May 27, 2006
Help! My Credit Card Application Was Denied
Yes, you've gotten literally hundreds of credit card applications in the mail and each and every one of them has said you have been pre-approved. Of course it is natural that this would lead us to believe that the application process is simply a formality. After all, you've been approved already so no worries, right? Wrong!
Why You Were Rejected
The most probable answer is your credit score. Although several other things may have been taken into consideration, such as your salary or time on your job, your credit score is usually the biggie. The catch here is that your credit history doesn't even have to be bad, it can be blank and that will work against you just as much as a bad score will. Having no credit is almost as bad as having bad credit since the credit card companies have no reference point to see just how you will handle your credit account.
If you have a history of making late payments on bills and other loans, that will work against you. The credit card company wants to know that you are a worthwhile risk before they issue you a card.
As I mentioned above, other issues also come into play. If you have just started a new job, a creditor may want to wait a while to make sure that you keep it. These are other factors that will be considered if your credit history is less than perfect but not a total loss.
What To Do
Clean up your credit history! This is the single best step you can take in improving your options when it comes to credit cards and other types of loans as well.
Most creditors are required to tell you why you were rejected and what credit bureau they used to access your report. You may be entitled to a free copy of your credit report if the data contained on it was used to deny your application. Check with the credit bureau to see.
If your credit rating is poor, take action. Start paying your bills on time. See about consolidating your bills so you can afford to pay the monthly amount. Eliminate any extra spending that isn't necessary and use that towards your outstanding debts. Yes, this could take some time, but in the long run it will be worth it.
Once you have cleaned up your credit a bit or established some basic credit, let some time pass. Apply for the card again. Once the creditor sees how hard you have been working to get your credit report up to par, you may just be rewarded for your efforts. Be careful, though. The last thing you want to do is go overboard with new credit and dig yourself into a financial hole!
Posted by creditcardsalon at 09:00 AM | Comments (0)
May 26, 2006
Introduction to Credit Cards
It's hard to imagine doing business today without credit cards. If you are among the relatively few who do not own a credit card, the chances are good that you have a great deal of difficulty rent a car or reserving a hotel room. So, just what are these little plastic cards and how do they work? Let's start by explaining the basics.
What is a Credit Card? The dictionary defines a credit card as:
In other words, whatever you charge to your credit account has to be paid back within the credit cycle or an interest amount will be applied to the remaining balance.
Advantages and Disadvantages of Credit Cards
The obvious advantage to using a credit card is that it allows you to purchase some goods or services that you may not be able to pay for immediately. The credit cycle is usually about 30 days, and if the money is paid in that amount of time, there is no interest attached to the money borrowed. This sounds good in theory, but the bottom line is that most Americans don't pay off their balances on a monthly basis. This is where some of the disadvantages come into play.
Any amount that isn't paid off within the time of the monthly cycle will be subjected to an interest charge. Depending upon the rate charged by the specific card issuer, that interest rate can be huge. On top of that, many people will continue to charge things to their card and the balance and interest just continues to grow until they have no hope of ever paying the card off if they just make the minimum required payment.
Credit Requirements
Chances are that every few days you get a pre-approved credit card application with your name on it. Sounds easy, doesn't it? Well, read the fine print and you'll see that many of these offers come with heavy penalties that can add up to high interest rates and annual fees.
To get the best possible interest rate with no additional fees, the credit companies will look at your credit history for information. They will check to see that you are responsible with your credit and have paid your bills in a timely manner. Signs of stability and credit responsibility will go a long way in reducing the amount of interest that card company will charge you. Outstanding loans with late payments and too much available credit will work against you.
Although credit cards can be great in an emergency situation, they can easily get out of hand. Before you apply for one, decide in advance what you plan to use it for. If used with discretion, they can come in pretty handy.
Posted by creditcardsalon at 09:23 PM | Comments (0)
May 24, 2006
Your Credit History
Your credit history. Three simple words that can determine the outcome of our financial success. Your credit history influences any and all decisions that a company or institution will make when considering you as a credit risk. Because of its importance, knowing and understanding what your credit report says about you is vital.
Your Credit Report...
This all sounds pretty technical but what it boils down to is this, your credit score will influence all future financial decisions. That is why it is so vitally important that you keep track of your score and read your report regularly. Mistakes can and have been made. Keeping track of your report will help you to find these mistakes and resolve them in a timely manner.
What Your Score Means For You
Pretty much everything. As I mentioned above, your credit score will influence the decisions that companies make when you apply for credit. If your credit is less than perfect, you may be turned down or at least given a higher interest rate than someone who has a higher score. Problems can stay on your report for as long as two years even after they have been resolved.
What Influences Your Score
Your payment history is one of the main influences. Have you paid your bills on time? If you have routinely been late with payments, your score will be negatively affected.
How much outstanding debt you have is also a factor. This includes the outstanding balance on any loans you may have as well as the credit limits on any credit cards you may have. If you have multiple credit cards and these cards all have high credit limits, even if you don't carry a balance on these cards, the possibility still exists that you will someday charge all these cards to their limits. This possibility alone will negatively affect your credit score.
The length of your credit history is also a factor. Surprisingly, no credit history can work against you. With nothing to go on, the company has no idea as to just how you will handle your credit.
Obtaining Your Report
Since January of 2004, all credit bureaus are required to give you one copy of your credit report for free each year. Although the credit report is free, they can charge you for your FICO score. Contact any of the major credit bureaus either online or by phone and see what their policy is.
Posted by creditcardsalon at 04:00 PM | Comments (0)
May 23, 2006
Handling Your Credit Card Debt
If you don't pay attention, you can run up a staggering amount of credit card debt very quickly. In order to avoid that happening to you, follow these tips that are designed to keep credit card debt under control.
Credit Card Debt Management Tips
If at all possible, transfer your balance to a lower interest rate card. Many card companies now offer low or even zero percent interest on transferred balances for a specific period of time. Before you do this, however, make sure you know what the interest rate will go up to after the grace period is over.
If you have equity in your home, it is possible you could take out a home equity loan to consolidate your credit card debt into one monthly payment at a considerably lower interest rate. Only borrow the least amount of money you can to clear the card and pay attention to the closing costs. Think carefully before you do this though, since your home is the collateral and you could lose it if you default.
You could contact a free credit-counseling firm. They will negotiate lower interest rates and length of payments. They deal with the companies, but you still have to make your payments on time.
How To Use Credit Cards Wisely
Credit cards do make life a little easier as long as you use them responsibly. Here are some guidelines that should help you use these cards wisely.
A credit card is just like any other loan. It needs to be paid back. Don't overspend.
Pay attention to the balance on your card. Always know just what it is and make sure to stop using your card once it exceeds the amount that you can afford to pay in full at any given time.
Keep your receipts from every transaction and balance them with your monthly statement. This will help alleviate any charge errors.
Pay your monthly bill on time. Even if it is just the minimum amount, it is still better than paying late. Not only will the charge card companies impost an interest penalty, your credit score could suffer also.
Don't take your cards with you when you go shopping. If you are going somewhere where you know you will have a hard time controlling your spending, don't take your card with you. Only take cash. It will keep your spending in check. The moral of this story is obvious, use your cards wisely. Otherwise you will find yourself in a hole that could take forever to dig yourself out of.
Posted by creditcardsalon at 11:47 AM | Comments (0)
May 22, 2006
Credit Card Numbers and What They Mean
Have you ever really looked at your credit card and tried to figure out what that huge string of numbers really means? Do these card issuers have so many customers that your account number has to be 16 digits long?
You may be surprised to know that all those numbers you see actually do stand for something, and it's not just who YOU are. Let's take a look.
The very first digit in the series will be a 3,4,5, 0r 6. This number designates the type of card as follows:
3 = a Travel & Entertainment Card like American Express or Diners Club.
4 = Visa and Visa-branded debit cards, cash cards, etc.
5 = MasterCard and MasterCard-branded debit cards, cash cards, etc.
6 = Discover
American Express and Diners Club use the second digit to identify the company. That means that Diners Club cards will start with either "36" or "38", and American Express cards will use either "34" or "37".
The remaining numbers in the series are used for different purposes depending upon the card type and issuer.
In most cases, the next group after the opening series of numbers represents the routing number of the card-issuing bank, the group after that is the user's account number, and the final digit is a check digit. The check digit is a number that is calculated by applying a special formula to all of the other numbers. The check digit is the result of that formula and is used as an anti-fraud check.
To keep things from getting too confusing, look at your card as you follow along for the next steps.
American Express
The American Express Card uses digits three and four for type (business or personal) and the currency of the cardholder's country of origin. The next digits from the fifth through the eleventh are account numbers. Digits twelve through fourteen indicate the card number within the account and the last digit is the check digit.
Visa
With Visa, digits two through six represent the bank number. Beginning with the seventh digit and running through the twelfth or the fifteenth represents the account number and the last number is the check digit. Since all Visa cards do not have the same amount of numbers in the sequence, the number of digits in a group may vary.
MasterCard
For MasterCard, the second digit, through to anywhere between the third and the sixth digit is the bank number. All remaining digits, except the check digit at the end of the series, identifies that cardholder's account. Now that we've gone over it all, you're probably wondering why you were ever wondering in the first place. Just remember though, knowledge is power. Some things are just fun to know.
Posted by creditcardsalon at 02:48 PM | Comments (0)
May 21, 2006
Why Does A Credit Card Expire and How Do You Renew It?
Besides the long string of numbers that identify your account, there is a short little series of numbers that makes up your card's expiration date. Most of us don't even pay any attention to that date, but you can bet that the credit card approval network knows exactly when your card expires, and for good reason. Actually, there are several reasons, so let's take a look.
Top Reasons Why a Credit Card Has an Expiration Date
Some institutions use an expiration date as a way of reconnecting with the cardholder. It gives the company and the user the opportunity to get together and discuss any issues or complaints that the customer may have. It also allows the card company to appear to care about you as a customer. They will send you a friendly reminder, kindly offering you the chance to renew with your same comfortable company. With all the competition out there, comfort and history can go a long way in keeping customers.
Cardholder security is another reason. This allows the company to check up on you and make sure you are who you say you are and nothing has changed. With identity theft being what it is today, this is a good thing. Some people have had credit cards opened in their names without their knowledge and charges have been made. If the card expires, the company will contact you and possibly warn you about current fraud trends.
The company may use the expiration date as a way to remind you they are there. For people who don't use their cards very often, this can be a gentle reminder of just what's in their wallet and, hopefully, remind you to use it.
Nearing The Expiration Date
It is actually quite easy to renew your card. About a month before your current card actually expires, a new one will suddenly appear in the mail to replace your expired one. This is great if you're in town. If you are going to be traveling, check your card before you go. If it will expire before you get back, call ahead and get your new one before you leave.
Once you have your new card, read the material that came with it. This may very well include a list of new and improved terms. If you find these terms to be new, but not improved, contact the card company. Do not use the card until you have received verification that the terms have been changed to your approval. If they refuse, you can always cancel the card. Trust me, it won't take long to find a replacement.
Posted by creditcardsalon at 01:06 PM | Comments (0)
May 20, 2006
Finding A Credit Card That Works For You
Barely a day goes by without getting an offer to apply for a credit card, either by the traditional mail service or online. If this is something you are considering doing, there are several key issues that you will need to understand before you decide what card offer is right for you. All card offers will offer benefits. Finding the one that fits your needs is the key. Let's discuss a few of the things you should be aware of before you do any applying.
What Do You Need The Card For?
If the card is for personal use, decide why and for what do you really need it for. If you plan on using it instead of cash and checks throughout the month but plan to pay it off each month, know what the card's grace period is and what happens if you miss it. Pick a card that offers reward points even if you don't carry a monthly balance. This can be a great way to rack up the frequent flyer miles as long as you're disciplined enough to use it this way.
Know The Interest Rate
Many card companies will offer an initial interest rate that is quite low, sometimes even 0%, for a designated period of time. This rate usually applies to both transferred balances and new purchases. What you need to know is what happens after the introductory phase has ended. Will the interest then skyrocket? Will the interest rate be more moderate as long as you have a good payment history? Look for hidden costs such as an annual fee or a cash advance fee. These are important to know if you plan on using your card effectively.
Incentives
Many cards also offer a whole list of incentives with their application request. Although many of these are nice, usually you have to use your card a great deal to get them. This can become a kind of trap. You know, buy more to save more. If you're going to use your card anyway, then you might as well have something to show for it. Look for cards that offer incentives that interest you and you would actually use.
Posted by creditcardsalon at 09:31 AM | Comments (0)
May 19, 2006
Cash Back and Reward Credit Cards
Credit is sweet if it's properly used and today it can be even sweeter if you use cash back or reward credit cards. With these types of cards, you make your usual credit card purchases and receive incentives in the form of cash back or reward points. You use these incentives to receive free or discounted products and services. Some cards even allow you to donate your cash back to your favorite charity. There are also cards that will allow you to deposit your cash back into a savings account to save for your child's college fund, which can add up over the years and can be very beneficial.
Cash Back Credit Cards
Cash back credit cards usually pay between one or two percent cash back on the majority of your purchases. You receive a check in the mail at specified times for the amount you have earned. All you have to do is put the cash in your pocket to spend as you wish. Sometimes 'hard cash' takes various forms, though. Discounts on particular items, such as furniture or gasoline, are common. Others offer to store the cash back in the form of a negative balance on your account. Such credit can be used towards future purchases.
Reward Cards
Reward cards give you points for your purchases, usually one to five points for every dollar you spend on your credit card. Use caution here. Some reward credit cards only offer rewards when you shop at specific places that they stipulate in their 'Merchant Network' list. If you don't shop at these specified merchants, you will not earn any rewards, or you may get a few points less for using your credit card elsewhere. When rewards have accumulated to a certain level, you can redeem them for 'specified' items at any location that is on their 'Merchant Network' list.
The advantage of a reward credit card is that the reward points are usually a little higher percentage of your purchases than cash back. Reward incentives often reach as high as five percent. On the other hand reward incentives can only be used at specific merchants that belong to the credit card company's 'Marketing Network' and you can only purchase specified items.
Whether you choose a cash back or reward credit card is strictly your decision. If you use your credit card often, rewards can add up quickly, but remember, you can only shop at locations that are specified locations. Cash back can also add up, but not as quickly. Make your decision by carefully researching the incentives of several credit card companies. This will assure that you get a cash back or reward credit card that is right for you.
Posted by creditcardsalon at 09:00 AM | Comments (0)
May 18, 2006
Business Credit Cards — The Mother Lode
Given the variety of business credit card programs available, anyone with decent credit should seriously consider one. Although intended primarily for small business owners, the offers combine every kind of credit card contract. Business credit cards are available with low APR, zero introductory interest rates, balance transfer options, rewards (like airline miles or cash back), and on and on. Business cards offer travel discounts on cars and hotels, frequent flyer miles, travel insurance, even restaurant savings.
They're convenient for large or small expenditures, whether office furniture or stationary supplies. Gone is the need to maintain a petty cash account. And every business owner has seen the day when emergencies arise that present the need for unexpected additional funds. It's times such as those when those high credit limits come in handy.
Nearly all provide, free of charge, quarterly or annual reports that categorize expenses. This helps manage cash flow and makes it easier to track tax deductible items. They help around tax filing time, when you need to total those items. They also help separate personal from business expenses.
Since issuers are eager to do business with other businesses, the customer service associated with such cards is usually superior. Different 800 numbers from those offered consumers are available and the person on the other end is often more eager to assist.
It also makes abuse easier to detect. Terminating one account is as easy as a phone call and your primary account remains active and unaffected. Of course, as the primary account holder, you are still held responsible for any charges made. One way to deal with this unfortunate, but all too common, issue is to use pre-paid cards. Pre-paid cards allow you to load a card with a specified quantity of funds, which automatically caps the amount for which you can be liable.
For businesses that experience lag in accounts receivable (and who doesn't?), business cards can help smooth out cash flow bumps. Pay now with the card, invoice the client, and you'll be better able to time paying your expenses when your clients pay you.
Every major financial institution offers business credit cards. Some have several programs. Everything from Platinum cards to Debit cards are offered, usually with the same low rate and no annual charge. And here's the catch — which for once is in your favor. Anyone can consider him or herself a business owner. No special proof (such as a business license) is required. Most programs are available through the issuers' web sites. You fill out the form, a credit check is performed by an automated computer system, and you receive an answer within seconds.
For a business owner with a thousand things more to do than time to do them, it doesn't get better than that.
Posted by creditcardsalon at 08:13 AM | Comments (0)
May 17, 2006
Airline and Air Miles Credit Cards: What You Should Know
If you have, or are considering applying for, an airline credit card, you need to ask yourself two questions:
1. Are benefits available from the largest airline in my area?
2. Which airline credit card can I use to reap the benefits quickly?
An airline sponsored credit card only allows you to focus on one specific airline. If that particular airline controls the majority of the destination routes from your area, it will give you convenience and efficiency and it will be extremely economical. Bank sponsored credit cards allow you more freedom. Why?
Membership and annual fees can vary greatly for different types of cards. Most major credit card companies offer standard, gold and platinum air miles credit cards. Keep in mind that the better the option, the higher the fees. Gold and platinum cards offer high credit limits but membership and annual fees are also higher and these add up quickly. Most major credit card companies offer introductory air miles cards with 0 % interest. Why? Because they want your credit card business. If interest rates are of concern for you, an air miles card should not be the card you choose because interest rates tend to be very high. Many air miles credit cards have a minimum number of miles that have to accumulate before you receive a free or discounted trip. Be sure to read the fine print and then read it again. Be sure you understand all of the stipulations.
If you travel frequently for business or pleasure, air miles cards can be very beneficial. With these types of cards, you use your credit card to purchase all necessary goods and services. In return, you accumulate rewards in the form of points and then you redeem them for air miles. You then use the air miles to get free or discounted trips to the destination of your choice. As an added incentive, airline credit cards often offer bonus air miles at selected stores, or on specific travel destinations. Usually, both airline and bank sponsored cards give bonus air miles when you sign with their company.
There are some disadvantages to having an air miles card. Usually these cards, as mentioned earlier, have much higher interest rates than standard cards, which can add up quickly if you don't pay the entire balance off each month. Another disadvantage is that these cards are often used for unnecessary purchases in order to accumulate points to be exchanged for air miles. As with all credit cards, air miles credit cards have to be used responsibly in order for the cardholder to reap the benefits.
Posted by creditcardsalon at 01:12 AM | Comments (0)
May 16, 2006
The Tales Of The 0% APR Credit Card
People used to think that they had enough on their benefits with their credit cards. They thought that the rewards they get and the low interest they have is already enough to last a lifetime.
However, there are instances when they get to have the chance of seeing promotions like 0% APR. Now, this is really something. But the question is, is it true? Is there a great probability that credit card companies can actually offer a 0% APR?
Normally, 0% annual percentage rate or APR lasts only for 6 months. The countdown starts from the day the credit card is claimed.
In most instances, 0% APR are attractive to people who would want to have a balance transfer. This is because they would want to consolidate all of their debts into one payment only. And because they have a huge pile of debt, they would rather go to a credit company that can offer them lower interest rates.
With things like 0% APR credit card, who can resist them?
Moreover, with the 6-month timeframe, people will get to have the chance of paying their standing debts for a whole six month-period only. That would be a lot of savings.
But then again, 0% APR credit cards are not at all beneficial to everybody. As they say, there is always an exception to the rule. This refers to those who do not accumulate interest charges simply because they have outstanding balance. So, they wouldn’t feel the necessity of getting a 0% APR credit card.
The best credit cards for these types of people are those that offer rewards and cash backs instead of lower rates.
All of these boil down to one point, that people must be aware on how these wonderful offers can provide them the benefit that they want.
Indeed, there are lots of rewards and 0% APR credit card out there. But if it will not work for those who do not really them because of the mentioned situations, then it’s best not to have them at all. Besides, the best 0% reward is not to have a credit card at all.
Posted by creditcardsalon at 01:04 AM | Comments (0)
May 15, 2006
Applying For A Credit Card With No Credit History
Oddly enough, not only will bad credit work against you when applying for a loan or a credit card, but no credit will too. Even though this doesn't seem fair, it is the way things work in the complicated world of consumer credit. Lenders are leery about opening accounts for people with no credit history because they simply have nothing to base your reliability on.
So, if you can't build a credit history without credit and you can't get credit without a credit history, just what has a person to do? It's nearly impossible to rent a car, stay in a hotel, or shop online without a credit card, so let's explore a few of the options that can eliminate this Catch-22.
Available Credit Options
Find a credit card company that will review your overall financial situation and not just your credit history. Some lenders will look at your employment history, your housing situation, and how often you have moved. If this is all on the up and up, they may approve your application. Again, use this card wisely.
Credit Unions
If you are a credit union member, or are eligible for membership, see what their card issuing terms are. Although they are no giving out cards with their eyes closed, they will often have more relaxed conditions for members. You no longer have to work for a specific company to be eligible to join a credit union. So it's well worth checking if there's one in your area.
Secured Credit Cards
Secured credit cards are offered by lenders who will give you a line of credit that either matches, or is slightly higher than, a cash deposit that you give them to hold. As your experience with the card grows, these lenders will often raise your limit without requiring you to increase your deposit. Eventually, you can use your experience with this lender to apply for cards that are not secured.
Student Credit Cards
If you are a student, then you'll be best off with a student credit card. Student credit cards can be a great way of building the credit history that you will need to depend upon after graduation. The important thing here is to remember to use that opportunity wisely. Many banks will issue college students a credit card, especially banks that are located in college or university cities and towns.
When you do manage to get a credit card, remember that you are establishing a credit history. Show that you are a good financial risk by paying the bill on time. Don't go crazy with the spending. It will only cause you problems in the future.
Posted by creditcardsalon at 01:29 AM | Comments (0)
