Your First Credit Card

Everyone needs to start building credit at some point. Whether you’re in high school or college, starting out isn’t that difficult (as long as you’re at least 18 years old).

Getting approved for that first credit card can seem like an overwhelming task, but today lenders make it easier for your first time. If you have applied for a few credit cards and were turned down, don’t worry. Change your strategy and you’ll have plastic in your wallet in no time.

One of the more common mistakes that people tend to make when applying for credit cards is applying for the incorrect card that doesn’t really suit them. The major credit cards like Visa, Master Card, American Express and Discover are very difficult to come by for the first time card holder.

But finance cards are much easier to get. Finance cards are credit cards that are issued via a store or franchise and you can only use at that business. Some finance cards include Target and Best Buy.

The finance credit cards do not carry as much significance on your credit report as a major credit card will, but they are a good way to start out when establishing credit. It shows responsibility for a new card holder.  And if you still find it difficult to get a finance credit card you may want to consider a secured credit card.

Secured Cards

Secured credit cards are issued based upon a deposit you make in the amount of the credit limit. It may sound strange to some to pay $300 to get a credit limit for a $300 credit card, but a secured credit card can be a major impact on your credit report.

When applying for a secured credit card, keep two things in mind: that the card will still report your credit limit and, depending on the creditor, that the card will not show up as a secured credit card on your credit report.

Receiving a card that reports your credit limit is very important. This is because of the way credit scores are calculated. To score well, your debt ratio should be less than 30% on revolving accounts. If your secured credit card doesn’t report the credit limit, the credit report bureaus will use the total amount charged as the credit limit and this will look as though your debt ratio is 100%.

Additionally, it is extremely important to make sure your card is not reported as a secured credit card. If your credit card company reports your card as being a secured card, this will impact your credit score negatively.

Getting your first credit card can seem like a daunting task, but it isn’t. If you do your research and choose the best card for you and your lifestyle you will be approved before you know it.

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Part 1 of the World of Credit Cards explained bank credit cards and how they work. The easiest credit card to attain is travel and gas cards.

Travel, Gas and Department Chain Credit Cards

These cards are easier to qualify for. Similar to bank credit cards however consumers can charge purchases at various gas and convenience stores. However, they are different from bank credit cards because they are offered directly by the companies and not via the bank lender.

Travel and Entertainment related venues once widely accepted these cards. Some places such as airlines, hotels, restaurants and car rentals widely accepted these cards and still do today accept with broader guidelines. Nowadays, other establishments, such as department stores and gas stations, accept them. Like any bank card, the typical travel and entertainment card of today offers the menu of features that most credit card holders have come to expect.

Another major difference among these cards is, they do not carry an extended line of credit. Meaning, upon receiving your monthly credit card statement, you will be required to pay your outstanding balances in full.

A house card is accepted only at specific stores or stores within the same chain. Retail credit cards are one of the largest types of credit cards; major store chain card issuers include department stores, gas and convenience stores, and a few telephone companies. The Discover Card, once owned by Sears, was the most well-known chain store card until it was purchased by a banking institution.

Merchants view these credit cards as an advantageous marketing platform. These cards help to assemble customer allegiance and improve their sales; Just like a bank credit card, a house or chain card provides you with a line of credit. This credit limit will vary depending on your past credit history and current creditworthiness. These cards offer a revolving line of credit and you can pay a minimum on your balance each month.

All credit cards will carry an interest rate which will add on additional costs to the consumer. If you carry a number of credit cards, you may want to consider discarding of some (but don’t close the accounts!) and saving you some money in the long run.

If you are the type who pays your entire balance each month and does not carry a balance, you can probably qualify for a credit card with no annual fees. However, as with everything, read the fine print and pay close attention to dates. Banks are known for increasing fees and interest rates after a specified time.

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Discover places to find easy-to-get credit cards to help restore your credit and raise your credit score. Check out the Credit Secrets Bible today.

Banks and credit card companies are not happy. They have been having too good, but now there’s trouble in paradise. I’m not complaining. After all, I’ve been a victim of some of the unfair practices that have pushed some otherwise good credit consumers into “sub-prime” status.

Once these new regulations have been enacted, no longer will banks and credit card companies be able to impose penalties for one day lateness in making a payment. They will be required to give you more time (21 days seems to be the proposed time span).

Also, they will not be able to raise interest rates at whim. It is interesting to learn that they have been increasing rates even for accounts in good standing.

Though still too soon to say in certainty, it is interesting that the lobbyists don’t seem to be getting their way for a change. Also to note is that this has come in the midst of the current credit crisis. Did have to take a crisis for those guys in Washington to see that there is really a problem?

The lobbyists have been having it their way for too long now. They even succeeded in having new bankruptcies laws passed (in the name of “bankruptcy abuse prevention act” or something like that) that gave lenders unfair advantage over consumers. Please don’t let them touch this one.

Read full story

Every day lenders clog our mailbox with over 4.5 billion pieces of promotional offers inviting consumers to apply for a new credit card. Even those not qualifying for the conventional credit cards due to impaired credit receive offers; some credit card issuers specialize in marketing these offers to consumers worldwide.

Credit is our economic foundation and we rely on this. The average American household is projected to have a minimum of ten credit or charge cards. Most consumers will think one card is just the same as the next, that’s not exactly true.

There are in distinctions among each card and characteristics for the category of credit cards. There basically are four distinct, different types of cards used today: a bank credit card, a gas card, a retail credit card and a charge card.

Part 1 of this 2 part credit card article will explain the various credit and charge cards.

Major Bank Credit Cards

Most people are familiar with MasterCard, Visa, and Discover card. These are the major bank credit cards. While these cards are the more well known banking cards, none directly distributed to consumers; the first two companies (MasterCard and Visa) do not issue credit cards directly to consumers.

These credit cards are issued to banks that are approved by Visa and MasterCard to utilize their name and distribute to consumers. Each bank is associated to the credit card association, because they are not allowed to issue any kind of card unless they are association members.

A bank credit card provides a revolving line of credit. Each month upon receiving your credit card statement, you have a choice of paying the entire balance or a portion of it.

Upon receiving this type of card, you will be authorized for a pre-determined credit limit. This limit will depends on factors such as credit history, monthly salary and disposable income. Not all major bank credit cards offer advantage to you. These cards come with various interest rates.

For many years, high interest rates were only for those people with a slightly damaged credit history. Now days, high interest rates are common and more readily accepted.

This is the most valuable type of credit card to get when building or repairing credit. However, it’s possible for card holders to get themselves into trouble when they are unable to manage this revolving credit line. If this happens, the bank will cancel your card and place a negative mark on your credit report.

Many guidelines of the bank credit cards have changed; Most of the features and benefits changed, some for the good and some not so advantageous, but the basic characteristics of these bank credit cards have remained the same.

What is the best way to improve credit score? This article will not only answer that question, but offer tips on how to improve your credit score as fast as possible.

Side note: This article assumes that you already know your credit score. If not, you can purchase (unlike credit reports, credit scores don’t come free) it from either MyFico or Equifax. Why these two? Because they are the only ones that offer the true FICO score that is most widely used by lenders.

The biggest chunk of your credit score (65%) is based on two main factors:

1. Payment History (35%): This is the most important factor. Paying your bills on time raises your score. Late payments hurt your score often by significant margins.

2. Amount of debt (30%): This is the second most important factor in determining your credit score. Your debt to credit ratio plays a large part here; you want to keep it low.

Of the two factors above, the only one you have some control of is the No.2. Only time can take care of the No.1.

So, the first thing you need to do is to start paying your bills on time. Eventually, any late payments will sink into the background and decrease in importance. Also to note here is that new adverse information is most damaging to your score.

The fastest way to improve your credit score is by reducing your debt to credit ratio.  Your total debt should be between 10% and 30%. And yes, you do need to keep some debt in order to show regular and timely payments.

Your debt to credit ratio can be reduced by one of several methods:

1. Paying down your credit cards. This is not the easiest or fastest route as funds may not be readily available in the short term. For many, paying more than minimum amount due without using the credit card(s) might work, albeit slowly.
 
2. Requesting credit limit increases: This is a quicker option, but depending on your credit history, your creditors may decline to increase your limit. Not only that, but they will often run your credit, which will generate a hard inquiry (which causes points lose).

3. A commonly used method is to open a savings or cash deposit account (CD) for $500 to $1000 (the more the better if you can). You then borrow an equal amount against it. You can take the same money you borrowed from and open another account with another bank and repeat the process. There is no limit as to how many times you can do this, just make sure you can afford the payments.

4. A better way to improve credit score is to have new accounts added to your file. You want to be fairly sure that you will get approved, so go for pre-approved credit cards; you know, like the ones that come in junk mail. The downside is that the limits offered are often small and they usually come with other fees such as application fees, annual fees etc.

5. Now the best method. A very practical and easy method for raising your credit limit and reduce your debt to credit ratio is to get a merchandize card. Some merchandize cards can start you with a handsome limit ($2000 to $5000 and sometimes more) with no credit check or annual fees. As long as they report to the bureaus, these cards can help improve your credit score almost immediately. The challenge here is finding out which cards report to the bureaus, offer best rates, and are not scam.

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Credit card fraud is a serious problem. In fact, it is the leading cause of identity theft. And, credit card fraud is on the rise and the perpetrators continue to get more and more sophisticated. This article offers some credit card fraud prevention tips to help you avoid becoming the next victim.

These thieves, con men and scam artists that steal credit card numbers make millions of dollars in purchases and cash withdrawals/advances, often before consumers are even aware that there’s a problem.

It is therefore of paramount importance that every step we can to secure our credit cards and information. Here are some simple credit card fraud tips to keep in mind:

• Be aware of your surroundings. That guy or gal waiting to use the ATM after you may actually be watching your fingers as you punch in your PIN. The ATM machine could be owned or managed by some crooked person who will install software to read your credit card number. Others have been known to install cameras that record the numbers as you punch in. 
• Know where your credit cards are. Don’t let them lie around and avoid lending them to other people. Also, be careful what you do with your credit card receipts, as they often contain your complete credit card number.
• Check you statements. Make a habit of opening credit card statements promptly and check for any suspicious charges. If your issuer provides online account access, use that facility to regularly keep up to date on activities on your card.
• Call to activate and sign your credit cards as soon as you receive them.
• Keep a list of all your credit card numbers, expiration dates, customer service numbers and addresses. Keep this list in a secure place (not together with your credit cards!), and keep it up to date.
• A lot of credit card fraud is perpetrated by retail sales employees who handle credit cards. Be careful of who you hand your card to, and don’t let it out of your sight if at all possible.
• Make purchases and bill payments online. Contrary to popular belief, online payments are the safest as no person handles your credit card information, and they are secured through encryption. In fact, internet credit card fraud is much less common if not rare.
• Never give your credit card information out over the phone, unless you initiated the call or are very certain whom you are talking to.
• Though online payments are safer, do be careful with your online purchases all the same. Before entering any personal information on a website, verify that the website is secure. Do that by checking the status bar at the bottom of your browser, somewhere on there it’ll show the symbol of a closed lock to indicate that the website is secure and your information will be encrypted. That means that outside parties will not be able to read the information you’re sending.
• Trust not. That innocent-looking “student” selling magazine subscriptions (or whatever) at your door could cause you the worst credit card nightmares.

The above credit card fraud prevention tips are neither comprehensive nor fool-proof. Commonsense, guts and continuous awareness are still required. Keep watching this blog for more fraud tips and alerts.

The promise of getting out of debt easily and quickly is indeed enticing. There are numerous debt consolidation professionals, companies and “non-profit” organizations that promise to consolidate your credit card debts into one easy monthly payment, reduce your interest rates, and get you out of debt. But are they worth their salt?

Just what is “Credit card debt consolidation”? Why is it such an important topic?

Dictionary.com defines the word “consolidate” as, “to bring together (separate parts) into a single or unified whole; unite; combine.

“Credit card debt consolidation” refers to:

1) Consolidation of the debt on various credit cards into a single credit card (or a couple of credit cards) at a lower interest rate. This can also be referred to as balance transfer.

2) Borrowing of money by use of collateral such as a mortgage or home equity loan and using it to pay off your credit cards, with or without enlisting the service of a professional, organization or company. In this case, you’re left with just one payment to make - the money you borrowed to pay off your debts.

3) Enlisting the help of an intermidiary such as credit counselor, agency, organization or company to consolidate your credit card debts into one monthly payment and negotiate lower interest rate(s) on your behalf.

Credit card debt consolidation seems like a good way of tackling the problem of credit card debt. But there are upsides and downsides as well as the good, the bad and the downright ugly. This is subject of a future post.

Keep watching this blog.