Credit Card Blog

One of my credit cards has an annual fee of $59.  When I got the card two years ago, my credit score was quite low and it was my hope to use the card to help re-establish my credit by making small purchases and paying them off each month before the due date.  I was only able to get a credit card with an annual fee, so I accepted it.

In the last year though, my credit score has been steadily climbing and I no longer feel my only option for credit is to you pay $59 a year to keep it.  I contacted the credit card company and asked if they would please remove the annual fee, and of course the response was an immediate “No.”  The customer service representative explained that when I applied for the card I agreed to their terms and conditions, which included a $59 annual fee.

Instead of taking no for an answer, I calmly thanked the man for his time and said that I would be transferring the small balance that remained on this credit card to a new credit card that was not charging an annual fee; and that I would be closing this credit card account.

I was placed on hold after which the representative returned to thank me for being a great customer of their card, not only removed the future charges of the $59 annual fee, but removed the last fee charged to my account and only asked that in return I did not cancel my credit card with them.

This is a perfect example of not taking no as the final answer from your credit card companies. If you have annual fees, ask to have them removed.  If you have a high interest rate, ask to have it lowered.  You might be surprised at what you can accomplish just by taking the initiative.

Jet setters beware: those crystalline waters you dream of are often swimming with predatory scammers. And travelers are their prey of choice.

Why have travel scams become so popular? The payment terms have a lot to do with it. Scammers can offer properties, accommodations, and special activities that require payment in advance. And since anyone can make a professional-looking web site that accepts online payments, many vacationers have parted with their money only to find themselves stranded in paradise.

What can a traveler do to protect themselves? Pay with a credit card. Never use your debit card to purchase travel deals. Debit cards don’t have the same chargeback protection that credit cards do. If you buy with your debit card, your money is simply gone – whether or not the seller delivered the services they agreed to deliver. By using a credit card, you ensure that you won’t have to pay for empty promises.

One word of caution: chargebacks don’t protect you against shoddiness. Even if those 5-star accommodations turn out to be less than stellar, you’re still obligated to pay for them.

Credit cards can be mysterious. Have you ever tried to decipher the small print in a credit card contract? The terms can be confusing, and customer support isn’t always ready or willing to help you navigate through the agreement.

But some credit card ignorance is truly appalling. In studies commissioned by the Consumer Federation of America and Washington Mutual Bank (WaMu), eight percent of card holders didn’t even know whether or not they carried a balance on their cards. Also, less than 33% of Americans knew what a credit score signified and why it was important.

Speaking of credit scores, most Americans surveyed thought that they were entitled to one free copy of their credit score per year. Actually, that rule pertains to credit reports – which don’t typically include credit scores. Those cost extra.

Even more shocking, less than a third of the people surveyed realized that credit scores can impact insurance and mortgage rates. It was also uncommon knowledge that filling up one’s credit cards lowers credit scores regardless of timely payment history.

Did the researchers just stumble upon a group of credit-illiterate respondents? Or are we as a nation really sort of clueless about the way credit works? Either way, this study has some alarming implications.

MasterCard shares have plummeted, though not as dramatically as investors feared they would. Even though litigation and sluggish credit card use have made an impact on MasterCard’s shares, the payment processor still saw second quarter earnings that were better than expected. MasterCard’s shares closed at $244.15 on Thursday, down 9.8%.

Investors have been sweating over the downturn of credit card use in America. The credit crunch is mostly to blame; there just isn’t as much available credit, and card issuers are more picky about who they issue credit to. Additionally, credit limits are being lowered. Adding to the sluggish credit card growth is the fact that many Americans have reigned in their spending to cope with the high cost of living. When cardholders don’t use their plastic, card issuers and their investors are understandably concerned.

MasterCard’s numbers reveal that Americans are using their debit cards much more often than their credit cards. Gross dollar volume on MasterCard credit cards rose 0.7% during the second quarter. In comparison, MasterCard debit card gross dollar volume increased by 15.8%.

According to many news reports, credit card spending has increased as more and more Americans use their credit cards to make ends meet in these tough financial times. But a study by Javelin Strategy and Research has come up with some data that paints quite a different picture.

Javelin, a company in Pleasanton, CA, found that credit cards are actually being used less frequently, and that Americans are shopping with thrift in mind. This flies in the face of the popular belief that Americans are leaning heavily on credit cards to meet their basic needs.

And it appears that conservative attitudes prevail on both sides of the financial fence; credit card issuers have scaled back their efforts to lure new customers. The study also found that 62% of card issuers have reduced their customers’ credit limits. 28% of the 1500 Americans surveyed said that they’re finding it more difficult to pay off their credit card balances. To compensate for higher gas and food costs, most card holders are simply choosing to stay home and prepare their own meals.

The name of Javelin’s study is “Credit Card Issuer Profitability in a Difficult Economy.”

If  you’ve got high interest credit card debt, and the option of getting approved for a credit card with 0% interest on balance transfers, you might want to consider playing the credit card balance transfer game and save yourself some money.

Things to look out for:

• Is there a fee for transferring your balance from your other card(s) to the new card? If so, make sure the fee is less than the money you are saving by paying 0% interest for six or twelve months (or whatever the balance transfer offer is)
• How long is the 0% interest good for?  If only three months and you are transferring a high balance, chances are good that you won’t pay it off during the promotional period.
• What is the interest rate on the unpaid balance when the 0% interest rate period ends?  Is it the same or lower than the interest rate you are currently paying? If not, transfering the balance may not be worth the effort
• Did you try calling the creditor for the balance you are currently paying to ask for a lower interest rate? Sometimes telling them you plan to transfer the balance to a 0% interest card to save money will result in a lower interest rate and save you the time and effort of transfering the balance to a new card.