake card on any machine and spend on certain goods. This type of fraud can also be performed by a person who knows your card details like the PIN, EXPIRY DATE, CVV, etc. These information can be used to create a ‘fake plastic credit card’.

CNP (Card Not Present) fraud

Practically, CNP means that a criminal is using your credit card without actually being there physically. If any person knows the EXPIRY DATE and CREDIT CARD ACCOUNT NUMBER, they can commit a CNP fraud against you. This fraud can be performed through phone, mail, or through the internet.

This scenario happens most of the time when we shop online.

To safeguard this situation, the merchants will need the card verification code, known as OTP (One Time Password).

Because of this security check, making CNP fraud is getting difficult for criminals these days.

But, if a fraudster somehow grabs your phone or can get your Email id access or account number, he/she might know that OTP too. So, keep your cards safe as well as your phone and Email, too.

Assumed identity

In this situation, a fraudster may use a temporary address and a fake identity to apply for a credit card.

For getting a solid protection against this type of fraud, there are several system checks in the banks.

For example, banks may ask new customers to submit account references. The more reference you can submit, the more the banks will be convinced and it’ll become easier to get your card being a genuine customer.

Customers can be asked to provide birth certificates, original copies of driver’s license, or passports, and so on to prove their authenticity.

Account takeover by someone else

Account takeover is practically the most common example of a credit card fraud. Basically, a criminal will somehow manage to get his hands on your card information and related documents.

This is mostly an online scam.

The fraudster contacts the credit card company as “you” and asks for address modification. They also submit ‘proof’ of identity that they hacked from you. After verification, a replacement card will be issued to that the new address and the conman will be able to use your card.

Unfortunately, it isn’t rare for this type of fraud to occur. So, protecting your personal information will be the best thing you need to do for preventing such frauds.

This means using strong passwords, periodic password changes, using two-step-verification, and not leaving your personal details in the open sight.

Examples of credit card fraud:

There are few examples of credit card frauds that are famous in the credit industry.

“...Albert Gonzalez was a capable computer hacker who had previously been involved in credit card fraud cases, though nothing akin to what made him most infamous. Gonzalez and the group of hackers he led successfully hacked TJX Companies, stealing 45.6 million credit and debit card numbers over 18 months. He and his team went around from store to store, using wireless networks to steal credit card information from a number of different stores, including T.J. Maxx, Barnes & Noble, and Sports Authority.”

“Another recent incident exemplifying credit card fraud cases involved Julio Lopez and Anett Villar, two members of a southern Florida gang that purchased stolen credit card numbers through the Internet and used them to cause over $75 in damages. The credit card numbers were paid for through the E-Gold online payment system, giving fraud investigations a way to track the perpetrators.”

“After purchasing the numbers, Lopez and his gang then made physical cards using the stolen numbers. He then proceeded to sell those physical cards, which were fully functioning credit cards with all the necessary security features. The Secret Service arrested Lopez, Villar, and four others, charging them with numerous fraud cases...”

For more details visit here.

You can also check out a few statistics to get a clearer picture of how much credit card frauds affected us till now:

Data courtesy - creditcards.com

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How to manage multiple credit cards like a pro

Why do people use multiple credit cards?

1. Avoid credit cards with annual fees

2. Estimate the spending limit on each card

3. Determine when to use each specific card

4. Remember your important dates

a. Monthly statement closing date

b. Your payment due date

c. The first month of the cardmember year

5. Make on-time payments

6. Check your credit card costs regularly

7. Keep an eye on your credit score

Conclusion

Why do store cards have more chances of defaults?

What makes store credit cards so vulnerable to debts than other ‘bank issued’ conventional credit cards?

Before you know it, departmental stores and retailers will put down heavy laws and rules for debtors:

What happens to credit score when you do a balance transfer?

Credit card payment systems - Learn more to avoid transaction decline

First, we need to know about the parties involved in a credit card transaction

Standalone Terminals

Virtual terminals

Cellphone processing solutions

Credit card transaction process:

Authorization

Authentication

Clearing & settlement

When your credit card transaction gets declined and how to avoid it

Killing the myths about credit and collection agency!

Evaluate attractive credit card offers - Why and how to do it

2. Consider the type of card you require

6. Consider the fees applicable and their value

Your reasons for why you need to take credit rating seriously!

How to start building credit being a new teenager

Closing your credit card? Here are the dos and don’ts!

Credit card fraud - Types and characteristics you need to know