Credit Card Blog

With an increasing number of people without jobs and struggling to make ends meet, the rate of credit card fraud is on the rise.  Here are some tips for preventing credit fraud:

• Open your account statements as soon as they arrive and look closely at the transactions. Match all of your receipts against the statement to make sure there are no unauthorized purchases on the account and report any that you don’t recognize immediately.
•  Shred receipts and account statements before discarding because some may contain your credit card number.
• Never give out your credit card number to people calling to ask for it by phone, you don’t know if they are really who they say they are.  If you need to make a payment by phone with a credit card or bank account, call the company yourself so you know you are dealing with the right people.
• Obtain a free credit report from each of the credit bureaus at least once per year to ensure it is accurate.
• Keep a firesafe, locked box to hold personal documents such as social security cards, birth certificates and bank records.
• Report a lost or stolen credit card immediately so that it can be canceled.
• If your expiration date is getting close on debit and credit cards, contact the card issuer if you haven’t received a card replacement – it’s possible it was taken from your mailbox by a thief.
• Don’t use obvious passwords for online banking accounts.
• Don’t leave your receipt at the ATM or gasoline pump.
• Don’t put your credit card payments in your home mailbox to be picked up – take it to the post office instead.
• Look for the “https” before the URL of websites you want to buy from to ensure they are encrypted and secure  before making a purchase online.

The Boston Globe has recently published an article, “Lenders Abruptly Cut Lines of Credit“, which discusses the recently common practice of credit lenders to cut spending limits for customers – even if they have good track records of making payments on time.

Diana Lawton, a 44-year-old freelance writer in Chelmsford, is one of those being affected by the change in credit-line policies. She said American Express Co. called her last week to say her two charge cards – one personal, one for business – had been frozen pending a “financial review.” Lawton, who had been using the personal card since 1988, said she was stunned. The company offered no explanation, according to Lawton, but told her she could apply for reinstatement by submitting two years of income tax returns, along with three months of pay stubs and bank records.

Outraged at having to undergo a 10-day investigation of her finances, Lawton canceled the cards. “I know the economy’s bad,” she said, “but this is just shocking to me.”

If you’ve been a card member for years, it would seem the credit card company would have all the information they needed regarding your financial situation.  If you make your payments to them on time – what more do they  need to know? Why ask for financial statements for theprevious two years or pay stubs for three months?  In the meantime, the accounts are frozen and unuseable – which is probably the end goal.  The more accounts they freeze, the less that COULD be charged on the accounts and puts less risk on the lenders for how much money could potentially go unpaid if/when people are unable to make payments.

Fair Isaac Corp.,  the company that calculates credit scores, said it is examining the impact that credit line reductions are having on credit scores. The results are expected to made public within a month or so, and could lead to a shift in the way scores are calculated.  Since the reduction of a credit line will cause an individual to utilize more of their available credit, it has the potential to lower your credit score.  Let’s hope a change in score calculation is in order for these instances.

Studies have shown that the type of spending on credit cards has been changing.  While credit cards were once used for luxury purchases to allow people to pay a little each month rather than saving up enough cash to make the purchases – like vacations and big ticket items – more recently, credit cards are being used to pay for necessities.  People now regularly swipe their cards to pay for groceries, put gas in their cars, and even to pay their other bills.

If this is how you are using your credit cards, you’ll want to use a rewards card to further maximize that spending.  If you have a card that offers rewards or cash back every time you put gas in your car, for example, your gas purchases can help fund your grocery shopping – and it won’t cost you any more to do so.

The trick is to choose a rewards card that matches your lifestyle and how you spend money.  Read the fine print of the rewards program to find out how much you have to spend and on what or from what retailer in order to get the rewards; and then how many rewards points or dollars you must earn before you can redeem.

Carefully selecting a rewards program can save you money in the long run.

Reviewing your personal finance information (in your credit report) is a great way to start out the new year.  Individuals are entitled to receive a free copy of their credit report from each of the three major credit bureaus (Equifax, TransUnion and Experian) once in every twelve month period.

The federal Fair Credit Reporting Act has made it possible for everyone to receive one free credit report per year from each of the three credit reporting agencies since 2005.   Your credit report shows your credit history, and is what creditors and even potential employers view when determining whether or not you are credit-worthy or a good candidate for a job.  The report lists all of your current and past credit card accounts and loans, notations regarding how you make your payments and whether you’ve been sued or arrested before.

The information contained in credit reports are sold to credit card companies and other creditors, insurers, employers and businesses by the reporting agencies.  Poor credit histories and low credit scores make it impossible to obtain new credit, can prevent you from being hired for a job you want, and can raise the amount you pay for car insurance.

Many experts recommend getting one of your free reports every four months throughout the year, to make sure there are no mistakes made on your credit report that could result in problems.  If you notice any errors or accounts on the report that are not yours, you can report it to the reporting agency and have it corrected.

To get your free annual credit report, visit  https://www.annualcreditreport.com.

If you’ve recently struggled with poor money management or simply haven’t had enough money to make your payments on time,  your credit score has likely taken a hit.  Late payments, non-payment and having high debt utilization all contribute to a lower credit score and once your score drops it becomes difficult, if not impossible, to gain new credit.

The good news is you can start improving your credit score without the use of additional or new credit accounts.  Your priority should be to make at least the minimum payment on all of your accounts before the due date.  Easier said than done, sometimes, but it is the only way to start improving a low credit score.  If necessary, look for ways to increase your income and decrease your living expenses as much as possible while you start repaying your debt.  Everytime you find a way to save money, use the money toward paying off debt.  (Here is a useful article that offers 55 Ways to Save $1 per day to get you started!)

If you have accounts that have gone into collections, make arrangements with the collections departments to make payments on the accounts and get them paid up-to-date, and then pay them off at the agreed upon payment arrangement.

It’s a good idea to take a money management course, to help prevent this situation from happening again in the future.  Your local library may have a free course offering, some community colleges and consumer credit counseling agencies offer free money management courses for consumers.

When your debts are all paid on time, you might consider at that point obtaining a new credit card or credit account that will report payments to all three credit bureaus.  There are options for getting secured credit that will be useful for individuals with poor credit (they use the individual’s own money as collateral to obtain the credit).

Making payments on time, and reducing the amount of debt you have will improve your credit score.

With the upcoming changes in credit card rules scheduled for July 2010, credit card companies are looking at the months between now and then to consider how to recoup what will be lost revenue for them.  Cardholders can expect to see increases in their interest rates, lower credit limits and changes to the terms and agreement of their card – particularly if they hold credit cards designed for the subprime market of credit card users.

Come July 1, 2010, new laws will make it extremely difficult for credit card companies to change how interest rates are calculated in order to make more money off cardholders – but there is a great deal of time between now and then which you can expect to see your interest rates climb as credit card issuers attempt to recoup what they’re sure to lose once the changes go into effect.

When the rules do go into effect, predictions by experts say that the credit card companies will begin decreasing their operating costs in order to maintain their profitability.  While new reward programs are constantly being rolled out now and is the primary way a credit card company competes with other companies to attract new cardholders – we are likely to see a decrease in rewards programs once the credit card changes take effect.

While the credit card industry has criticized the changes that will go into effect in 2010 – including an end to double-cycle billing, universal default, and other practices deemed unfair to consumers – more changes could be quicker to come. Consumer advocate groups and many legislators have voiced their displeasure regarding the 2010 timeline. Representative Carolyn Maloney of New York, a vocal supporter of credit card reform, said, “If practices are labeled unfair, deceptive and anti- competitive, Congress should act immediately to stop them, not force consumers to wait another year and a half before they get relief.”

Now new legislation has been proposed which will go into effect within 90 days of the president’s approval. The new laws focus on exorbitant fees and interest rate increases. They would also eliminate restroactive interest rate hikes for existing balances unless the consumer is 30 days behind on their payments.

The proposed laws are very similar to ones that failed to pass in the Senate last year. This year, however, the bill’s supporters are optimistic because they consider the new Senate to be more favorable.

There has been some recent debate over whether or not it’s fair for bartenders to require a patron to leave a credit card in order to open a tab. The general consensus among card holders is that the practice is only carried out in order to keep people from skipping out on a tab. Therefore, if the establishment is upscale or not at all crowded, asking for a credit card upfront might be considered rude. Small pubs and very busy bars can ask for credit cards with no breach of etiquette.

Some patrons found that if they forgot to collect their credit cards before leaving, a 15-25% gratuity was added to their tab. Bar owners claim that the automatic tip charge is justified because of the inconvenience. However, this policy has to be stated in writing on the bar’s menu or posted in a visible place for patrons to see. Then, when a drink order is placed, the patron is assumed to have agreed to the policy.

The best advice for card holders who want to get their drink on is this: Don’t be offended if you’re asked to provide a credit card, and don’t forget your card when you leave. If you do go home without your card, call the pub and ask when it would be most convenient to come and retrieve it.

Some credit card companies have little tricks to squeeze out late fees from more cardholders.  You remember when you used to have a full 30 days grace period to pay your credit card bill before interest or late fees would be added?  You would get a credit card statement with a good two weeks or more before the payment was due.

These days, many credit card users are lucky to get their credit card statements a week before you need to get the check written and in the mail.  In fact, I have been noticing my own credit card due dates changing, and by the time the statement comes in the mail, I have to write the check the second I open the mail and practically hand it to the mail lady before she drives away if I hope to have a chance of getting the bill back before the due date and avoid my late fee!

Instead of stressing over it, I’ve switched to using online account managers for each of my credit card accounts.  I log in, set up automatic payments and make sure the date is set for two or three days before the bill is due.  The only thing I have to be careful of is if the credit card company due date changes – in which case I have to go in and change the date the payments will come out.

If you’re automatically scheduling your payments for credit cards, it doesn’t matter how long the card companies mail sits in a bin before going out to cardholders.  You can receive your statement after it’s due for all you’ll care – your payment will have been made before it was due therefore avoiding the $39 + late fee.

It’s wonderfully convenient for customers to swipe their credit or debit cards and make a purchase, but it’s not always convenient for the merchant to accept credit card payments. That is, the bulky card readers aren’t easily portable for door-to-door sales, flea markets, or trade shows. But ProPay has changed all that with the introduction of a card reader so small that it easily fits into a shirt pocket.

Merchants, meet the ProPay MicroSecure Card Reader. Weighing in at a mere 1.4 ounces, this super-small reader makes it simple for anyone, anywhere, to accept credit card payments. The reader retails for $150, plus a $5 monthly service fee. It features an internal battery that lasts for 8 hours at a time and stores up to 71 credit card transactions. The device can be connected to a computer via USB, where the data can be safely uploaded.

Unfortunately, since the ProPay MicroSecure Card Reader doesn’t have a screen or even keys, merchants will need to hand out written receipts to their customers. Most feel that this is a small price to pay for such a convenient and portable tool. You can learn more about the ProPay MicroSecure Card Reader at ProPay’s web site.