Is there a new rules for credit card minimum payments?

The proposed Regulation Z revisions cover two different kinds of disclosures designed to warn consumers who make the minimum payments on their accounts. Paying only the minimum amount each month lengthens the amount of time credit cardholders can take to pay off their debts -- and increases the amount of interest creditors earn from accountholders.
The Fed proposes alerting consumers on monthly (periodic) statements about the consequences of minimum payments. The proposal requires credit card issuers to: "provide (1) a 'warning' statement indicating that making only the minimum payment will increase the interest the consumer pays and the time it takes to repay the consumer's balance; (2) a hypothetical example of how long it would take to pay a specified balance in full if only minimum payments are made; and (3) a toll-free telephone number that consumers may call to obtain an estimate of the time it would take to repay their actual account balance using minimum payments."

The National Retail Federation, a trade association that represents more than 1.6 million retailers (discount and department stores, catalog distributors and Internet sites), says the Fed should clarify this requirement. Retailers may grant several different lines of credit (called sub-accounts) to a single customer based on general purchase items or big-ticket merchandise. These accounts each often carry different interest rates and terms.

"It is not clear whether the proposal contemplates a separate minimum payment disclosure for each of these sub-accounts," the retail federation writes. "Some credit grantors may want to disclose only the longest applicable period, while others may wish to specify the maximum time."
Revolving lines of credit
Regulators also want to make revolving credit plans -- those credit accounts opened at furniture or appliance stores or other retail outlets selling "big-ticket" items -- more consumer-friendly. These types of accounts may not issue credit cards but make lines of credit available to customers. "The monthly minimum payments associated with the purchase are often advertised as part of the offer," according to the board.

You've probably seen or heard ads that promote "zero down" or $50 a month" and it's yours to take home. "Some consumers agree to the financing on the basis of a certain advertised minimum payment but are later surprised to learn how long the debt will take to pay, and how much the credit will cost them over that time period," according to regulators.

There are currently no rules requiring creditors to disclose repayment terms in the ads. The Fed wants to change that. Regulation Z revisions would require all advertisements for these credit plans to give equal prominence to the minimum payment as well as the amount of time required to pay off the balance and the total amount of the payments if consumers pay only the minimum monthly installments.

Retailers object to this provision as well, citing concerns that the minimum payment disclosures do "not provide consumers with a realistic assessment of the time required to complete minimum payments."
However, Chase bank has asked the Fed to reconsider this rule change because banks and credit card issuers are the wrong targets for such regulation. "We believe these changes should be limited to sellers of goods and services, or those under common control with those sellers."
The National Consumer Law Center points out potential loopholes in both disclosure proposals, and notes: " ... [T]here may well be a sales pitch without an 'advertisement' ... "
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How to flee from holiday credit card debt

Climbing out of holiday debt isn't easy, but it has to be done. The holidays bring a flurry of emotions and obligations, and people find it easy to get lost in holiday spirit. You may feel guilty if you can't afford to buy your loved ones what they want, so you put presents on the credit card.

Come January, the holiday joy turns into debt regret. It's important to shed this debt quickly, and to learn how to prevent the same troubles next year.

Drowning in debt after the holidays is all too common. "It's important to first take a deep breath and realize you're not the only one struggling with looming holiday debt," says Michael Gold, a certified financial planner who works in investments at Wachovia Securities. The average American household is already saddled with debt before holiday spending, so "digging an even bigger hole of debt during the holidays is a major concern for most."

First step: Tally the damage
To sort through your post-holiday debt, write down your total outstanding balance, interest rate and minimum payment for each credit card. Gold suggests paying off the balance on your credit card with the highest interest rate first, and continuing to do so with all your cards until you end up with the lowest interest card. This is the only card that should not have a date with the scissors -- or at least temporarily retired.

You also have the option of consolidating your balances onto one or two cards with low or 0 percent interest rate. Many balance transfer cards carry their low rate for up to a year. As you pay the other balances off on the higher-rate cards, consider closing the accounts -- although that is a step to take slowly and carefully because closing credit accounts can hurt your credit score. See the story "Do's and don'ts for closing old credit card accounts" for details.

Some people have an alternative to credit cards. "If you're a homeowner, set up a home equity line and use that cash to pay off your credit cards. This can save hundreds, if not thousands of dollars in interest charges," Gold says. Be aware, however, that switching a debt from credit card to a home equity loan or line of credit is trading unsecured debt for secured debt. In other words, you could lose your home if you default.

If you feel like you can't go it alone, contact your creditors, or find an accredited credit counselor. Many creditors are willing to work out a repayment plan with you -- either directly or through the credit counselor -- if that will help them get their money without the help of debt collectors. Be mindful that changing your credit terms or paying anything less than you originally agreed can have a substantial negative effect on your credit score.

Whack unnecessary frivolity
Reducing discretionary expenses and cutting back on unnecessary spending and frivolous activity is a wise idea until your finances are back on track, Gold says. He suggests bringing lunch to work and eating out one less night a week. "You'll be surprised how quickly you can save up cash to get rid of that looming debt and begin a truly happy new year," he says.

In order to determine where unnecessary purchases are happening, you should track your spending. Manisha Thakor, co-author of "On My Own Two Feet," a personal finance guide for young women, has many years of experience in the financial services industry. She says it's time for a "financial reality check," which is like a diet diary. This is done by keeping a piece of paper in your wallet for one or two months and writing down everything you spend. "At the end of each month, tally it all up," Thakor says.

"If you find that you are spending as much or more than you make -- and many people do -- whip out two different colored highlighters. With one, highlight the true essentials. In another color highlight all the fun expenses."

Rough budget benchmarks
Thakor says that for most people, balanced spending of your total gross income should be as follows: roughly 25 percent goes to taxes, 15 percent to savings, 45 percent to foundation expenses and 15 percent to fun expenses. "If your budget pie slices are out of whack, slow down and look item by item to see what you can cut back on," Thakor says. Some of her suggestions are getting rid of magazine subscriptions you don't read and no longer going out for drinks with people you don't like.

Once your post-holiday finances have shifted from red to black, learn how to prevent yourself from ending up with the same debt next year. While it may sound early, Gold says you should prepare a budget for next holiday season now. List every possible person you will give gifts to. Look at what you spent this year, inflate it by 2 or 3 percent and use that as your budget. "Divide that number by 12, for 12 months, set up a separate account and have that number automatically deposited into that account. Come December 2008, you have your holiday money," Gold says.

Plan now for '08 holidays
You should also purchase all of your gift-wrapping, cards and decorations in all the post-holiday sales, when everything is heavily discounted, and save them for next year.

Gold also suggests comparing prices on the Internet before going to the store, as you can find some of the best deals this way. Avoiding frequent dining with friends and family during the holidays is another way to cut back. "Instead of going out with every couple in the neighborhood at fine restaurants, consider having a neighborhood potluck dinner," Gold says. "Each couple brings over a dish they prepared and you'll be surprised at how much fun you can have while saving a tremendous amount of money."

A final suggestion is to do a "Secret Santa" or "Secret Hanukkah Harry" gift-giving method. Instead of every single relative buying each other gifts, each person picks a family member's name from a hat (which stays secret) and buys that person a gift. You can place a price cap on how much everyone can spend. This can save you and your family hundreds if not thousands of dollars, depending on how big your family is. "You might be surprised by how many family members feel the same way you do when it comes to spending for the holidays. Trust me, your loved ones will be relieved that they won't have the daunting task of shopping and spending for so many relatives this year," Gold says.

Crawling out of debt isn't easy, so don't keep doing this to yourself every holiday season. Tackle the debt wisely now, and plan way ahead of time for the holidays next year. There's nothing like starting off a new year fresh.
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How to claim expired gift card funds

My gift card survey showed that most gift cards issued by major retail chains do not expire. But some do. What happens to that unclaimed money is increasingly the subject of a tug of war between retailers and states, many of which have passed laws forcing retailers to turn the money over.

"There is an increasing chess game between issuers of these cards trying to find ways to reduce abandoned property exposure and states trying to increase ways to get their hands on what they view as legitimate abandoned property," says attorney Duncan Douglass of Alston & Bird, LLP in Atlanta, who specializes in gift cards and the state laws that apply to them. Catherine Fox-Simpson, a partner in the retail and consumer product practice at consulting firm BDO Seidman, LLP, is more blunt. "I expect a showdown," she says. "It is a matter of time."

As of November 2007, according to the National Conference of State Legislatures Web site, more than 30 states have unclaimed property laws that apply to unused gift card balances. In Michigan and New York, unused balances go to the state (escheat). In Texas and Illinois gift card balances are reverted to the state with certain conditions, while in Florida open-loop, network-branded gift card balances go to the state when unused. People who bought cards in those states may try to initiate unclaimed property claims, usually through the state’s treasurer or similar post. The National Association of Unclaimed Property Administrators’ Web site can link you to the appropriate office in every state.

A minority of states, including the largest, California, do not presently make any effort to reclaim gift card money into state coffers.

There is a third party in this competition over unspent gift card money: The consumer who paid for it in the first place.

How can these consumers make sure that neither the retailer nor the state gets to keep their money? Experts and states recommend the following steps:

• When buying or receiving a gift card, read it carefully. In some cases, the retailer may not make it entirely clear if or how the gift card expires. "We encourage people to read the fine print regardless of what the merchandiser tells them," says Elizabeth Kupchinsky, spokeswoman for the Pennsylvania Treasury Department.


• Hold onto the physical card itself and any receipts. Very often, it is unclear to whom the expired gift cards funds belong. "The difficulty in gift cards is that there is no name attached at the point of sale unlike, say, having a deposit for your utility service," says Rochelle Stewart, bureau chief for Citizen Services at the Montana Department of Revenue. Having the card and receipt in your possession can help.


• Learn how gift card expirations are treated in your state, because the issuer may be prohibited from imposing an expiration date. In states with such laws, funds on expired gift cards no longer have to be turned over as unclaimed property.


• If the state permits expiration and the date is past, talk to the retailer first. "We encourage people to go to the business and say 'Will you honor this?'" says Kupchinsky. Even if they won't, some card issuers may allow the gift card funds to be transferred to a new card.

If the retailer has already turned over the money, look to the state for help. Every state maintains an online database of unclaimed property. Additionally, a call to the Department of Revenue, state Treasury Department or other government branch in charge of unclaimed property could help.
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Why You Must Shred Credit Card Applications?

It is common for people to have one or two credit cards. They are convenient to use and can help establish good credit if the cardholder is responsible with their debt amounts and monthly payments. Because credit cards have become so ubiquitous in our world, many of us forget that they need to be protected just as avidly as cash. If your credit card offer has a high credit limit, then you might even want to protect more avidly than cash… unless you routinely carry $10,000 with you.

Identity theft is a big issue these days. You hear a lot about how you should protect yourself. You should shred, rather than just throw away, any documents that have your account numbers on them. This includes bank statements, receipts, loan statements, and credit card offer statements that you want to discard. This is the first form of protection that you should be taking. Often, identity theft begins when someone pulls important numbers out of your trash. You should even shred all of those credit card applications that you get in the mail. Your trash says a lot more about you than you might think. Let’s say that in your trash you have a credit card application that you didn’t want, a doctor’s bill from last month, and a note that you mother wrote you. These are three things that you normally wouldn’t connect to each other. While they don’t have anything to do with each other, the information in these documents could be enough for a savvy thief to steal your identity.

Consider the possibility that the thief already knows your name and address. It’s printed on everything. And even if somehow neither your name nor address is printed on something you throw away, he pulled the credit card application (you can found many applications for MasterCard customers) and other documents out of the trash right in front of your house. Now, also consider that the bill from doctor might use your social security number so that the office will know exactly who the bill is going to and from whom the payment is coming.

What’s your name, your address, and your social security number? These are three questions that are commonly asked by credit card processing companies when they are taking your application over the phone.But could the note from your mother possibly have something in it that would help a thief steal your identity? Credit card companies, in an attempt to offer some protection to current and potential customers, will often ask callers a personal question so that the caller’s identity can be verified.

These questions could be something as simple as “What city were you born in?” or “What’s you father’s middle name?” Stealing someone’s identity sometimes requires the thief to be good at solving puzzles. And a lot of them are. If your mother has signed the note with her first name, then the thief probably has her first and last name. There might be ten people in your city who have your name, but how many also have a mother with the same name as you. By consulting a phone book the thief can then learn your mother’s address. See how the holes start to fill in?

Protecting your identity is necessary, so you should always be certain to shred credit card applications. Throwing them away isn’t good enough. Unfortunately for you, a lot of crooks are very smart.

By: Michael Russell

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Which Credit Card Should You Opt To Use?

Chances are you obtained your credit card because a salesman hailed you in a shopping mall and tossed an attractive prize your way. But is the card right for your needs, as well as for your spending and borrowing patterns? There are two reasons to take a second look at our credit cards now. First, the card market has become more competitive in recent years and you can now take advantage of the latest offers and variations. Second, the ubiquitous credit card is becoming a bigger part of our daily lives. At such high usage levels, the right card could give you hundreds of dollar in savings a year. While there is no one best credit card, there are cards that stand out from the crowd in terms of rewarding you and giving you better savings and there are cards that are right for you based on how you use your plastic. With most cards offering a 20-day, interest-free grace period and late-payment fees, individuals who like to settle their credit card debts in full should opt for cards that provide savings in other forms. For instance, look for a card that has no annual fee and rewards you for spending money. Always read the fine print - several cards are offering 'free for life' deals that come with conditions. For instance, you might have to use the card for a specified number of times or spend a certain amount per annum. If you are in the habit of carrying a substantial balance on your card, forget about 'free for life' cards or bountiful reward programs. Just being in the habit of owing $1,000 on your credit card alone can cost you twice as much a year as the standard annual fees out there. You need to look for a card that minimizes the interest you pay.
That means looking for cards that charge less than the annual 18% industry rate on your outstanding balance and/or cards that give you a rebate on the interest you are charged. What if you pay high value purchases in installments? There are two options available with credit cards. One is offered by associated merchants and is interest-free if you complete payment within the specified tenure. There are also 'flexi-payment' plans provided by the card issuer, and these either have a one-time processing fee or an interest charge. You should find a card that is associated with many merchants since this provides you with the most opportunities to utilize the interest-free installment plan.

In some cases, you may have to pay a processing fee to use this scheme. The best card should then incur lower processing fees if any, to use this plan, while offering long payment tenure. On the other hand, if you prefer flexi-payment, look for a card that charges the lowest interest rate or processing fee and has a good choice of installment time frames.

Remember to compare apples with apples and annualize flat processing fees if you are comparing them with interest rates. To encourage consumers to spend on their particular card, banks give incentives in the form of cash-backs and gifts. Which should you go for? Here's a tip - most gift reward programs give you around 0.5% of every dollar spent. So, it's suitable for the big spenders. If you don't charge a lot to your credit cards, it's wiser to just go for a card with no annual fees.
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Shopping Online With Credit Cards? Here Is 10 Easy Steps To Be Safe

Do you shop online? Do you pay bills online with your credit card? Do you think a credit card is safe to use online?

If your answer is "YES" to at least one of the questions, please read below before using your credit card online again. There are some simple tips that can help you to safeguard yourselves against online credit card theft.

1. Check for fraud protection

Check with your credit card issuer if they provide fraud protection for online purchases. No fraud protection means less safety.

2. Check for temporary credit card number

Some credit card companies offer a temporary credit card number linking to your original credit card. Check with your credit card company if they offer such a thing. If yours doesn't offer such a card then it's always safer to use a credit card with a lower credit limit.

3. Check your computer

Having the latest antivirus software will protect you from trespassers who try to steal your information. Use a browser with 128-bit encryption, which provides maximum security.

4. Check the website

Before entering your personal information check for the lock sign in the bottom status bar of the Internet browser.

5. Check the online merchant

Only buy things from a well-known, trusted merchant. If the merchant is new always check with the local business bureau for any complaints before you buy things from them. Always read the privacy policies, terms and conditions, delivery and return polices.


6. Avoid out of country merchants

Though there are lots of good legal shopping merchants in other countries, it's always difficult to find reliable and trustworthy sellers among them. If you are doubtful, avoid doing business with them since most of the credit card companies will not give much support for international frauds.

7. Keep records.

Maintain all the receipts of your credit card purchases and compare them with your credit card statement. If there are any discrepancies contact your credit card company immediately. If you are a frequent online shopper, don't forget to check your credit card statements often.

8. Know the procedure

You should know what to do and whom to contact when your credit card information is stolen. Keep the phone numbers/contact person name handy so that you can act immediately without wasting time and losing more money.

9. Maintain a diary

If you are a frequent shopper keep records of all your purchases like order number, confirmation number and date of purchase in a diary. If you use more than one credit card, keeping a diary is a must. Even if you lose some of the purchase receipts, your diary will come handy when you check your credit card statement. You know it's easier to lose receipts than a diary.

10. Few more "optional" tips

When you are online shopping don't move from your seat till you are finished and logged out. Make this a habit even when you are using a home computer. Don't do multi tasks.

Online shopping is more fun and easy. Make it safer with these simple steps. "Better Safe than Sorry".

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People With Bad Credit CAN Get Credit Cards Too

Do you have less than stellar credit? If so, you probably know just how difficult it is to get a credit card. If you've looked, no doubt you have found plenty of companies out there, like you can see on the right of blog, that will offer to help you rebuild your credit rating by issuing a credit card. For some people, it is worth it to get one of these cards - even with interest rates around 20%. Just be very careful, because there are extremely high fees involved. Here is what you should know.

Most credit card companies who issue cards to people with bad credit leverage their risk by charging outlandish fees. If you are truly trying to repair your credit, these may be a good option for you. If you are looking for a credit card that you can use immediately, take a closer look. Most of these credit card companies start you off with a low credit limit of around $250. That could be enough to get you out of a bind if you have an unexpected expense. However, these credit card companies charge some pretty hefty fees just to issue you a card.

The first fee that most credit card companies charge is an application, processing or program fee. This can be anywhere from $100 to $150 or more. Most charge a monthly fee of around $10. Then there is the annual fee of around $50. All of this is charged up front, upon approval, and before you even make a purchase. For our calculations, we'll use the best-case scenario. With a $250 initial credit limit, subtract $100 for the program fee, $10 for the monthly fee, and $50 for the annual fee. That's $160 in charges before you make a purchase on your credit card. In our best-case scenario, that leaves you with an available balance of $90 on your new credit card. If the program fee is $150, that only leaves an available balance of $40.

There are other fees you can expect to see each month. Most of these credit card companies require that you have your payments debited directly from your checking account each month. This is not necessarily a bad thing. It will help you pay on time and avoid late payment fees. However, there is a charge for this “service”. It's usually around $10 a month. That's in addition to your monthly fee. If you make a late payment, or if there are insufficient funds in your checking account, you will have to pay a fee of around $35. In addition to the late payment fee, your interest rate will be increased by an average of 5%, and if this causes you to go over your credit limit, another $35 will usually be tacked on.

The whole idea of these credit cards is to rebuild your credit, right? Most of these credit card companies will increase your credit limit when you pay on time. In the fine print though, you'll find that this will cost you around $25 every time you have an increase. You may or may not be able to control whether or not the credit card company raises your limit. Most will increase your limit every six months. This brings the annual cost for your credit card to around $440 for your first year, and that's if you don't have any penalties; and before interest is charged.

If you are trying to get some quick money, and you have bad credit, opening a credit card account for people with bad credit is probably not a great idea. If you are truly trying to rebuild your credit, just understand that it will cost you to do so. You will have to endure high fees that eat up your available credit. You will have high interest rates. And you will have high penalty and monthly fees to contend with. With time and persistence, you will be able to rebuild your credit and get a credit card that does not charge you so much.
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Why Do People Need More Than One Credit Card?

A few days ago, I was in San Fransisco with a friend, eating burgers at a Korean/Japaneses/Asian fusion (whatever that is) restaurant called Namu (Nothing beats burgers at an asian restaurant. heh. Yelp reviews can be found here).

Being the awesome friend that he is, my friend paid for the lunch with his semi-recently acquired Citi mTVU student credit card. This credit card was his first credit card and it was none other than yours truly that recommended the card to him.

“Ah, so you’re using the card now eh?” I said to the friend calculating the tip amount. “Do you like the card?”

“It’s great! I’ve racked up quite a bit of points already.” my friend told me as he writes down a 15% tip.

The funny thing about all of this, is that my friend is at least a year or so older than me. He is almost out of graduate school, and will soon be making a nice six figure salary. Besides his student loan, which is also of a sickening six figure amount, my friend has never been in debt.

It was only about a half a year ago, when I had lunch with him that he pulled out his debit card to pay for his lunch.

“Why don’t you use your credit card?” I asked him.

“Oh. Um, I don’t have one.” he told me nonchalantly.

My jaw would have dropped, but this was not the first time I came across a situation like this. Despite the media report, there is still quite a good amount of college/graduate students without a credit card — and from my experiences, that’s probably a good thing.

I have already mentioned that I love credit cards (even though it is the very thing that got me into the debt mess), but that doesn’t mean I despise people that use debit cards. Like my friend here, I have many other friends that didn’t get a credit card until a certain annoying friend told them to. All of these friends that don’t have a credit card have an interesting difference to my other friends with credit cards.

What’s this difference?

You’ve probably already guessed it: None of them have high-interest consumer debt.

And so, I went ahead and recommended to these friends that don’t have a credit card to get a credit card. heh.

No no, not because I want them to get into debt — I’m not that petty, dammit. I recommended a credit card to them because I know fully well that they already have the capability to manage their cash wisely, and so I trust that they will also manage their credit wisely.

They have already been paying their purchases in full for years, so switching to a different paying method should not affect their spending habits.

Anyway, that’s not the point of this post.

As we walked out of the Asian fusion restaurant (heh) and continue to chat about the benefits of using a credit card wisely, my friend asked me this question:

Why do people need more than one credit card?

This was a really refreshing question. I was stumped a bit on the question, not because I couldn’t immediately think of a reason on why people use different cards (mileage, gas, rebates, cash back, etc.), but more so because of whom the question is from.

Here was a guy who has never had a credit card until recently. He’s enjoying the free rewards from the purchases as he diligently pays off his bill every month. He is content with the credit card that he has, and to him, having one credit card is more than plenty. He does not look forward to dealing with more than one bill, nor does he care to juggle various reward cards to get the maximum reward/cash-back.

It is interesting that for awhile, I thought it was normal and perfectly acceptable for people to have many different types of credit cards — all the while, my friend can’t even fathom the reason why people need more than one card.

“Hmm. To be honest, most people probably don’t need more than one credit card.” I finally answered my friend. “There’s plenty of good reasons to have more than one credit card, since you can utilize different card for different transactions. But yeah… at the end, having more than one credit card, or even more than a few, is probably unnecessary.”

I proceeded to tell him the usual story about the average household credit card debt, and how people get one card to transfer the debt from one to another. And then I told him about how people unknowingly get high interest card, neglect to pay in full and became undisciplined in their spending with credit cards.

“So as you can see, credit card can really be a world of trouble for many people.” I told my friend. “The only reason why I recommended them to you is because I know you won’t abuse them.”

And I’ll continue to stick with these guidelines when I recommend credit cards.

If you already have more than one credit card, ask yourself this question:

• Why do I need more than one credit card?

Depending on your answer, you may be able to see where you stand financially.
If you are considering getting a credit card, ask yourself these questions:

• Why do I need a credit card?


• What would I use for it for?


• Will I pay my balances in full?

Educate yourself with the resources available. Learn to utilize cash wisely before you try credit. If you have trouble managing your cash flow, you will most likely have trouble with a credit card. Don’t know which card to choose? Ask around!

Although I love credit cards, you can probably get by these days without ever touching one. Don’t get suck into the idea that you need a credit card. Don’t get more than one credit card because you think you should. Lastly, whatever you do, don’t get a credit card just because the cashier asked you if you wanted one.

by stopbuyingcrap.com

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HOWTO: Understand Credit Card Terms & Conditions, Because You Don’t Want to Get Screwed

Applying for credit cards without reading the card’s terms and condition, is like selling your soul to the devil for a mystery bag. Not a smart thing to do.

In a quest to save more souls, here’s the kick-ass guide to understanding credit card terms & condition, all for your benefit. Let’s use the Best Credit Card Offer Ever as our reference!

FACT: Under federal law, all credit card solicitation or applications must contain certain key information. This key information is usually inserted in a disclosure box, as seen below:




I. A Closer Look at the Disclosure Box

To get a better understanding of the disclosure box, or, the actual credit card offer, you’ll need to better understand the actual terms involved. Before we go further, it may help if you click on picture above and leave it open, so you can refer to it as we go over each of the terms and condition.

Annual Percentage Rate (APR) for Purchases: This is the annual rate you’ll be charged if you carry a balance from month to month. In a credit card offer with an introductory rate, this is where you’ll also see it listed. For our example, the APR for purchases is 9.99%.

Other APRs: This is where other annual percentage rates for other types of transaction are listed. Take our example, it’s balance transfer APR is 9.99% and it’s special opening cash advance is also 9.99%; however, it’s regular cash advance is 19.99%–a hefty interest rate. The delinquency APR is an even higher 23.99%.

Variable-Rate Information: In this box, you’ll see how your variable rate is determined. Generally, the purchases APR will be a variable rate, such as 3% + the Prime Rate, while the balance transfer APR will be a fixed rate. There’s generally also a footnote with an explanation on how prime rate is determined—usually by the highest prime rate published in The Wall Street Journal on the last business day of the month.

In our “Best Credit Card Offer” example, ALL the rates (purchase, cash advance, and balance transfer) are variable! Through your February 2007 cycle, the rates are 1.99% + prime rate, but it will never be lower than 9.99%, even if the prime rate is at a miraculous 1.00%. After 2/07, the rates will increase to a 4.99% + prime rate. Yay! The Prime Rate for our example is also determined a bit differently, but it is still based upon the WSJ.

Grace Period for Purchases: This is the amount of days you have to pay your bill in full before incurring finance charges. It’s 25 days in our example, which means if you start the current billing cycle without a balance, and you bought a brand new Ionic Breeze Air Purifier (for the awesome price of $399) you’ll have 25 days to pay off the charge before interest starts to accrue. Grace period rocks! You should also note that grace period usually applies only to purchases, and not to balance transfer or cash advance, which accumulates interest right away!

Balance Calculation Method: This box will determine how you get screwed over. Specifically, this is the method in which interest on balance are calculated. Similar to our example, most cards these days are calculated by the average daily balance method including new purchases. There are other types of method, such as the funky two-cycle average daily balance method; the better (but rarely seen) average daily balance method excluding new purchases; the adjusted balance method and the previous balance method.

Annual Fees: Straight forward enough. The annual fees associated with the card. They can either be none, like our example and many other credit cards, or $75 to $100, like many airline mileage credit cards. For your benefit, you should probably go with a card without an annual fee, unless you really do take advantage of a card’s benefit.

Minimum Finance Charge: This is the funny box, where they state the minimum amount of finance charge you’ll receive if you carry over a balance. Example, if you carry over a balance of $0.20, you’ll receive the finance charge of $1.00, even though actual interest on that balance is only about $0.02.

Specific Transaction Fees: Most credit cards will have a section that explains the fees associated with a certain type of transaction (e.g., cash advance, balance transfer). In our lovely example, the fees for cash advance and balance transfer is 3% of the amount of each cash advance, but not less than $5 nor more than $50 (fee waived for transaction in connection with accounting opening). This means that if you initiate a balance transfer of $5,000 after you opened the account, the balance transfer fees would be $50. 3% of $5,000 = $150, but fees won’t exceed $50 as stated in the terms. Watch out for credit card offers with high maximum fees, or NO maximum fees!

Late Payment Fee & Overlimit Fee: This is rather self explanatory. According to our example, if you pay late because you’re busy watching Battlestar Galactica, you get a nice $35 late fee. If you went over your limit because you’re horrible at arithmetic, you also get an awesome $35 overlimit fee.


II. Footnotes That You Really Should Read



What’s a credit card offer without asterisk and footnotes? Some of the most important terms and condition are within the vary footnotes of the card’s terms and condition. The very solicitation itself requires a footnote, as many Pre-approved offers are rather like a craps shot. Example of footnotes below:

Here are some more important terms that you should look out for:

Other Fees: Yes, more of them. Return Check Fee, Returned Payment Fee, Stop Payment Fee, Copy Fee, you name it, they probably have it. For our specific “Best Credit Card Offer,” if you pay off your balance transfer early, there’s a cool Early Pay-Down Fee of $600! Before you apply for a credit card, you should always check for all types of possible fees associated with the usage of the card.

Pre-Qualified Status: In these explanation footnotes, the terms spell out exactly what it means to be Pre-qualified for an offer. Usually, a credit card company receives information about you from a credit reporting agency—based on that information, the card company has determined that you may qualify for the credit card offered. Problem is, the information they received from the credit reporting agency may be out of date, or your credit history may have changed since, which might result in your credit application being denied. Just because they say you’re Pre-approved or Pre-qualified, doesn’t really mean you are!

Cash Advance Definition: Some credit card offers will specifically lay out what a cash advance is. Cash advance is the most expensive type of credit card transaction, as most cash advance have no grace period—the interest starts accumulating the second you initiate the transaction! In our example, cash advance is basically any transactions that are directly converted to cash. This includes purchase of gaming chip and gaming transaction! So the next time you’re thinking of using your credit card to pay for your chips at the casino, you better make sure your credit card doesn’t consider that as a cash advance.

Delinquency/Default APR: This is the fixed, foobar rate. It is usually the highest rate within a credit card terms. If you pay your credit card late too many times, you may be in danger of having your rates changed to the default (penalty) rate. Most credit cards offer will explain the default APR more clearly when you’re actually approved, however our pre-qualified offer here actually spells it out quite nicely. Basically, if you pay in two consecutive months, or two times in any six months period, you get hit with the default APR. To get out of the high APR, you simply need to make six consecutive timely payments.

III. Other Things That You Really Should Know

Credit Limit: Although usually not mentioned specifically in a credit card offer, the credit limit of a credit card determines the maximum amount you may charge on your credit card. This includes regular purchases, balance transfers, cash advance, fees and finance charges. If you go over this limit, well, you know what happens.

Cash Limit: The cash limit is the maximum amount you can utilize of cash advance. This is generally a specific dollar amount (such as $1,000) or a percentage of your total credit limit (e.g., 50% of your credit limit).

Type of Credit Card: Are you applying for a secured credit card or a regular, non-secured credit card? There’s a big difference here. Secured credit cards are generally for those with poor or no-credit, requiring a security deposit to open an account. Generally, the larger the security deposit you make, the larger your credit limit. Non-secure credit cards are of course the ones that do not require a security deposit; these are the regular cards that you see most of the time.

IV. Is That All You’ll Need To Know?

You wish. This is a brief glimpse into the basic terms and condition that you’ll find on a credit card offer. When you actually apply for the card and you’re approved, the real terms and condition sent to you can be an even more confusing read.

Still, the gist of things and the important terms you should know about are all above. Because credit card terms and condition are always changing (and usually not in your favor), you should definitely pay attention to the modified terms and condition sent to you by your credit card companies. After all, it would be awfully silly to pay for fees that you didn’t even know existed.

by stopbuyingсrap.com

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HowTo: Avoid Credit Card Fraud

Credit card fraud is becoming more and more of a problem, and if you are not careful then you could lose money to fraudsters. If you are worried about fraud but are unsure how you can protect yourself and your credit cards, then this article could help you. Here are some useful tips and advice about how to protect yourself from credit card fraud:

Methods of fraud

The methods and types of fraud are increasing as criminals learn new techniques and get improved technology. The most common methods of fraud today include:

• Copying and ‘cloning’ of cards


• ATM fraud


• Internet card fraud


• PIN number stealing

All of these methods are used more commonly than ever before to effectively steal your money. Obviously, it is impossible to totally eliminate the problem of credit card fraud, but there are things you can do to greatly reduce the risks.

Keep cards close

Make sure that you never let your cards out of your sight. Never leave cards unattended, and certainly don’t lend your card to anyone. If you are paying in a restaurant or shop, make sure you pay attention as to where your card is. A common method used to copy your card is to get the details whilst you pay, so keep an eye on your card at all times.

Check receipts

Whenever you get a receipt or a credit card bill, check that all the items and amounts are correct. If there are any amounts that you are unsure about, contact your card issuer immediately. Any paperwork that you throw away should be disposed of properly. Shred documents so that people cannot go through your rubbish and discover your card details.


Look behind you

When withdrawing money from a cash machine, make sure no one is looking over your shoulder to read your PIN. The easiest way for someone to use your card illegally is to see your PIN and then steal the card. Also, make sure you never keep a written record of your PIN, especially near your cards.

Use reputable firms

When buying on the Internet, make sure that you only purchase items from large and well-established providers. Small or unknown providers should be avoided as even if they are genuine, their security and encryption may be poor and allow fraudsters to access your details.

Keep contact numbers

If you have your card stolen or you think you have been the victim of credit card fraud, then you need to sort the problem out as quickly as possible. Keep all the contact numbers for your card issuer in a safe place so that you can call them up and sort out problems immediately. If you are careful and act quickly, you can limit the damage of fraud or prevent it occurring at all.
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Airline Credit Card Necessities

An airline credit card is the perfect addition to the wallets of those who spend a lot of time traveling on planes. These cards allow you to build up points that you can spend in any number of different ways. Not all airline credit cards are created equal, in fact some are not any good at all and it is your job to determine which is which before you sign the contract. You do not want to get sucked into a bad credit card contract, believe me, this is something you want to avoid like the plague. So what can you do to make sure that the airline credit card you choose has all the necessities that you’ll need?

The very first thing that you need to look at when trying to choose the airline credit card for you is the interest rate. Do not get blinded by the flashy introductory rate, look at the long term rate. This will be the interest rate that kicks in after the first few months. This will be the one that you pay for years and years and years, so obviously it is the important one. You will be able to find out all about the interest rate in the airline cards contract.

If you do not read through the contract of your airline card then you deserve everything that comes you way and let me tell you, there will be a lot coming! Airline credit cards just like any other credit cards on the market can have all kinds of hidden fees and loopholes that will cost you a bundle over the years. These are what you need to be on the lookout for at all times when you have an airline credit card.

Here are some things to find out before you sign for that airline card:

What are the minimum monthly payments going to be? These are usually a percentage of the principal of the balance owed on the airline credit card.

How long is the grace period? This is the amount of time that you will have before you have to make a payment on what you have purchased with your airline credit cards. This can be anywhere from a couple of weeks to a month. If you fail to make the payment on time you could be faced with late fees and a higher interest rate.

What are the penalty fees? Most credit cards have all kinds of different fees that they can slap you with. There are late fees, annual fees ad dozens more that can pop up when you least expect them. You need to know what all of these fees are if you want to be able to avoid them each year.

What are your credit limits on the airline card? If you do not know your credit limit you will not know when you need to stop spending. If you go above your credit limit then you will be faced with charges that can cripple you. You must always stay on top of how much you have owning on your airline credit cards, always.

Your airline credit card can be a great way for you to learn points towards any trips that you want to take down the road. You can use these points to travel for business or to travel for pleasure. These airline cards are especially useful to those who spend a lot of time in the air. The best part of airline credit cards is the fact that often times you can use the money for other things besides traveling in the air. You can also use them to pay for hotel stays or even food or gadgets! If you have not yet looked into all of the many benefits that come from having your own airline credit card then now is the time.
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Merchant Accounts For Beginners

Looking for something that will explain merchant accounts to you? Are you in need of a merchant account for beginners, mini tutoring session? Then you have come to the right place. Below you will find a list of the fundamentals pertaining to merchant accounts and how they work!

Once you have completely established your web-based business, you will want to begin the application process for a merchant account. A merchant account will allow you to accept credit card orders through your website with your website acting as a virtual gateway for order processing.

Your website must be fully established before you apply for your merchant account, as a merchant account supplier will want to see that your business actually exists. Further, a merchant account supplier may require that you have a registered domain name, so you may want to take such information into consideration when you are creating your website.

Applying for a merchant account may take several days, so don’t be surprised if you are not instantly approved. A merchant account supplier will verify much of the information you submitted and will also approve or deny your application based on a number of risk assessments. Such assessments are determined on how long you have been in business, what type of credit you have and what type of business you are running.

Once you have been approved for a merchant account, you will be able to set up your merchant account processing software or appropriate links, depending on the merchant account supplier. Later, after you have successfully set up your merchant account access, your customers will be able to make purchases via your merchant account access and the merchant account supplier will handle all of your transactions.

You will be charged a transaction fee and a discount fee for each transaction, and a monthly statement fee from the merchant account supplier. Additionally, you may be required to set up a reserve based on the risk assessment initially conducted on your business. Although the reserve money belongs to you, the merchant account supplier holds on to such funds in the event that you encounter credit card fraud. Unfortunately, you will be responsible for such charges and your reserve will meet the sudden and unfortunate expense.

It all sound so easy right? Usually it is, however you can run into a snag or two. If you are denied a merchant account based on the risk assessment conducted, how will you collect credit card payments? Through a third party of course!

Third parties are willing to collect credit card payments for you if you pay the transaction fees required. A particularly popular third party processor is PayPal. There are no setup fees involved in enrolling in PayPal, however, you might be required to wait until you have verified your bank account before you can use PayPal’s services.

PayPal is also easy to set up on your website and you can even accept payments via email. What’s more, depending on the type of program you sign up for, you can even set up a shopping cart on your website or bill customers with PayPal’s unique invoicing template. Finally, PayPal offers mediation services when a customer is not satisfied with a product and they also offer the very best technology to help prevent fraudulent transactions.

Merchant accounts and third party processors can literally change the way you conduct business on the Internet. What’s more, both merchant accounts and third party processors broaden your business horizons by increasing the forms of payments that you can accept. Therefore, in using such accounts you essentially increase your bottom line!

By: Kirsten Hawkins
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