Credit Card Blog

In a Montana casino, a single gambler used his credit card to obtain cash advances, with which he then used the money to gamble. The casino reported the cash advances as food or beverage sales, with each transaction between $50 and $600.

This is actually against the law in Montana, as the law prohibits gambling on credit. The idea is, a gambler might walk into a casino and lose everything he has in his pocket or bank account; but can’t lose his shirt because he isn’t able to run up a credit tab for gambling losses.

The casino had to pay fines, return the money to this particular gambler, and make a donation to the Montana Council on Problem Gambling. The law is becoming more strict, and every month a few new cases around Montana are investigated.

Other states have similar laws designed to protect individuals who have a problem with gambling. They keep taking out more money thinking they can recover the money they lost in previous gambling attempts.

Many retailers ask each person at the checkout line if they’d like to apply for their store brand credit card- and they even make it seem like a good deal.  For example, you might save 10% off today’s purchase if you use your new store credit card to pay for it!

What you have to remember is that the average retail credit card is charging over 20% interest- or aroudn 8-10% higher than bank issued credit cards.  If you typically carry a balance on your credit card from one month to the next instead of paying it off in full; saving 10% on today’s purchase is going to end up costing you far more on the retailer credit card than it would on a regular bank credit card.

If you are someone who religiously pays off credit card balances in full every month; you may be ok with using a retailer’s card in order to take advantage of the discount.  If the discount is only for one day’s purchase, however, it may still not be reasonable to sign up for a new credit card just for a one-time discount.  You’ll have a new line of credit on your credit report, which can sometimes lower your score.

Weigh your options carefully before deciding to get a retail credit card.  More often than not, you’d be better off to use a bank-issued credit card instead.

Despite beefed up security measures from online retailers such as address verification, CVV codes, Verified by Visa and Verisign’s SSL (Secure Socket Layer) technology, there’s always a risk when you provide your credit card information through the Internet that someone nasty is going to get a hold of it.

But a protective measure that is becoming more popular among online retailers is alternative payment options such as PayPal, Google Checkout, 2CO, WorldPay and BillMeLater.  Even Amazon is jumping into the game with its own payment services.

How this works is you sign up with one of these payment services, and provide your banking and credit card information to the service (which is why you should only deal with reputable services like the ones mentioned).  You can then pay through these accounts with participating merchants without having to give your information out again (not to mention skipping all the checkout form fields).  This convenience and added security makes it worth your while to sign up.  And like credit cards, these payment services will protect you from fraudulent activity and resolve any other disputes that may arise.

BillMeLater is a unique service that allows you to pay for items without providing credit card information for a number of online purchases (or telephone orders), and select whether you want to pay off your monthly bills in full or in installments.

Boing Boing TV recently demonstrated how easy it is to buy an $8 device off eBay that will decrypt credit card numbers off of RFID credit cards — which are supposed to be more secure! The irony is it’s even easier now to steal credit card numbers and head right back to eBay for more shopping.

But there is a way you can protect your “butt,” a stainless steel wallet will “foil” any would-be credit card thief.

Affinity credit cards donate a percentage of cardholder purchases to charity. The exact charity depends on which affinity credit card you have - but the amount is usually around 25 - 50 cents for every $100 charged on the credit card. Doesn’t seem like much; but in 2006, US cardholder’s affinity credit card use donated over $300 billion to various charities.

One of the nice features of the affinity cards is that the card is designed with the charity name or symbols. Each time a cardholder takes the card out to pay for a purchase, someone is bound to see the charity name or design; and it then becomes a mini, moving, billboard advertisement for the organization.

The trouble with many of these charitable credit cards is that they’re charging the cardholders higher finance fees or interest rates than non-charitable cards, in order to make the donations. Instead of using one of these credit cards, cardholders could donate the amount they would pay on the fees of these cards to the charities of their choice- and end up giving more.

Since the majority of people don’t think to donate that often, however, affinity credit cards are a good way to let the money you spend help someone else.

You’ve worked hard and finally paid off the balance on one of your credit cards. Now, you should go ahead and pay off the balance and cancel the card, right?

Wrong!

You should think twice before canceling a paid off credit card. Closing a credit card account will negatively impact your credit score, especially if you’ve held the credit card for a long time.

Also, if you are about to apply for a loan or mortgage, a recent credit card cancellation could actually hurt your chances of qualifying.

There are two main ways that cancelling a credit card can hurt your credit score:

Number One – Cancelling a Credit Card Can Raise Your Ratio of Credit Card Utilization

Credit bureaus compare the amount of credit that you are using to your total available credit limits. In fact, credit card utilization accounts for up to 30% of your credit score. The lower your credit card utilization figure is, the better it is for your overall credit score. It’s best to keep your credit utilization ratio below 20%. If you cancel a credit card, then you are increasing the percentage of available credit that you are using because the credit limit for that card is cancelled too.

For example: Imagine that you have three credit cards with a $2,000 limit on each of them. On card number 1, you have a $600 balance. On card number 2, you have a $500 balance. On card number 3, you have a $50.00 balance. Your credit card utilization ratio is averaged across the three cards, so it would be ($600 + $500 + $50)/$6000 = $1150/$6,000, or a healthy 19% of your available credit.

However, let’s say that you decide to pay off card number 3 and cancel the card. Your credit utilization ration, now averaged across two cards, would now be ($600 + $500)/$4000=$1100/$4000, or about 28% of your available credit. Closing a credit card account caused your credit utilization score to jump quickly from an acceptable range (19%) to an unacceptable range (28%).

Number Two – Cancelling a Credit Card Affects Your Credit History

When it comes to your credit score, older debt is better than new debt. That’s because loan companies want to see that you have a long history of managing debt well. In fact, the length of your credit history accounts for up to 15% of your credit score. If your card history for a particular card shows a consistent pattern of payment over a long time, then usually you are much better off keeping that credit card account open.

What to Do Instead of Cancelling a Credit Card

Let’s say that you finally have a credit card almost paid off. A natural impulse would be to completely pay it off and close the credit card account. As we have shown, however, this may not be the best overall choice for your credit score.

An alternative to closing an account is to leave the credit card account open, but to make no new charges on it. (If you feel that the temptation to make new charges is too great, then you may wish to hide the card away to avoid using it.)

Guest post by Apex Credit Cards.

Part of managing your credit responsibly involves knowing your FICO score. You can order your score anytime from the various credit bureaus, but there is a fee involved. (Everyone is entitled to one free credit report each year from each of the major bureaus; but it doesn’t include your FICO score, which is a large part of how creditors determine whether or not to issue you credit, among other things).

WaMu has been offering their cardholders access to their FICO score, for free, since 2003. If you have a WaMu credit card, you simply set up access to your online account manager, which allows you to make payments and view your credit card history as well as receive monthly updates from TransUnion regarding your FICO score and why it is what it is! Ongoing credit monitoring can be purchased through various companies for monthly fees that can add up to over $100 a year.

Keeping on top of your credit history is important. WaMu offers you a way to do that simply by being a credit card holder.