Category Archives: credit card costs

Should I Consider a Bank Credit Card Offered By My Local Bank?

Posted on May 18, 2012 by admin

Take a close look at your Visa or MasterCard and you’ll see the name of a bank on the card. Visa and Mastercard do not issue their own credit cards, and if you applied for either card, you probably submitted your application to a major bank, such as Capital One, Citibank or Chase.  But while these banks are popular and well-known credit card issuers, they aren’t the only option for credit cards. Local banks also issue credit cards; and if the major banks keep rejecting your credit card application, perhaps you need to start small. Here are a few reasons why you may want to shop locally for a bank credit card. You Can Get a Credit Card to Build Credit Some major banks do not offer starter credit cards. Getting approved for credit with these banks requires a history of successfully managing credit. For this reason, it is harder to obtain credit from Chase or Citibank with no credit history or past credit problems. Apply with your local bank and you can obtain a secured credit card account. Open a savings account with the bank, place a security deposit in this account and obtain your plastic. The security deposit acts as collateral and helps minimize the bank’s  loss if you default. You Have a Relationship With the Bank If you’re a long-time customer with a history of good account management, this opens the door to an unsecured credit card — even if you don’t have a long credit history. Major banks base approval solely on your credit report. However, your local bank representative will review your credit application, as well as your account history with the bank. A history of overdraft fees and bounced checks can prevent a credit approval, but if you know how to manage money and you have a stable financial history, local banks are more willing to approve your credit request. Quick, Personable Service Call the customer service number for a major bank and expect a long wait time. Because local banks are smaller and have fewer customers, you’ll spend less time on hold and you’ll speak with a representative quicker. Convenient Payment Options Major banks that issue credit cards aren’t located in every city. For this reason, you’ll have to either mail your credit card payment several days before the due date or pay your bill online. But if you apply for a credit card with your local bank, you can submit your payments via drive-thru or inside teller. Perfect if you don’t have Internet access or if it’s too late to mail your payment. Competitive Offers Don’t assume that major credit card issuers are the only banks that offer low fees on balance transfers and low interest rates. A local bank credit card can have offers similar incentives, and when shopping for a new credit card, it pays to check out your local bank and compare their offers with the major banks. As an existing customer, your might be eligible for certain perks with your local bank, such as no balance transfer fees, a 0% interest introductory rate or a low permanent rate. Continue reading →

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What are Bad Credit Credit Cards?

Posted on May 7, 2012 by admin

Having good credit today doesn’t mean that you’ll always have a high credit score. Job loss, an illness, divorce and other personal issues can negatively impact your personal finances. This can affect your ability to pay your credit cards, mortgage or auto loan, which can lower your credit score and ruin your credit history. But there’s light at the end of every dark tunnel, and with the help of bad credit credit cards , you can rebuild your credit history. Definition of Bad Credit Credit Cards Bad credit credit cards are specifically designed to help people with low credit scores boost their FICO scores. Owning a credit card is key to establishing or repairing a damaged credit score. Credit card companies report account activity to the bureaus on a monthly basis. And as long as you pay your bills on time and keep your balances low, you will receive positive updates. Bad credit credit cards are essentially secured credit cards issued by banks. Credit scores don’t factor into the approval process, however, banks do require a security deposit or upfront payment before approving or issuing a card. Fees associated with secured or bad credit credit cards are costly and it’s important to shop around. In addition to the security deposit, some banks charge an annual fee, a monthly maintenance fee, an account setup fee and a high APR. Security Deposits and Credit Limits Your credit limit on a bad credit credit card depends on your security deposit. Banks require a minimum deposit of $300 to $500, but you can pay a higher deposit to acquire a larger credit limit. This deposit acts as collateral for your credit card account. If you default on your bill and stop paying, the bank can take your deposit as repayment. It’s important to understand that bad credit credit cards are stepping stones to unsecured credit cards, which are reserved for people with good credit. It takes time to rebuild your credit after a major financial mishap — such as bankruptcy or foreclosure — and rebuilding requires smart financial habits. The bank that issues your bad credit credit card will continually monitor your account. They’ll keep watch of your payment history, as well as your spending habits. Good habits, such as always paying on time, paying your balance in full each month and keeping a low balance demonstrates creditworthiness. After sufficient time passes, the bank may conclude that you’re able to handle credit responsibly and offer you an unsecured credit card. Bad Credit Credit Cards and Credit Reports When shopping for a bad credit credit card, choose a bank that reports to each of the three credit bureaus on a regular basis. You can apply for a secured credit card and make timely payments each month. But if the bank doesn’t notify the bureaus of your good payment habits, your credit score will not improve. Don’t assume that every bank sends updates to the credit bureaus. Before applying for a bad credit credit card, call up different banks and specifically ask whether they will update all three of your reports on a monthly basis. Continue reading →

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Consumer Financial Protection Bureau Pushes Easier-To-Read Credit Card Agreements

Posted on December 18, 2011 by admin

On December 7, 2011 the Consumer Financial Protection Bureau ( CFPB ) announced that the way credit card agreements are laid out and presented to the consumer will be changing.  The third phase of the Know Before You Owe campaign is directed at simplifying the agreements credit card users must sign.  The card issuers must be more transparent with their new agreements, showing all the terms and conditions in an easy to read format. The CFPB started in 2010 and is dedicated to a more open government.  By making financial matters easier to understand, the CFPB aims to give more power to the consumer rather than big corporations.  The Bureau recently launched a three part series that started with Mortgages , moved on to student loans , and is now giving the power to consumers with credit cards. The US population is estimated at about 300 million residents.  There are currently over 500 million credit cards in use, the debt on those cards is over $700 Billion, or roughly the same amount as President Obama’s initial stimulus package.  The goal of the Know Before You Owe campaign is to help reduce this amount by informing consumers what they are getting into before they start using a credit card. In order to increase consumer knowledge when it comes to credit cards, there are several changes being considered.  Credit card agreements are long and difficult to read.  They currently average around 5,000 words, much of which is legal jargon hard to decipher by most credit card users.  Buried in this jargon are the key terms, interest rates, and other important information that the consumer should know.  Unfortunately the agreements are written in a way that causes the consumer to pass over it all, and just sign on the line.  The new agreements will have all the important information on the first page in an easy-to-read format, and be nearly 5 times shorter with an average word count of 1,100 words.  See the simplified prototype for what it may look like in the future. One of the worst feelings is the one that hits when you know that you have been scammed.  Even worse is when the person or company that tricked you did it legally.  While the companies issuing the credit cards most likely did not set out to trick their customers, the end result was many felt cheated.  For those who feel they have been cheated, the CFPB has an easy to use credit card complaint feature .  With the new credit card regulations, this feature will hopefully go unused, but until the new agreements start to roll out, you can preview the new agreements, and give feedback to the CFPB here . Continue reading →

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