Credit Card Blog

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.

MasterCard’s Easy Savings Program helps cardholders save money at various merchants and retailers when they shop using their MasterCard credit card. Previously, the Easy Savings Program added the United States Postal Service to the list of merchants, giving program members an automatic 5% savings when using the US Postal Service website for Click N’ Ship supplies, including shipping labels and postage.

Now, Dunkin’ Donut lovers can take advantage of a 5% discount on any purchases made at Dunkin’ Donuts for members of MasterCard’s Easy Savings Program. Obviously, cardholders are benefiting from savings at their favorite retailers, but it’s important to note that merchants who participate in MasterCard’s Easy Savings Program are also benefiting. The rebates and discounts cardholders receive encourage people to shop there, including people who maybe wouldn’t have shopped at that retailer without the discount as they want to gain the most benefit from the Easy Savings Program membership.

MasterCard estimates that members of the Easy Savings Program spent 60% more with merchants who are part of the program.

As of April 10th, 2009, Capital One will no longer offer health care credit or modify existing loans. This decision comes after a long period of evaluation. In the end, Capital One decided to move away from health care credit due to the current economy and a desire to refocus on their primary business objective: credit card lending.

Since 2001, Capital One has been financing orthodontics, cosmetic surgery, fertility treatments, and other procedures not typically covered by insurance plans. Doctors would often send their patients to Capital One’s web site for more information about health care financing.

But there’s still plenty of competition in the health care credit field. Those who hope to use health care credit to finance a procedure can still choose the Citi Health Card, the Chase Health Advantage loan, or Care Credit from GE Money. These cards and others offer financing for everything from veterinary services to hair restoration and laser vision correction.

Health care credit cards can be useful in the event of medical emergencies, especially since so many Americans lack medical coverage or access to affordable health care procedures. Still, experts warn against opening a line of credit during a time of emotional stress. Sadly, medical debt is one of the primary causes of personal bankruptcy in America.

Before our current economic recession, college students could barely walk across their campus without being (almost) harassed into applying for a new credit card.  Credit card companies would give away t shirts, free pizza and little gadgets (even frisbees!) to encourage students to sign on the dotted line for their student credit card offers.

Today though, it’s becoming increasingly difficult for students to find credit cards.  There are far fewer tables set up across campuses and even credit card websites are making it harder to find the student credit card offers.   For example, American Express has removed their Blue for Students card from their website listing (unless you physically type in “student” in the website search bar).

It hasn’t become impossible for students to obtain credit cards, but instead of them being pushed onto students, those who want the credit cards will have to do a little searching.  If you can’t find an adequate student credit card for your needs, consider becoming an authorized user on a parent’s account.  If the parent has good credit, your own credit score will get a boost from the association (and the opposite is true as well, so choose carefully!)

We all know why credit cards are harmful to our financial situation when they’re used irresponsibly.  When they are used and paid off when the statement arrives (like any other invoice that is due upon receipt!) you can actually benefit more from a credit card than if you made all purchases with cash.  Here are 4 reasons a credit card is better than cash:

1. Easily have a record of all payments and purchases you make each month.  If you stick to one or two credit cards for all expenses and purchases, you will have an itemized statement each month to show you exactly where your money is going, making it easier to stick to a budget.
2. Earn rewards and cash back.  Why pay full price for anything?  When you use a credit card with cash back, you get a portion of everything you pay for on your card back – which is the same as paying less than full price for your purchase.  On cards that give rewards for your purchases, you can redeem for flights, gasoline, hotel stays, car rental, merchandise, etc.  Using rewards cards leverages your expenses and helps you get more out of every dollar you spend.
3. Purchase protection.  When you pay for things using a credit card that offers purchase protection, you give yourself another layer of protection on every purchase.  If the item is not as described, you can let the card company know and they will handle the situation – ensuring you get another item to replace it or your money back.  Many cards also offer warranty protection that goes above and beyond the store warranties.  Your cash purchases only come with the standard warranty provided by the retailer.
4. Credit cards build up your credit score.  When you use credit cards monthly and pay them off monthly, you are reported to the credit bureaus as being responsible with your money.  When you need a loan or financing for a car or mortgage – chances are you’ll be able to get it with a good credit score.  If you buy everything with cash, you won’t have a credit history and will be a riskier consumer in the minds of lenders.

Despite the good news that credit card delinquencies have begun to slow down, Capital One is facing more losses than ever before. The company’s charge-off rate for bad debts rose to 8.06% in February, higher than the charge-off average for the credit card industry.

Capital One was a major issuer of sub-prime credit cards. They were also one of the first companies to hike interest rates and lower credit limits to try and minimize their losses. This has made some Capital One customers less than sympathetic about the company’s plight.

If you’re looking for a better credit card deal, now could be the time to start shopping around. It’s still possible to get a credit card if you have less-than-perfect credit. Check out some of these secured and unsecured credit cards to get started on the road to good credit.

JPMorgan Chase’s cardholders aren’t happy.

After signing up for low-interest credit cards, many customers are being hit with new terms that increase their minimum monthly payments and tack on an annual usage fee.

Customers who call Chase to ask about the changes to their terms are given the choice between paying the higher minimum payments (5% instead of the previous 2%) and the annual fee, or agreeing to a higher interest rate. The new annual fee is also subject to interest.

In response, a law firm in New York has filed a class-action lawsuit against JPMorgan Chase. Cardholders joining the suit believe that they should have the option to pay off their existing balances at the interest rate that was agreed upon when the charges were incurred. Many of them transferred balances from other credit cards because Chase offered them a very low fixed interest rate. They feel that the new changes are unfair and unethical.

Right now, credit card companies reserve the right to change your terms and conditions at any time, for any reason. Hopefully that will change when the new credit card reforms go into effect in 2010. Until then, buyer beware!

If you’re a newcomer to the credit scene, you’ve probably noticed that you need to have credit in order to get credit. It makes sense from a business perspective; lenders want to know that you’re credit-worthy before they risk loaning you money. But that doesn’t make it any easier for first-time borrowers.

Luckily, secured credit cards can help. To use one, you’re required to set up a savings account. The funds in that account act as collateral. If you default on your debt, the card issuer will take the money from your account. But as long as you pay your monthly bill, your money will stay put.

Here are three reasons to get a secured credit card if you have limited or poor credit:

1. It’s credit. Plain and simple. You need credit, and these cards are a great way to start building or repairing your credit score.

2. Your repayment gets reported. Build up a year of timely payments and your credit history will look good.

3. Your savings account funds accrue interest. As long as you pay your credit card bill on time, your collateral money will stay in the savings account where it will draw interest over time.

Need help finding a bank that issues these cards? Check out our selection of secured credit cards today.