Credit card issuers are on a rampage – cutting credit limits, increasing interest rates, and closing inactive credit card accounts. Though you don’t have much control over rising interest rates and decreased credit limits, you can keep your credit cards open by using them every once in awhile.
Why are creditors closing inactive cards?
Credit card companies don’t make any money on accounts that aren’t used. In fact, it costs them money. During this credit crisis, it’s risky for credit card companies to have unused credit cards on their books, because it’s hard to predict what you’re going to do with the credit card. You could decide to max out the card one day and never pay back the balance. In this case, it’s cheaper for the credit card company to just let you go.
Why should I care?
Having a credit card closed could lower your credit score. First, part of your credit score calculation considers the age of your credit – an older credit history is better. If your oldest credit card gets closed, it won’t be factored into your credit score. Your credit will seem younger, and your credit score will drop.
Another part of your credit score measures your level of debt by comparing your total balances to your total credit limits. The higher your credit card balances in relation to your credit limits, the lower your credit score will be. Having a credit card closed raises your ratio of balances to credit limits – your credit utilization – and lowers your credit score.
What can I do?
If your credit card has recently been closed, call your credit card issuer and request to have your account reopened. It helps if you’ve been a long-time, timely-paying customer.
Keep your credit card open by using it periodically and paying the balance off when the billing statement comes. By doing this, you’re letting your credit card know that you still appreciate and use the credit card.
Showing posts with label credit cards. Show all posts
Showing posts with label credit cards. Show all posts
Monday, December 29, 2008
3 Things to Check On Your Credit Report
Your credit report is one of the most important documents of your life. It’s like your financial permanent record. Nearly everything you do with money follows you around on your credit report for future creditors and lenders to see and judge you by. You should look at your credit report at least once a year to make sure everything’s being recorded correctly. Here are three things you should check when you review your credit report.
It’s your report. Check the name, current and previous addresses, and current and previous employers. Confirm that the correct names are associated with your social security number. Married women may see their maiden names on their credit reports. But, if you’re a Jr. or Sr., make sure the correct one appears on your report.
The accounts are yours. Look through each account to be sure it’s yours. Mistakes have been known to happen, putting the wrong credit card accounts on the wrong credit reports. If you find an account that doesn’t belong to you, dispute it with the credit bureaus. If you find multiple inaccurate accounts, you may have been a victim of identity theft. In that case, you should file a fraud alert with the credit bureaus.
Your payment history is correct. Each account lists the number of delinquencies you have in your payment history. For example, one of your accounts might say “30 days late, one time” or “charged-off.” Delinquent payment history is negative and can only be reported for seven years. If the late payments are inaccurate or the reporting time limit has passed, you can dispute the information with the credit bureau.
When you order your credit report, it will have instructions on disputing negative information. Make sure you send your dispute in writing and save a copy for yourself. Expect to receive a response from the credit bureau within 30-45 days.
It’s your report. Check the name, current and previous addresses, and current and previous employers. Confirm that the correct names are associated with your social security number. Married women may see their maiden names on their credit reports. But, if you’re a Jr. or Sr., make sure the correct one appears on your report.
The accounts are yours. Look through each account to be sure it’s yours. Mistakes have been known to happen, putting the wrong credit card accounts on the wrong credit reports. If you find an account that doesn’t belong to you, dispute it with the credit bureaus. If you find multiple inaccurate accounts, you may have been a victim of identity theft. In that case, you should file a fraud alert with the credit bureaus.
Your payment history is correct. Each account lists the number of delinquencies you have in your payment history. For example, one of your accounts might say “30 days late, one time” or “charged-off.” Delinquent payment history is negative and can only be reported for seven years. If the late payments are inaccurate or the reporting time limit has passed, you can dispute the information with the credit bureau.
When you order your credit report, it will have instructions on disputing negative information. Make sure you send your dispute in writing and save a copy for yourself. Expect to receive a response from the credit bureau within 30-45 days.
Friday, December 19, 2008
Major Changes to Credit Card Rules
To apply for a credit card, click here.
The Federal Reserve voted on December 18 to approve rules that would reform several unfair practices within the credit card industry. Some of the rules include:
· No interest rate increases during the first year of opening an account, unless the interest rate increase was disclosed when you opened the account. You can enjoy your interest rate for a full 12 months without having your credit card issuer increase your interest rate. The exception is when the lender told you your rate would increase when you opened your account. For example, you knowingly signed up for a credit card with a 6-month promotional rate.
· No interest rate charges on pre-existing credit card balances. If your interest rate increases, you can continue to pay your current balance at the lower interest rate. Only charges made after the interest rate increase will have the new interest rate.
· Credit card issuers must give a 45-day notice before increasing your interest rate. This is a drastic change over the current 15-day advance notice time period. The 45-day advanced-noticed includes penalty rate increases.
· Your minimum payment can be increased if you don’t make the minimum payment within 30 days of the due date.
· No more double billing cycle finance charges in which credit card issuers calculate your finance charge using an average of the current and previous month’s average daily balances. Under this method, you would end up paying interest on balances you’d already paid.
· Subprime credit cards can no longer charge fees that exceed 50% of the credit limit. Furthermore, the fees charged when the credit card is first opened can’t exceed 25% of the credit limit. Other fees must be spread evenly over a minimum of 5 billing cycles.
Although the rules make strides in protecting consumers from unscrupulous credit card issuers and their expensive practices, they won’t take effect until January 1, 2010. That gives credit card issuers plenty of time to wreak havoc on consumers.
The Federal Reserve voted on December 18 to approve rules that would reform several unfair practices within the credit card industry. Some of the rules include:
· No interest rate increases during the first year of opening an account, unless the interest rate increase was disclosed when you opened the account. You can enjoy your interest rate for a full 12 months without having your credit card issuer increase your interest rate. The exception is when the lender told you your rate would increase when you opened your account. For example, you knowingly signed up for a credit card with a 6-month promotional rate.
· No interest rate charges on pre-existing credit card balances. If your interest rate increases, you can continue to pay your current balance at the lower interest rate. Only charges made after the interest rate increase will have the new interest rate.
· Credit card issuers must give a 45-day notice before increasing your interest rate. This is a drastic change over the current 15-day advance notice time period. The 45-day advanced-noticed includes penalty rate increases.
· Your minimum payment can be increased if you don’t make the minimum payment within 30 days of the due date.
· No more double billing cycle finance charges in which credit card issuers calculate your finance charge using an average of the current and previous month’s average daily balances. Under this method, you would end up paying interest on balances you’d already paid.
· Subprime credit cards can no longer charge fees that exceed 50% of the credit limit. Furthermore, the fees charged when the credit card is first opened can’t exceed 25% of the credit limit. Other fees must be spread evenly over a minimum of 5 billing cycles.
Although the rules make strides in protecting consumers from unscrupulous credit card issuers and their expensive practices, they won’t take effect until January 1, 2010. That gives credit card issuers plenty of time to wreak havoc on consumers.
Monday, December 15, 2008
Resist Store Credit Card Offers
Retail store representatives unfailingly try to get you to sign up for their retail-branded credit cards. “You can save 15% off your purchase today by signing up for our credit card.” They get incentives for each person who signs up for a credit card. So, saving you 15% is agenda-pushing at its best.
Given that store credit card interest rates are in the 20% range, you don’t really save 15% on your purchase unless you pay your balance in full when the first statement comes in the mail. And how many of us actually do that? You can get much better interest rates on non-retail-branded credit cards that you can use in multiple places.
Another reason you should say “no” to store credit cards, it’s never good to sign up for a credit card on impulse. Instead, you should shop around for a credit card based on your spending habits – not the stores where you shop. Even annoying credit card mail offers send you the interest rate and fees for the credit card. Store credit cards don’t give you that luxury. They expect you to open up a new credit card without giving you any information about the card, for $15 off your purchase.
Then, consider the impact of a new credit card on your credit score. First, your credit score takes a hit when you make the application for credit. An inquiry is placed on your credit report and influences your credit score for 12 months. The inquiry doesn’t fall off your credit report until 24 months have passed.
Store credit cards typically dole out credit like there’s a credit famine. You can count on having a low credit limit. Your credit utilization will increase which will cause your credit score to drop a little more.
The list of cons for a store credit card outweigh the pros. Don’t let an offer to save you a few bucks cloud your judgment.
Given that store credit card interest rates are in the 20% range, you don’t really save 15% on your purchase unless you pay your balance in full when the first statement comes in the mail. And how many of us actually do that? You can get much better interest rates on non-retail-branded credit cards that you can use in multiple places.
Another reason you should say “no” to store credit cards, it’s never good to sign up for a credit card on impulse. Instead, you should shop around for a credit card based on your spending habits – not the stores where you shop. Even annoying credit card mail offers send you the interest rate and fees for the credit card. Store credit cards don’t give you that luxury. They expect you to open up a new credit card without giving you any information about the card, for $15 off your purchase.
Then, consider the impact of a new credit card on your credit score. First, your credit score takes a hit when you make the application for credit. An inquiry is placed on your credit report and influences your credit score for 12 months. The inquiry doesn’t fall off your credit report until 24 months have passed.
Store credit cards typically dole out credit like there’s a credit famine. You can count on having a low credit limit. Your credit utilization will increase which will cause your credit score to drop a little more.
The list of cons for a store credit card outweigh the pros. Don’t let an offer to save you a few bucks cloud your judgment.
Monday, November 24, 2008
Be on Guard for Holiday Credit Card Fraud
The holiday season is one of the heaviest credit card fraud seasons. Thieves prey on unsuspecting shoppers, lifting their credit card information, or even the cards themselves, when their owners least expect it. Credit card fraud can be difficult to detect and expensive to fight. Preventing fraud is the best approach to dealing with credit card fraud during the holidays.
Purse and Wallet Safety
Ladies, when you’re holiday shopping, wear a purse with short straps. One that sits directly under your arm is ideal to prevent purse snatching. If your purse hangs down near your waist or hips, it’s easier for someone to snatch it away from you or pickpocket you.
Guys, it’s unusual, but safer, to keep your wallet in your front pockets while you’re shopping. Keeping your wallet in your back pockets makes it easy for thieves to sneak your wallet away from you.
Keep Credit Cards to a Minimum
Shop with only one or two credit cards. The more credit cards you have, the harder it is to keep up with them and the easier it is for one or more of them to be stolen.
Use Credit Cards Over Debit and Check Cards
Click here for more credit card information
I recommend doing your holiday shopping using a credit card rather than a debit card or check card. If someone makes purchases on your stolen check card, the money immediately comes out of your account. It could take a few days for the money to be credited back to your account. You can dispute fraudulent credit card charges with your card issuer without having to be personally liable for the charges. Just make sure you pay off the credit card balance when you’re done shopping.
Protect Your Credit Card
Keep an eye on your credit card in stores. Don’t take it out until you’re ready to have it swiped. With digital cameras and camera phones, sneaky thieves could photograph your credit card and use the information to make purchases online. Always double check to be sure you get your credit card back after using it.
Check Your Statements for Theft
Check your billing statement frequently, especially if you can check it online. That will give you an early clue if your credit card has been compromised.
Report Lost or Stolen Cards Immediately
Reporting your stolen credit card before the thief has a chance to use it lets you off the hook for any fraudulent charges made. If you wait, you could be liable for up to $50 of the purchases.
Purse and Wallet Safety
Ladies, when you’re holiday shopping, wear a purse with short straps. One that sits directly under your arm is ideal to prevent purse snatching. If your purse hangs down near your waist or hips, it’s easier for someone to snatch it away from you or pickpocket you.
Guys, it’s unusual, but safer, to keep your wallet in your front pockets while you’re shopping. Keeping your wallet in your back pockets makes it easy for thieves to sneak your wallet away from you.
Keep Credit Cards to a Minimum
Shop with only one or two credit cards. The more credit cards you have, the harder it is to keep up with them and the easier it is for one or more of them to be stolen.
Use Credit Cards Over Debit and Check Cards
Click here for more credit card information
I recommend doing your holiday shopping using a credit card rather than a debit card or check card. If someone makes purchases on your stolen check card, the money immediately comes out of your account. It could take a few days for the money to be credited back to your account. You can dispute fraudulent credit card charges with your card issuer without having to be personally liable for the charges. Just make sure you pay off the credit card balance when you’re done shopping.
Protect Your Credit Card
Keep an eye on your credit card in stores. Don’t take it out until you’re ready to have it swiped. With digital cameras and camera phones, sneaky thieves could photograph your credit card and use the information to make purchases online. Always double check to be sure you get your credit card back after using it.
Check Your Statements for Theft
Check your billing statement frequently, especially if you can check it online. That will give you an early clue if your credit card has been compromised.
Report Lost or Stolen Cards Immediately
Reporting your stolen credit card before the thief has a chance to use it lets you off the hook for any fraudulent charges made. If you wait, you could be liable for up to $50 of the purchases.
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