Credit Card Blog

Are you in the market for a new or used (but new-to-you!) vehicle?  Sometimes, saving for a down payment is difficult- especially for people who are living paycheck to paycheck.  Having a reliable vehicle is important, though, so there are steps you can take now to help you come up with the down payment for a car later on - without it costing you anything out of your own pocket.

Many credit card companies have relationships with car makers, which means it’s only natural that credit card rewards programs would exist to help with the purchase of a car.  Basically, as you use the credit cards with auto rewards, you earn points or rebates that build up in your account.  When you are ready to purchase your car (even if you are going to be financing the vehicle rather than purchasing it outright), you can call the credit card company and have the rebates you’ve earned applied as the down payment on the car.

Many small business owners use zero-percent interest offers to get their businesses off the ground.  While it can be a reasonable solution to starting a business for individuals who don’t have access to the necessary capital available; you definitely want to be careful that you don’t get in over your head.  Credit cards make it easy to spend more than you can afford if you are not disciplined.  Here are some tips for using a credit card to start a business:

• Avoid spending more than you can reasonably afford to pay each month based on your current income level - just in case your business doesn’t turn a profit or generate cash flow as quickly as you plan.
• Look for zero-percent credit card offers that offer no interest for at least twelve months, followed by a low, fixed-interest rate.
• If using a credit card to fund your business start-up; be sure to use one that also offers a rewards program that you can benefit from (travel rewards, cash back programs, or discounted merchandise, etc).

It’s true: There are credit cards for every occasion. So how do you know if the cards you have are the right cards for you? That depends on your goals. Are you trying to become debt-free? Are you looking to be a home owner in the near future? Do you want to use your credit cards to help seed a college fund for your kids or a retirement fund for yourself? Or do you just need a quick, 0% interest loan for home repairs or other necessities?

Card holders who want to pay off their debt should look for good balance-transfer cards with reasonable credit limits. By paying off their balance within the introductory phase, they can avoid interest rates. 0% APR cards are also great for medium-sized one-time purchases, such as furnishings or moving expenses.

Future home owners will want good credit scores, so they should have several open lines of credit available to them. The trick is to use very little of that available credit. Use too much, and credit scores will suffer.

Card holders who want to plan for the future should take advantage of reward cards that pay into IRAs or 529 educational funds, such as the FutureTrust MasterCard.

Whatever you need, there are credit cards that fit the bill. Don’t make the mistake of opening up charge accounts that don’t suit your needs. Instead, hunt around for a good deal that can really help you get what you want.

The thought of a teenager with a thousand dollar credit limit and easy access to a shopping mall is enough to give most parents the willies. But it’s more common than you’d think. According to recent studies, approximately 8% of all American teens now have their own credit cards in their own names. Is this a good thing? That depends on how well-educated the teens are about credit card use - and debt.

Having a credit card at a young age can nurture a good credit score early. Misuse of the card can also lead to poor credit early in life. If you’re a parent of a card-holding teen, make sure they know that credit cards are intended for emergencies. Or set a spending limit of your own, and encourage them to pay off their balance each month to avoid revolving debt and interest.

If you’re worried about your teen’s spending habits, but want to teach them to be responsible card holders, think about getting them a prepaid credit card. That way, you can decide how much they can spend. You can also co-sign for a card and set up online account access so that you can monitor all charges.

Credit cards are definitely a part of today’s society, so teaching kids to use them right is a good thing. Set an example by using your own cards wisely and encouraging your teens to do the same.

People are becoming more charitable, and they are looking for easy and creative ways to support their favorite causes. Affinity credit cards, which donate a percentage of purchases to a given charity, are quite popular right now. The cards often sport logos or pictures that make clear the causes close to a card holder’s heart. By charging your daily purchases, you can help save the whales, make a dying child’s wishes come true, or give a little support to any one of hundreds of great charities. But what price do banks tack onto these affinity cards? Are the cards actually worth the cost?

The bank that issues an affinity card is the party responsible for making the charitable contributions. Some card holders are critical of the banks because they seem to overcompensate for their donations by charging high finance fees and interest rates. In addition, the amounts they actually donate are pennies on the dollar. Regular use of an affinity card might add up to an annual donation of $25 to support your favorite cause – very little when compared to how much you could help an organization by writing them a check.

As with any credit card, card holders who maintain a monthly balance on their affinity cards will be more affected by high fees and interest than those who routinely pay off their balance from month to month. And while contributions can be on the stingy side, some insist that it’s better to give a little than not at all. For the truly philanthropic among us, affinity cards might best serve as a way to help in addition to – not instead of – more traditional donations.

If you were offered a credit card with a $100 credit limit, but knew that you would have to pay a $100 activation fee in addition to monthly payments and high interest rates, you’d likely turn up your nose and take your business elsewhere.

Sadly, millions of sub-prime card holders are agreeing to these atrocious terms. They fear that their lack of credit, or bad credit, will prevent them from obtaining a more traditional credit card. College students are prime targets for fee-harvesting card marketing. Their biggest mistake is failing to read the terms and conditions of the credit card before signing a contract. Some of these cards offer credit limits as low as fifty dollars. If students and other potential card holders were to read the terms carefully, they’d do the smart thing and walk away.

It’s true that poor or no credit will have an impact on your interest rate when you sign up for a credit card. But even people with the lowest credit scores can do better than a fee-harvester. If you’re in need of a credit card while you build or repair your credit, talk to your bank. If you’ve done business with them for a while, they will likely work with you and extend you credit. There are plenty of ways to get a credit card if you have bad credit. Do your homework, and don’t fall for cards that sound too easy to be true. Chances are, they’re not a very good deal.

The soaring cost of health care is a hot-button issue in modern America. To address this, many credit cards are now offering health care rewards. The reward points on these credit cards can be used to purchase medical supplies, cover co-pay expenses, or earn discounts on prescriptions. Some cards offer discounts on preventative health merchandise, such as blood pressure and heart monitors, and even scales and exercise and fitness equipment.

The Citi Professional card gives cardholders a 10-60% discount on prescriptions at thousands of pharmacies nationwide. The Target store card offers a coupon for 10% off shopping day after you purchase 10 prescriptions at their pharmacy. Bank of America offers a card that makes health care more affordable for Aetna customers. Like other types of reward cards, the incentives vary. Always read the terms and conditions carefully before signing a contract.

Is there a catch? Sort of. These reward cards will cost you big if you make a late or partial payment. If you decide to use one, stay on top of your debt and pay off your balance as quickly as possible. If you make late payments, a spike in your interest rate will eat up the savings you’ve previously enjoyed.

The bottom line: if you spend a lot of money on health care expenses, a health care reward card could be right for you. If you don’t require much medical attention beyond routine check-ups, you might be better off paying cash.

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.

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.

Meta Payment Systems (MPS) has recently introduced the iAdvance Line of Credit.  For all purposes; the advance is similar to a payday loan.  The difference is, consumers gain access to the small loans through a prepaid credit card.  iAdvance deposits money on the prepaid credit card and the consumer can then use it to pay for whatever they choose.

The idea is that the advance helps Americans who are not able to get conventional bank loans.  There is no credit check for a consumer looking to borrow money through iAdvance and it takes about two minutes to enroll, with the advance completed in a few seconds via telephone or internet.  Funds are made available immediately on the prepaid card.

Most non-bank loan products do not report the activity to credit bureaus, and therefore do nothing to assist a customer with establishing or rebuilding their credit.  iAdvance will report the activity and payment history, which can help strengthen consumer credit reports (if they pay the advance back on time).

“iAdvance offers a credit alternative that prevents underserved consumers from falling into a debt treadmill by borrowing from non-bank lenders,” says Trent Sorbe, Senior Vice President of Credit at MPS.