Credit Card Blog

Between ballooning interest rates and hidden charges, you’ve finally reached that pinnacle point with your finances when you’re ready to pull your hair out and take the hedge trimmers to your credit cards. If the largest portion of your debt is on high interest rate credit cards, take heart in knowing there is a solution.

Transferring all your debt over to one card with a zero percent interest rate can be one debt-reducing solution; not to mention also a stress-reducer. There are currently two available through Discover: Discover More American Flag card offers 0% interest for twelve months with a 5% balance transfer fee; the Escape card offers 0% interest for six months with a 3% balance transfer fee.

Discover More Card-0% interest for twelve months with 5% balance transfer fee.

After the first year of 0% Annual Percentage Rate, the standard rate of 10.99% - 18.99% will apply. Standard rates depend on your credit history. There are multiple designs to choose from and there are over 50 million Discover Card users. Also, there is no annual fee with the Discover More Card.

Escape Card-0% interest for six months with 3% balance transfer fee.

After the initial six months, the standard APR rate of 11.99-18.99% will apply, according to your credit rating. Although there is only a 3% balance transfer fee during the first six months, there is a $60 annual fee in addition to other fees and charges.

Neither of these options will make your debt disappear but can certainly reduce your stress level. Knowing your monthly payment is paying completely for principal and not interest, is a priceless peace of mind. Which card you choose depends on how soon you can realistically pay off your debt; six months or twelve. For your convenience, you can apply for either the Discover More or Escape Card online or by phone.

Capital One introduces the Progress Card for consumers with bad credit. It will be available in time for Christmas shopping but beware of the starting interest rate. In addition to no annual fee, cardholders are rewarded for paying on time and at or above minimum payment, by having their interest rate reduced by 5% every six months; but this rate starts out at 34.9%. This rate may seem astronomical but keep in mind, if after eighteen months you’ve been a smart Progress cardholder then your interest rate will be down to 19.9% which is just above average. By the fourth statement of responsible credit usage, some cardholders may be offered an increased line of credit.

To be eligible for a Progress card, you must be over the age of 18, with at least some credit history. If you’ve declared bankruptcy within the past year or have absolutely no credit ratings, then it’s likely your application for a Progress card will be rejected. The Progress card can be compared to a progress report with incentives and rewards for good management efforts.

Although quite out of character for the credit card industry, the Progress card may prove to be a revolutionary concept. With the unemployment rate about to surpass a historically high 10%, there are thousands of individuals desperate to find ways to reestablish their credit. Even though the Progress cardholder’s interest rate is reduced by 5% per month of smart usage, users should inquire of the lowest level the rate will reach. This card can be a wise and cost-effective tool for young adults trying to implement good credit or for those individuals in dire need of an opportunity to rebuild their credit score. The Progress card may be just that opportunity, not available elsewhere.

According to the Wall Street Journal (citing a Nillson Report), there has been a surge in debit card use even while credit card charges have declined. That doesn’t seem too surprising when you think about it; we’re in a bad economy right now, and people want to pay off their credit cards as quickly as possible. Running their balances up would be counter-productive. Debit cards, on the other hand, are as good as cash at most places.

But some debit card shoppers have raised good points. For one thing, you have greater purchase protection when you buy things with a credit card. Some banks don’t go to bat for debit card customers, so any money that exits your checking account might be gone for good.

Debit cards can also get you into trouble if you don’t track your transactions meticulously. For example, while most charges post immediately, others might take days. This can create the illusion that you have more money in the bank than you actually do. And overspending with a debit card can subject you to numerous $30-40 overdraft charges in a single day.

The bottom line: If you pay off your credit card balances each month, you can safely continue to use your cards to collect reward points and other perks. But if you have big credit card balances that you need to pay down, start choosing debit for your transactions.

As small business loans have dried up, more entrepreneurs are turning to small business credit cards to fund their ventures. Though this is a common approach, you should be careful which cards you sign up for.

Banks are now offering new cards labeled specifically for small business use. However, if the business doesn’t work out and the credit card bill goes into default, banks have a back-up source of funds - you, the cardholder.

One advantage of running a small business is that, if set up correctly, the business’s assets and liabilities are separate from your own. But with this new generation of small business credit cards, banks can come after your personal assets if the bill goes unpaid.

It’s worth noting that the new Credit Card Holder Bill of Rights doesn’t specifically protect entrepreneurs or small businesses. Experts recommend avoiding these small business cards altogether and using personal credit cards to pay business start-up costs. Then, pay the credit card bill from the business’s money.

Chase is planning to launch at least four entrepreneur-targeted cards, and other banks will undoubtedly follow suit. Weigh all of your options carefully when deciding how to fund your small business.

Small business owners often complain about the time consuming task of keeping track of their finances and purchases for tax time. It’s imperative that a business can account for each of their purchases – both for tax purposes and for strong management of their business.Using a business credit card can eliminate some of the time spent categorizing and tracking each of your expenses and purchases.

When you use a single credit card for all business purchases, your monthly credit card statement will give you a record of all of your expenses by the month, broken down by individual purchase. You can often get a year-end statement from the credit card company as well, with purchases already categorized by type and by month which will make your job (or your accountant’s job) of balancing your books much easier.For businesses that have a key employee or two, using business credit cards allows you to keep a close eye on the items they’re purchasing or paying for on behalf of your business. You can issue your key employees a card in their name, and then review the purchases made to each individual card on a monthly basis.Additionally, many credit cards designed for business use offer discounts for businesses – from office supplies to travel discounts to merchandise discounts or rewards. Select a card based on the type of purchases you need to make most often for the most benefits.

Beginning in February 2010, it will become more difficult to get credit cards for those who are under the age of 21. That is because under the Credit Card Accountability, Responsibility and Disclosure Act of 2009, that restriction will be imposed on those who try.

The only exceptions for this are if a parent, guardian our spouse is willing to co-sign the application which makes them liable for the charges on the account as well. Or, there must be proof of sufficient income to meet the financial obligations of the card.

The fear is that before this law goes into effect in February, there will be a run to apply for and obtain credit cards since once one is issued, it will fall outside of the law’s provisions.

In 2004, over 75 percent of undergraduates had at least one credit card. And now, that number is over 84 percent. Most do not pay off their balances every month and the median debt amount held by this group is $1,645 as opposed to around $950 in 2004.

Students in this age category show a clear need for guidance when it comes to using credit cards and paying their balances. Yet, one of the overriding protests to this law is that since they are able to vote, drive and enlist in the armed forces, they should be able to get credit cards, too.

The better course of direction with regards to credit cards and their used would be to educate about the merits of using them responsibly. But, ultimately, it is up to the students and their parents to make sure that their use of credit cards is based on sound logic and with forethought to the consequences.

Have you ever been standing behind someone in a check out line who opens their wallet to get out their credit card to pay… and noticed a rolodex-style wallet containing what looks like a hundred different credit cards?

Are you that person?

How many credit cards is reasonable?  I guess it really depends on each individual, but the general recommendation is to carry somewhere between two and six different credit cards at the most, and they should be the top issuers- Visa, MasterCard, Discover or American Express.

You should also have a goal to pay off your credit card statements in full each month, so keep that in mind when deciding how many cards you should have in your wallet.  If you know you have a tendency to carry a balance from one month to the next, look for cards with no or low interest rates, and you should be receiving some sort of rewards from using your credit card, whether it’s in the form of cash back or airline miles or something else- with all of the various rewards programs, there is no reason not to have one you can benefit from.

The more credit cards you have, the harder it is to remember when each of the payments come due.  it’s better to select two or three cards with great rates and a solid rewards program than to try and spread your purchases out among fifteen different cards and attempt to remember when each are due!

When looking at credit cards, most people focus on the interest rate the card says it offers. While this is an important consideration for people who will carry a balance from one month to the next, it’s not the only thing that matters when looking at credit cards. A card with a “fixed interest rate” can change for any number of reasons, and if you chose your credit card based on the interest rate alone, you could end up very disappointed.

In addition to the interest rate, you should consider whether or not the card offers a grace period. It used to be all credit cards had a grace period of 20 or 25 days. During this period of time, you could pay off your card balance in full and not get charged interest. The grace periods of credit cards is shrinking, some cards don’t offer a grace period at all and begin charging interest from the moment of purchase, and other lenders are sending their statements out so late that it’s almost impossible to mail your payment back in before the grace period is over. If you are someone who tries to pay your credit card balance off in full each month instead of carrying it from month to month, the grace period is probably more important tot you then the interest rate.

If you do carry a balance from month to month generally, you’ll want to take a look at how your payments are applied. If you have different interest rates for balance transfers, new purchases, or cash advances – how will your payments be applied? Will they apply your payment to the lowest interest balance first, or the balance carrying the highest interest? Will your payment be applied to your oldest purchases first or your late fees and penalties?

Remember the long term interest rate is more important than the promotional interest rate, also. Just because a card offers 0% interest for six months on new purchases doesn’t make it the perfect card for you if the interest rate is 27% after the first six months!

The new credit card reform laws will prohibit over-limit fees, double cycle billing, and interest rate hikes when payments are less than 60 days late. But that doesn’t mean you don’t have to watch out for any other fees. To make up for lost revenues, cardholders are likely to see other fees that are not specifically addressed in the credit card legislation.
Possible fees you should be on the look out for include:

• Fees for checking your balance
• Annual fees on credit cards that didn’t charge them previously
• Fees to participate in rewards programs
• Higher interest rates for everyone, regardless of credit scores
• An end to grace periods (interest will be charged immediately after a purchase rather than giving 20 days or so to make the payment before interest is charged)
• No 0% promotional offers 

It seems like all we hear about are the credit card industry’s unfair practices and arbitrary rules. Now it’s time to greet a new trend in credit card consumer relations: the consumer-friendly credit card. (Yes, they still make those.) Here are three of the top picks:

Discover. This card issuer is lauded for its adherence to the Fed’s rules at a time when most of its competitors are trying to find ways around them. Discover gives customers a reasonable amount of time to pay their bills; doesn’t charge a fee for payments made via phone; and gives consumers the right to choose when their monthly payments are due. Its payment policies make Discover a top choice for consumers.

Wells Fargo. This lender doesn’t believe in last-minute interest rate hikes. Instead, it gives consumers 45 days’ warning before their interest rate changes. Also, Wells Fargo doesn’t participate in universal default. If you’re late on another credit card payment, your Wells Fargo interest rate will not suffer as a result. If you have a bank account with Wells Fargo, you can qualify for some of the lowest interest rates available. The Walls Fargo approach to interest rates makes this issuer a top consumer friendly contender.

Citibank. New cardholders are encouraged to apply for the Citi Forward Card. This recent offering rewards consumers for making timely payments and staying within their credit limit. These rewards come in the form of reward points and lower interest rates. The Citi Forward Card encourages good credit behavior, and can be helpful for first-time cardholders as well as consumers who are trying to rebuild their credit and change their approach to credit spending.