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:
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:
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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Why Do People Need More Than One Credit Card?
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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