Credit Cards


What to know and how to choose the right card
Types of Cards
Tips on Spending
Errors and False Charges
FAQ


What to know and how to choose the right card


Are you looking to reestablish your credit and want to decide which credit card is for you; or are you just looking for a credit card and don't' know which way to turn? Secure Credit Solutions wants you to choose the wisest credit card for you, which is why we are providing you with some essential information you should know about credit cards before you get in to them (or back into them).

What you should know before getting a credit card, is that not only do the interest rates differ from card to card and even from person to person, its also within the hidden charges that you should be made well aware of prior to obtaining their credit. As much as they are investigating you and your credit history you should investigate them for their interest rates, payment schedules, hidden fees and even their customer service reputation. There is nothing worse than having an illegitimate charge on your credit card statement and having to deal with bad customer service to get it reversed. Make sure they have a good reputation and that you can find through both the Better Business Bureau and Consumer Reports.

There are many things that you should consider when choosing a credit card but the main details you should look into are the interest rate, the annual fee, and the grace period. The grace period is important to know so you can avoid any possible late fees and unexpected high balances. It is referred to as the time after the billing date that you'll have to pay off the bill without paying a finance charge.

For more information on how to choose a credit card that is right for you:
http://www.creditorweb.com/articles/tips-for-choosing-a-credit-card.html


Types of Cards


There are many different "types" of credit cards out there; a lot serve the same purpose and there are others that are specific for the type of situation they serve. Of these types of cards there are bank cards which are offered strictly through banking institutions and are offered in both Visa and Master Card. There are five major issuers in the United States that vary all around the board; they are HSBC, Capital One, Bank of America, Citibank, and JPMorgan Chase. They pretty much control about 80 % of the Visa and Master Card market right now.

American Express and Diners Club International. These are commonly referred to as "travel and entertainment cards. Some do carry annual fees so just as you are investigating your bank cards you should also look into what charges, fees are added to having the card.

Affinity - the affinity card is one that is connected to an organization that will be offer some type of reward for using the card; i.e. frequent flyer miles, cash back, catalogue purchase points, etc.

Secured credit card or prepaid credit cards - One of the best ways to being rebuilding your credit is to apply for one of these types of credit cards. Much like a debit card it works against a deposited amount with a bank. This is a great way to get back on track and even to help control your spending. The way it works is that you make a deposit in the amount you wish to set your limit. There isn't a checking account or a savings account it is just a desired deposit to the banking institution providing the card. Your payments are based against the deposit you make and charges accrued against that deposit. These are beneficial in many ways to the average consumer. In fact, just about anyone can obtain a secured credit card as long as you are over the legal age for obtaining a standard credit card.
NOTE: Don't be fooled into thinking there won't be any fees attached to a secured credit card. Just as you would look into getting a standard credit card, look into the secured credit cards. There can be application fees, annual fees, possible insurance charges, etc.

There are lenders out there that will provide you with a credit card if your credit is less than perfect and these are:
- Tribute Master Card
- Orchard Bank
- The USA Gold Card
- HSBC Household

Debit Cards or Check Cards - these types of cards are linked directly with your bank account and act just as a credit card with the purchases coming directly out of your account. These cards may have less protection than regular credit cards against fraudulent purchases and theft. However, according to the FDIC Consumer Protection, you are protected for up to 48 hours and 50 dollars. What this means is, if you notify your bank within 48 hours that your card has been lost or stolen the most you'll be responsible for is 50 dollars, if you wait longer than 48 hours you could be responsible for the entire amount. However, before you obtain a debit or check card from your bank you should inquire about what type of protection you're guaranteed, and what their policy is; each bank is different.

ATM - Automated Teller Machine - these give you the capability to withdrawal funds directly from your checking or savings account at any time of the day. There is a limit however, most banks will not allow more than 500 dollars to be withdrawn from your account per day; if you need more cash go into the bank teller during normal business hours. There are fees attached to using the ATM. A lot of debit cards carry the Visa or Master Card logo which gives you the ability to use ATM's at other banking institutions you are not a member of, this is when the charges are assessed and can be as hefty as $5.00 per transaction. Be careful in knowing if you're bank charges an ATM fee, most don't as a benefit to the member but there may be some usage charge you could be unaware of.

NOTE: Debit and Check cards do not have any impact on your credit.

Finally the last type of credit card is called a "house card" or department store card. This is only used in house at any of the chain locations.

It is important when dealing with these types of credit card lenders that you check all of the following:

Charges - Be sure and look into what charges will be assessed for holding and using this card. Most companies charge what is called a finance charge and that is what it costs to borrow their money. The way it is calculated is explained within the agreement and usually calculated based upon the balance of the credit card so it could differ month to month.

Fees - Be aware of all types of "fees" you will be assessed and why, this way you can avoid them at all costs. By law any credit card lender really can't have "hidden fees" but they are referred to as "hidden" because in most occasions it is somewhat difficult to understand how or why the fees were charged. A majority of credit lenders will provide all the information in the fine print on the back of the monthly statements or on the agreement you received upon first obtaining the card, so it is easy to be overlooked. Other fees to be made aware of are the late fees or default fees which are categorized as penalty fees. These can be charged for missing a payment or simply being late on your payment.

Annual fee - the annual fee is somewhat of a 'membership fee', in which it can be up to $40.00 per year and is billed on the date you opened the card, every year. Generally, you can have your annual fee waived as a perk to signing up, but expect it to be charged the years to come.

Finally the last type of fee you can be assessed and is totally avoidable, the Over-the-limit fee. This is called over-the-limit for the obvious reason that you have gone over the amount you were granted by your credit lender. Even if you have an immaculate record and know exactly how much your balance is, what can bring you over-the-limit is a hike in your APR. A good rule to follow is never breach the 90% mark with your credit balance unless absolutely necessary.

Interest rates - this is the amount of money you'll be charged based upon the amount of your balance. The interest rate you have will vary from card to card; it is based on your credit score, the balance you keep, your history with the credit lender, and even based upon your payment history with other lenders.

Interest rate increases - This is the ugly part of the credit card system. The lenders do have the right to raise your interest rate for whatever reason they feel necessary (some are un-notified). They can raise the rate even if you have kept a clean record with them but have made a late payment with another lender not even related to them; this is referred to as universal default. It is stated in the 'terms of agreement' that they have this right to raise "anytime for any reason".

Knowing YOUR card - all in all it's a really good idea to check and read the back of the application before you actually consider the card. If you already applied and received the credit card, check the back of your statement for information pertaining to YOUR credit card.

For those new cards that you apply for, the back of the application will state the following or a variation thereof:

Summary: it will give you a quick summary at the top of all the information pertaining to the card you're applying for such as:
- The APR (annual percentage rate) and state how long it will be a "fixed rate" and when you can expect it to increase. Most cards will give you an incentive of 0% interest for the first 90 days and state the increase to follow.
- Annual Membership fee: some are billed annually on the anniversary of your application or bill you monthly. They have a standard annual fee which is divided evenly into your monthly statement. This way they avoid having it waived.
- Enrollment fee
- Grace period for payments: usually about 20-25 days since the date of your statement
- How they calculate the Balance for purchases
- Cash advance fees
- Finance charges
- Late payment fees: these are contingent upon the balance. If you have a higher balance, closer to the credit limit you may be paying more in late fees.
- Over limit fee
- Closed Account Maintenance fees: if your account is closed by the credit granter there can be a small monthly charge until you satisfy the balance.

Following the summary will be a detailed breakdown of what was explained above including:
- the details of your agreement
- arbitration agreement
- treatment of check payments

Finally the minimum credit limit will be established and explained.


Tips on Spending


There are a lot of companies out there that will tell you not to use your credit cards and to stop right now. We agree. However, if you must have a credit card to either establish new credit or rebuild your credit we recommend the following spending tips to ensure that you stay within your budget and to use the credit cards wisely.

First what you want to do is understand that the credit card isn't free money, its probably what got you into debt in the first place and you don't want to go back down that road again. So before you go out and start using your card and rebuilding your credit, keep that in mind that you're rebuilding and reestablishing your credit and it will help you stay on track.
Also:

- Avoid impulse purchasing: you hear it everywhere but it remains fact that the majority of overspending is a result of impulse buying. How many times have you gone about your day and by the end of the month you check your bank statement only to realize that you've impulsively spent over 100 dollars and you can't recall the majority of the purchases. A lot of people are likely to overlook the minor purchases they had made and the 5 dollars, 7 dollars adds up over time. When you're in that situation ask yourself if you really need it, and if you can do without it, chances are you can and will do without it. It is also smart to save receipts and to keep track of your budget when making purchases.

- Try carrying cash instead. A good rule of thumb is if you can't afford it now don't buy it because chances are you won't be able to afford it when the statement comes. Let's not forget that if you make minimum payments toward your purchase you're going to be paying A LOT more than you had originally set out too, due to APR. Carrying cash and avoiding using your charge card will prevent the overspending and the risk of running into bad debt again.

- Set a budget: it's very important to set a weekly or monthly budget and STICK TO IT. Just like a diet and if you intend to lose weight, you can't cheat or you'll get nowhere. By setting a budget and sticking to it you're likely to save money and keep yourself out of debt.

- Wait it out. Perhaps the item that you're looking to purchase will go on sale in the very near future. Nothing is worse than going and buying a new leather coat for the winter one week and later seeing it marked off 40% the following week. You can also inquire about the sale as well and you'll be pleasantly surprised to know that the item may drop relatively quickly.

- Smart spending: Use your credit card to purchase larger items that will last a longer period of time. Its also wise to anticipate the purchase, although those unexpected expenses to arise such as car repair costs; and that in itself is a great example as to why you should limit the use of your credit card spending. However, if you must purchase a new piece of furniture by example, anticipate the purchase and start setting aside some money to use against the large purchase.

One final tip to ensure that you are using your credit card wisely is to make sure that you do not have a balance on your credit card more than 10% of your monthly income.


Errors and False Charges


If you have ever gone through your credit card statement and notice that there is an unauthorized charge or a typical billing error you may want to know that there are ways of protecting yourself against the responsibility of paying those errors and preventing them in the future.

First, to prevent or avoid the billing errors is to consistently check your statements and also look into the online billing statements that most credit card companies now offer for the day to day updated reports. This will show you exactly all of the charges that were made to your account and how much the charges were for.

If there is an error that shows up on your statement there are steps to take to ensure that you are not held responsible.

Report the error: The first step in handling an error is to report it right away. Most would advise that you write in the dispute along with the statement containing the error no more than 60 days after that first billing. However, we suggest that you contact your creditor immediately to report the error then write your request in by letter along with a statement that shows the error. What you want to include within the letter along with your name, address, account number, is the amount of the error and the date on which it occurred and the reason as to why you are disputing the charge. Mail your letter certified to the address printed on the billing envelope.

By law, after receiving your letter the creditor must inform you in writing no more than 30 days that they are investigating the charge and for that period of time you will not be held responsible. This investigation must be conducted no more than 90 days after receiving your dispute letter. If their investigation shows that you are NOT responsible for the charge the creditor must reverse the charges and remove any late charges that might have occurred during this time. If the charges are valid, you are held responsible, they must inform you in writing of what charges you owe and why; then you owe the charges and any other fees that might have occurred during that time of investigation.

Keep in mind that you are protected by law; just like the FDCPA the government has set up the Fair Credit Billing Act which protects you from these errors and fraud cases committed by merchants. You can read more about the FCBA here: http://www.ftc.gov/bcp/conline/pubs/credit/fcb.shtm


FAQ


Are Secured credit cards accepted where regular cards are accepted?
Yes. All secured cards are accepted anywhere the regular or standard cards are accepted, you are not limited to where you can use your secured card other than where the 'master card' or 'visa' is not.

If a secured card is like a debit card essentially, how does it help your credit?
Well, it shows that you can keep a consistent payment and be responsible for your purchases and budgeting. If you use it once and don't deposit more money to use it again its not going to fair well against your credit.

When I make a purchase, is it better to use a credit card or cash or possibly even my check or debit card?
Well as stated above you should only use your credit card in either an emergency (car trouble, etc.) or for a larger purchase that will last longer like furniture. If you get to the check outline and are wondering if using your credit card is better than cash right from your checking or savings account then NO it is not. Take the interest rate applied to each for the example; your checking account is paying an average of 3-5% interest while your credit card is 19-21%.

If I'm disputing a bill and there are pending late charges, does that affect my credit? Typically the answer is no. The creditor may not report the bill as delinquent if you are disputing the charges, but they can notify the bureaus that you are in fact challenging the charge. You are simply exercising your rights as a consumer and it shouldn't have an negative impact on your credit rating having the dispute notification sent.

Why was I charged more for a cash advance than a regular purchase? Be aware of the interest charged for cash advances when you select a credit card. Most credit cards will charge between 2 and 4 percent of the amount advanced on the card, with varying rates based upon credit score when you apply for the card. Also take note that most cash advances ARE NOT included in the "grace period" and begin charging interest the moment you receive the funds; so essentially you are repaying MORE than you withdrew when your statement arrives.

Some good sites to visit to check into credit cards are:
http://www.creditratings.com
http://www.bankrate.com
http://www.creditorweb.com