Category Archives: credit card usage

Can I Get a Credit Card for No Credit

Posted on May 5, 2012 by admin

Apply for a credit card or loan without a credit history and you’re likely to get turned down. Getting approved for a credit card is a Catch-22. You need credit to establish credit, but you can’t establish credit if companies won’t approve your application. This is a problem that’s plagued young adults for years. But while it’s frustrating and discouraging, rest assured that you can get a credit card with no credit history. Retail and Department Store Credit Cards It’s not a major credit card and you can’t book a flight with a retail or department store card. But if you’re looking to establish credit and get your foot in the door with credit card companies, this is an excellent place to start. It’s easier to get approved for a retail or department store card with no credit history. These credit card issuers typically only require a steady source of income and perhaps a bank account. You can apply for an account in-store or online and receive an instant approval. Student Credit Cards The college years are the best times to establish a credit history. By the time that you’re ready to graduate and buy your first place, you can have the credit score to qualify for a purchase. But getting a credit card in college isn’t easy, especially since some college students don’t earn a lot of money. With student credit cards , getting a credit card with no credit has never been easier. These credit card issuers target college students and they strive to help students jump start their credit. The application process is simple, and as long as you meet the basic requirements, you’re approved for credit. The application will request your Social Security number, your address, your place of employment and your monthly income. Understand, however, student credit cards do require some type of income. If you don’t have an income source, you can ask your parents to cosign the credit card application. Authorized Users Gaining access to someone’s credit card by becoming an authorized user is another fast way to get a credit card with no credit. As an authorized user you don’t apply for the credit card account, yet you can enjoy the benefits of having a card in your name. Here’s how it works. You approach someone with a credit card account, perhaps a parent, your spouse or a sibling. You then ask this person to add your name to one of their accounts. This person contacts their credit card company, adds your name and Social Security number and the credit card company mails a card in your name. It’s that simple. You’re not responsible for the account or the monthly payments, yet the account appears on your credit report. Your credit score gradually increases each time the primary accountholder pays his bills on time or pays off the account. In time, your score will be high enough to qualify for your own credit card. Secured Credit Card If you have a savings or checking account with a bank or credit union, visit the nearest branch and ask about first-time credit cards. These types of credit cards are typically secured accounts that require a security deposit and other fees. You don’t need a credit score or credit history to qualify. In fact, you can get a secured credit card for no credit. Credit limits are modest with secured credit cards, but they can increase as you prove your creditworthiness. Continue reading →

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Which Credit Card is the Best for You?

Posted on April 25, 2012 by admin

Ask five different people to name which credit card is the best available and you’ll probably get five different answers. The best credit card often depends on what you’re looking for or need in a credit card company. There’s a lot to consider when applying for a new credit card account, and with so many types of cards on the market, finding the best card requires patience and research. Here are a few questions to help narrow down your search for the best credit card. Do you have a good credit score? Your credit history directly affects the type of credit card that you’re able to get. It’s no surprise that people with a long credit history and an excellent credit score have more credit card options. They can apply with just about any bank or financial institution and get approved. But if you have no credit history or a low credit score, a secured credit card might be the best credit card for you. You can get a low-rate credit card and use the card to rebuild or establish your credit history.  Make timely payments for several months and the bank that issues your secured credit card may refund your deposit and switch your account to an unsecured credit card. Do you have existing credit card debt? If you’re already carrying a balance on your current credit cards, you can apply for a balance transfer credit card and consolidate your balances at a lower interest rate. You’ll pay less interest each month, and with 0% introductory rates, you can eliminate the credit card balance faster. Some credit card companies limit introductory rates to balance transfers only, in which you’ll pay a higher interest rate on purchases. When selecting a balance transfer credit card, research and pick a card with the lowest balance transfer fee. The fee to transfer a balance is around 5% of the balance, but many cards offer fees as low as 3%. Are you looking for a credit card with perks? If you’re a frequent traveler or a frequent credit card user, you might find which credit card is the best depends on how many points you earn on every dollar spent. Credit cards, such as the Capital One VentureOne and the Citi Thank You card lets you earn points on everyday purchases like groceries, gas and meals. You can redeem these points for cash, merchandise, hotel stays and airline tickets. Rewards credit cards vary, with some charging an annual fee. You may also deal with blackout dates on travel and reward points with expiration dates. Research different rewards credit cards and compare program requirements before submitting an application. How often do you use credit cards? If you’re not a big credit card spender and you only pull out the card for emergencies or as a last resort, then you probably don’t need a card with a lot of perks or rewards. You may decide which credit card is the best is a basic, no rewards credit card, such as the Slate by Chase or Citi’s Simplicity credit card. Annual fees are less common with basic credit cards and some cards offer low interest rates. Continue reading →

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Risk of Letting My 9th Grader Have a Credit Card

Posted on April 19, 2012 by admin

As a parent you might toy with the idea of allowing your 9th grader or high schooler to have a credit card. Teenagers under the age of 18 cannot apply for a credit card. Thus, you would have to cosign the credit card application or add your child as an authorized user on your account. There are definitely benefits to allowing your 9th grader to have a credit card. It takes credit to build credit, and if your child has a card in his name, this can jump start his credit history . He’ll have a credit score and an established credit history by the age of 18. With a credit history, he can apply for a car loan, a student loan and even rent an apartment on his own. While there are benefits to giving young teenager access to a credit card, there are also major risks. Loss or Theft of the Credit Card It’s important to set rules before giving your 9th grader a credit card. For example, you might prohibit your child from taking the card to school or showing the card to his friends. Regardless of whether your child is responsible, he can lose the credit card at school or leave the card at a friend’s house. One of his classmates or “so-called” friends can find or steal the card and run up the bill. Instant Gratification Putting a credit card in your 9th grader’s hands can give birth to some bad habits. Even if you give your child a monthly spending budget, the credit card lets him buy whatever he wants or whatever you allow. He may not work for these purchases, therefore, he may fail to grasp the value of a dollar. Granted, each child is different. However, easy access to credit and material possessions at a young age can give some teenagers a sense of entitlement. Huge Credit Card Bills Since teenagers under the age of 18 cannot apply for credit, they’re ultimately not responsible for charges incurred on their credit card. Your child may hold a card in his name. But at the end of the day, you are responsible for the account and any charges on the account. It doesn’t matter whether your child disobeyed and went over his spending limit. The credit card company wants its money and the company will hold you responsible for the balance until it’s paid off. Deciding the Best Time to Give a Teenager a Credit Card Some teenagers are more responsible than others, and the decision to give your 9th grader a credit card is a personal one. But before cosigning a credit application or adding your high schooler as an authorized user on one of your accounts, consider whether your child can handle credit. Questions to consider include: Can the child manage a savings account? How well does he manage his allowance? Is he a frivolous spender? Your answers to these questions can help you decide whether he’s ready for his own credit card. Continue reading →

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No-Frills Credit Cards: No Rewards, But Lower Rates

Posted on April 18, 2012 by admin

No-frills credit cards are making a comeback.  In fact, no-frills — also called plain-vanilla — credit cards accounted for approximately “30 percent of credit card offers” mailed to consumers last year. But why the attraction? No-frills credit cards are simple and straightforward. They do not feature a rewards program or other perks, which are highly coveted by some cardholders. Rewards credit cards let consumers earn points on every dollar that they spend. And once they accumulate enough points, they can redeem their points for gifts or cash. Unfortunately, everyone doesn’t meet the qualifications for such programs. Reward programs target a specific group of people — those who pay their balances in full each month and those with good credit. If you don’t meet the criteria for a rewards card, apply for a no-frills credit card. You won’t get cash back or earn free vacations, however, no-frills credit cards are attractive in their own way. Lower Interest Rates Credit card interest rates can range as high as 25%. The higher your interest, the harder it is to pay down your balance. If applying for a no-frills credit card, do not assume that you’ll get hit with an enormous rate. In fact, some simple, no perks credit cards have rates that are lower than rewards credit cards. It all depends on the credit card company. For example, Barclay’s no-frills MasterCard carries an interest rate of about 8% on purchases, whereas HSBC ’s no-frills credit card carries an interest rate of 17.99% on purchases. Low or No Annual Fee Annual fees are typical with reward programs. This is the price that you pay for perks and bonuses. Because no-frills credit cards do not have a rewards or cash back bonus, you can apply for a credit card and never pay an annual fee or pay a very small fee. The annual fee for a rewards credit card varies, but it is not uncommon to pay a hundred dollars or more a year just to own the card. Ditch your rewards card for a no-frills card and you’ll save money each year. Simplicity It you apply for a rewards credit card with the sole intent of racking up bonus points for a prize, there’s the risk of overspending. With a no-frills credit card, the temptation to spend can drop because you’re not working toward a prize. The simplicity of the card makes it easy to manage your credit. You do not have to keep track of points, expiration dates or blackout dates. Simply buy what you need, pay your balance and enjoy a lower rate and fees. No-Frills Equal Easier Approvals You practically have to jump through hoops to get approved for a rewards credit card. Because of the perks associated with these cards, credit card companies scrutinize each application and applicants need an excellent credit score. This is great if you have little credit card debt and an excellent history, but not so great if you’re rebuilding or establishing credit. Fortunately, there are plenty of no-frills credit cards for people with no credit history, a fair credit history or a bad credit history. Continue reading →

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How Has the Number of Credit Cards Per US Household Changed Since 2008?

Posted on April 12, 2012 by admin

The recession of 2008 is apt to be remembered for a long time. The fact that Americans deeply loved credit at that time is seen in the number of credit cards they held that year. Credit came easy and Americans had grown accustomed to saying “charge it” wherever they went – whether they could pay for those items or not. In 2008, it was not at all unusual for a household to have not just one, but several credit cards. According to a government census , there were 176 million people in America that had credit cards. At the same time, however, there were 1.49 billion credit cards in existence, which is just under 8.5 credit cards per cardholder. At the same time, the amount of credit that was on those credit cards was also at an all-time high. In 2008, credit had hit $975 billion, and these heights have not been reached since – at least not yet. After 2008, people began to pay off their debt and slowed down in obtaining new credit cards and new debt. Many people ran into all kinds of financial difficulties at that time, and large numbers of people lost jobs (unemployment soon hit 10.6 percent nationally, from a previous five percent before 2008) and many others even lost their homes. A large number of bankruptcies occurred everywhere in the next couple of years, and some are still occurring as a result. The good news is that the number of bankruptcies has dropped in 2011 . Americans began rethinking about credit and realized, perhaps for the first time in a long time that although credit can be good, staying in debt unnecessarily over the long term just does not make a lot of sense. As a result, many people cancelled their credit cards and worked on paying down the troublesome debt. This resulted, for the first time, in an overall decrease in the amount of credit card debt After a while, people began to get back on their feet financially, and the economy picked up some. Soon, as might be expected, more people started to get new credit cards. Although the need for new credit cards has increased since its drop off after 2008 and 2009, it has not yet reached its previous peak levels. A definite upswing is on the way, however, and the numbers indicate that people once again feel a need to buy things on credit. Credit cards are definitely coming back, but there is also an increase in the number of debit and prepaid cards being used. In 2011, the number of total credit cards is around 1.4 billion , [i] but the number of credit card owners has increased – 181 million people now have one or more cards. Visa remains the most popular credit card, with 111 million cardholders. People that own this card have $388 billion in debt. MasterCard is next, with 98 million cardholders, and they have an overall debt of $284 million. The third card most popular card is American Express, and those cardholders owe $94 million. The total amount of credit card debt in the United States is now around $798.3 billion, with the average of 7.7 cards per household. 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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Revolving Credit: Americans Borrow More in October

Posted on December 9, 2011 by admin

A recent release by the US Federal Reserve indicated an increased use of consumer credit.  According to the release, consumer credit increased at an annual rate of 3.75 percent in October, revolving credit increased at an annual rate of 0.5 percent and non-revolving credit increased at an annual rate of 5.25 percent. These changes could be an important indication as to the state of the economy. Revolving credit is the amount that consumers use for credit cards and similar financial tools.  According to the Financial Times , an increase of use in revolving credit can be a positive indication of consumer confidence.  After a series of several months that demonstrated a decrease in consumer credit, this recent increase could indicate that consumers are more willing and more comfortable accruing debt.  In particular, Black Friday and Cyber Monday saw record high sales this year as compared to previous years.  While consumers may or may not have accrued specific debts by purchasing holiday gifts, it is still a forecast of public spending and consumer credit. On the other hand, an increase in credit use can also be a negative indication of the economy if consumers are accumulating too much debt to offset declining incomes. Considering the increase profits of retailers this holiday season, the increase in revolving credit could also be a reflection of consumers charging holiday purchases, in which case a future decline in credit use will be likely within the next two months. Non-revolving credit refers to credit for long-term investments, such as vehicle loans or student loans. According to Bloomberg , the economy is stimulated during times when consumers borrow to buy cars and other large purchases.  Bloomberg also holds that the increased use of credit can also be an indication of future spending patterns.  Non-revolving credit increases are more indicative of spending patterns since they are not as volatile as credit card use. Continue reading →

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