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CREDIT
CARD NEWS YOU CAN USE™
Updated daily by Frankford Financial ©2007 All Rights Retained. Unauthorized
duplication strictly prohibited.
Shopping for and Comparing Low Interest Credit Cards & Balance Transfer Credit Cards
Keep these tips in mind when looking for a low interest credit
or charge card.
• Shop for the plan that best fits your needs.
• Make sure you understand a plan's terms before you accept the card.
• Hold on to receipts to reconcile charges when your bill arrives.
• Protect your cards and account numbers to prevent unauthorized use. Draw
a line through blank spaces on charge slips so the amount can't be changed, tear
up carbon copies.
• Keep a record-in a safe place separate from your cards-of your account
numbers, expiration dates and the phone numbers of each issuer to report a loss
quickly.
• Carry only the cards you think you'll use.
Save with low interest
credit cards and understand how balance transfer cards work
Shopping around for a credit card can save you money on interest and
fees. You'll want to find one with features that match your needs.
This information can help you understand the features of credit cards,
compare credit card features and costs, know your rights when using
your credit card, file a complaint if you have a problem with your
credit card. Start by asking the following questions.
How will you use your credit card?
The first step in choosing a credit card is thinking about how you
will use it.
If you expect to always pay your monthly bill in full-and other features
such as frequent flyer miles don't interest you-your best choice may
be a card that has no annual fee and offers a longer grace period.
If you sometimes carry over a balance from month to month, you may
be more interested in a card that carries a lower interest rate (stated
as an annual percentage rate, or APR).
If you expect to use your card to get cash advances, you'll want to
look for a card that carries a lower APR and lower fees on cash advances.
Some cards charge a higher APR for cash advances than for purchases.
What are the APRs?
The annual percentage rate-APR-is the way of stating the interest rate
you will pay if you carry over a balance, take out a cash advance,
or transfer a balance from another card. The APR states the interest
rate as a yearly rate. Watch for multiple APRs-A single credit card
may have several APRs:
One APR for purchases, another for cash advances, and yet another for
balance transfers. The APRs for cash advances and balance transfers
often are higher than the APR for purchases (for example, 14% for purchases,
18% for cash advances, and 19% for balance transfers).
Tiered APRs. Different rates are applied to different levels of the
outstanding balance (for example, 16% on balances of $1-$500 and 17%
on balances above $500).
A penalty APR. The APR may increase if you are late in making payments.
For example, your card agreement may say, "If your payment arrives
more than ten days late two times within a six-month period, the penalty
rate will apply."
An introductory APR. A different rate will apply after the introductory
rate expires.
A delayed APR. A different rate will apply in the future. For example,
a card may advertise that there is "no interest until next March." Look
for the APR that will be in effect after March.
If you carry over a part of your balance from month to month, even
a small difference in the APR can make a big difference in how much
you will pay over a year.
Fixed vs. variable APR: Some credit cards are "fixed rate"-the APR
doesn't change, or at least doesn't change often. Even the APR on a "fixed
rate" credit card can change over time. However, the credit card company
must tell you before increasing the fixed APR. Other credit cards are "variable
rate"-the APR changes from time to time. The rate is usually tied to
another interest rate, such as the prime rate or the Treasury bill
rate. If the other rate changes, the rate on your card may change,
too. Look for information on the credit card application and in the
credit card agreement to see how often your card's APR may change (the
agreement is like a contract-it lists the terms and conditions for
using your credit card)
How long is the grace period?
The grace period is the number of days you have to pay your bill in full without
triggering a finance charge. For example, the credit card company may
say that you have "25 days from the statement date, provided you paid your previous balance in full by the due date." The
statement date is given on the bill.
The grace period usually applies only to new purchases. Most credit cards do
not give a grace period for cash advances and balance transfers. Instead, interest
charges start right away.
If you carried over any part of your balance from the preceding month, you may
not have a grace period for new purchases. Instead, you may be charged interest
as soon as you make a purchase (in addition to being charged interest on the
earlier balance you have not paid off). Look on the credit card application for
information about the "method of computing the balance for purchases" to see if new purchases are included or excluded. Information on methods of computing the balance is in the section "How
is the finance charge calculated?"
How is the finance charge calculated?
The finance charge is the dollar amount you pay to use credit. The amount depends
in part on your outstanding balance and the APR.
Credit card companies use one of several methods to calculate the outstanding
balance. The method can make a big difference in the finance charge you'll pay.
Your outstanding balance may be calculated:
Over one billing cycle or two, using the adjusted balance, the average daily
balance, or the previous balance, and, including or excluding new purchases
in the balance.
Depending on the balance you carry and the timing of your purchases and payments,
you'll usually have a lower finance charge with one-cycle billing and either:
The average daily balance method excluding new purchases, the adjusted balance
method, or the previous balance method.
Minimum finance charge-Some credit cards have a minimum finance charge. You'll
be charged that minimum even if the calculated amount of your finance charge
is less. For example, your finance charge may be calculated to be 35˘-but if
the company's minimum finance charge is $1.00, you'll pay $1.00. A minimum finance
charge usually applies only when you must pay a finance charge-that is, when
you carry over a balance from one billing cycle to the next.
What are the fees?
Most credit cards charge fees under certain circumstances:
Annual fee (sometimes billed monthly). Charged for having the card
Cash advance fee. Charged when you use the card for a cash advance; may be a
flat fee (for example, $3.00) or a percentage of the cash advance (for example,
3%)
Balance-transfer fee. Charged when you transfer a balance from another credit
card (Your credit card company may send you "checks" to pay off the other card.
The balance is transferred when you use one of these checks to pay the amount
due on the other card.)
Late-payment fee. Charged if your payment is received after the due date.
Over-the-credit-limit fee. Charged if you go over your credit limit.
Credit-limit-increase fee. Charged if you ask for an increase in your credit
limit.
Set-up fee. Charged when a new credit card account is opened.
Return-item fee. Charged if you pay your bill by check and the check is returned
for non-sufficient funds (that is, your check bounces)
Other fees. Some credit card companies charge a fee if you pay by telephone (that
is, if you arrange by phone for payment to be transferred from your bank to the
company) or to cover the costs of reporting to credit bureaus, reviewing your
account, or providing other customer services. Read the information in your credit
card agreement to see if there are other fees and charges.
What are the cash advance features?
Some credit cards let you borrow cash in addition to making purchases on credit.
Most credit card companies treat these cash advances and your purchases differently.
If you plan to use your card for cash advances, look for information about
Access. Most credit cards let you use an ATM to get a cash advance. Or the credit
card company may send you "checks" that you can write to get the cash advance.
APR. The APR for cash advances may be higher than the APR for purchases.
Fees. The credit card company may charge a fee in addition to the interest you
will pay on the amount advanced.
Limits. Some credit cards limit cash advances to a dollar amount (for example,
$200 per cash advance or $500 per week) or a portion of your credit limit (for
example, 75% of your available credit limit).
How payments are credited. Many credit card companies apply your payments to
purchases first and then to cash advances. Read your credit card agreement to
learn how your payments will be credited.
How much is the credit limit?
The credit limit is the maximum total amount-for purchases, cash advances, balance
transfers, fees, and finance charges-you may charge on your credit card. If you
go over this limit, you may have to pay an "over-the-credit-limit fee."
What kind of card is it?
Most credit card companies offer several kinds of cards:
Secured cards, which require a security deposit. The larger the security deposit,
the higher the credit limit. Secured cards are usually offered to people who
have limited credit records-people who are just starting out or who have had
trouble with credit in the past.
Regular cards, which do not require a security deposit and have just a few features.
Most regular cards have higher credit limits than secured cards but lower credit
limits than premium cards.
Premium cards (gold, platinum, titanium), which offer higher credit limits and
usually have extra features-for example, product warranties, travel insurance,
or emergency services.
Does the card offer incentives and other features?
Many credit card companies offer incentives to use the card and other special
features:
Rebates (money back) on the purchases you make
Frequent flier miles or phone-call minutes
Additional warranty coverage for the items you purchase
Car rental insurance
Travel accident insurance or travel-related discounts
Credit card registration, to help if your wallet or purse is lost or stolen and
you need to report that all your credit cards are missing
Credit cards may also offer, for a price,
Insurance to cover the payments on your credit card balance if you become unemployed
or disabled, or die. Premiums are usually due monthly, making it easy to cancel
if the payments are higher than you want to pay or you decide you don't need
the insurance any longer.
Insurance to cover the first $50 of charges if your card is lost or stolen. Under
federal law, you are not responsible for charges over $50.
Before you sign up to pay for any of these features, think carefully about whether
it will be useful for you. Don't pay for something you don't want or don't need.
Where do i find best value credit cards?
We recommend
starting at our Best Credit Card Values page.
You will find the Top-10 credit cards in America here with full disclosures
after selecting the "Apply
Here" button.
When applying you will notice complete disclosures that under federal law, all
solicitations and applications for credit cards must include certain key information,
in a disclosure box which displays the following information:
Annual percentage rate (APR) for purchases
2.9% until 11/1/06, after that, 14.9%
Other APRs
Cash-advance APR: 15.9%, Balance-Transfer APR: 15.9%, Penalty rate: 23.9% See
explanation below.*
Variable-rate information will look something like this:
Your APR for purchase transactions may vary. The rate is determined monthly
by adding 5.9% to the Prime Rate.**
Grace period for repyament of balances for purchases
25 days on average
Method of computing the balance for purchases
Average daily balance (excluding new purchases)
Annual fees None
Minimum finance charge $.50
Transaction fee for cash advances: 3% of the amount advanced, Balance-transfer
fee: 3% of the amount transferred, Late-payment fee: $25, Over-the-credit-limit
fee: $25
* Explanation of penalty. If your payment arrives more than ten days late two
times withing a six-month period, the penalty rate will apply.**The Prime Rate
used to determine your APR is the rate published in the Wall Street Journal
on the 10th day of the prior month.
APR for purchases. The annual percentage rate you'll be charged if you carry
over a balance from month to month. If the card has an introductory rate, you'll
see both that rate and the rate that will apply after the introductory rate
expires.
Other APRs. The APRs you'll be charged if you get a cash advance on your card,
transfer a balance from another card, or are late in making a payment. More
information about the penalty rate may be stated outside the disclosure box-for
instance, in a footnote. In this example, if you make two payments that are
more than ten days late within six months, the APR will increase to 23.9%.
Variable-rate information. Information about how the variable rate will be
determined (if relevant). More information may be stated outside the disclosure
box-for instance, in a footnote.
Grace period for repayment of balances for purchases. The number of days
you'll have to pay your bill for purchases in full without triggering a
finance charge.
Method of computing the balance for purchases. The method that will be
used to calculate your outstanding balance if you carry over a balance
and will pay a finance charge.
Annual fees. The amount you'll be charged each twelve-month period for
simply having the card.
Minimum finance charge. The minimum, or fixed, finance charge that will
be imposed during a billing cycle. A minimum finance charge usually applies
only when a finance charge is imposed, that is, when you carry over a
balance.
Transaction fee for cash advances. The charge that will be imposed each
time you use the card for a cash advance.
Balance-transfer fee. The fee that will be imposed each time you transfer
a balance from another card.
Late-payment fee. The fee that will be imposed when your payment is
late.
Over-the-credit-limit fee. The fee that will be imposed if your charges
exceed the credit limit set for your card.
What are your liability limits?
If your credit card is lost or stolen-and then is used by someone
without your permission-you do not have to pay more than $50 of those
charges. This protection is provided by the federal Truth in Lending
Act. You do not need to buy "credit card insurance" to cover amounts
over $50.
If you discover that your card is lost or stolen, report it immediately
to your credit card company. Call the toll-free number listed on
your monthly statement. The company will cancel the card so that
new purchases cannot be made with it. The company will also send
you a new card.
Make a list of your account numbers and the companies' phone numbers.
Keep the list in a safe place. If your wallet or purse is lost or
stolen, you'll have all the numbers in one place. Take the list of
phone numbers-not the account numbers-with you when you travel, just
in case a card is lost or stolen.
What can you do about billing errors?
The federal Fair Credit Billing Act covers billing errors. Examples
of billing error are:
A charge for something you didn't buy, a bill for an amount different
from the actual amount you charged, a
charge for something that you did not accept when it was delivered,
a charge for something that was not delivered according to agreemen,
math errors,
Payments not credited to your account,
A charge by someone who does not have permission to use your credit
card
If you think your credit card bill has an error, take the following
steps:
1. Write to the credit card company within 60 days after the
statement date on the bill with the error. Use the address for "billing
inquiries" listed on the bill. Tell the company your name and account
number, that you believe the bill contains an error, and why you
believe it's wrong, and the date and amount of the error (the "disputed
amount").
2. Pay all the other parts of the bill. You do not have to pay
the "disputed amount" or any minimum payments or finance charges
that apply to it.
If there is an error, you will not have to pay any finance charges
on the disputed amount. Your account must be corrected.
If there is no error, the credit card company must send you an
explanation and a statement of the amount you owe. The amount
will include any finance charges or other charges that accumulated
while you were questioning the bill.
What if the item you purchase is damaged?
The federal Fair Credit Billing Act allows you to withhold payment
on any damaged or poor-quality goods or services purchased with
a credit card-even if you have accepted the goods or services-as
long as you have made an attempt to solve the problem with the
merchant. The sale must have been for more than $50 and must
have taken place in your home state or within 100 miles of your
home address. You should notify the credit card company in writing
and explain why you are withholding your payment. You may withhold
the payment while the credit card company investigates your
claim. If you pay the charges for the goods on your credit card
bill before the dispute is resolved, you will lose your right
to make a claim.
Choosing and Using Credit Cards
Chances are you've gotten your share of "pre-approved" credit
card offers in the mail, some with low introductory rates and
other perks. Many of these solicitations urge you to accept "before
the offer expires." Before you accept, shop around to get the
best deal.
Credit Card Terms
A credit card is a form of borrowing that often involves charges.
Credit terms and conditions affect your overall cost. So it's
wise to compare terms and fees before you agree to open a credit
or charge card account. The following are some important terms
to consider that generally must be disclosed in credit card applications
or in solicitations that require no application. You also may
want to ask about these terms when you're shopping for a card.
Annual Percentage Rate. The APR is a measure of the cost of
credit, expressed as a yearly rate. It also must be disclosed
before you become obligated on the account and on your account
statements.
The card issuer also must disclose the "periodic rate"-the rate
applied to your outstanding balance to figure the finance charge
for each billing period.
Some credit card plans allow the issuer to change your APR when
interest rates or other economic indicators-called indexes-change.
Because the rate change is linked to the index's performance,
these plans are called "variable rate" programs. Rate changes
raise or lower the finance charge on your account. If you're
considering a variable rate card, the issuer must also provide
various information that discloses to you: that the rate may
change; and how the rate is determined-which index is used and
what additional amount, the "margin," is added to determine your
new rate.
At the latest, you also must receive information, before you
become obligated on the account, about any limitations on how
much and how often your rate may change.
Free Period. Also called a "grace period," a free period lets
you avoid finance charges by paying your balance in full before
the due date. Knowing whether a card gives you a free period
is especially important if you plan to pay your account in full
each month. Without a free period, the card issuer may impose
a finance charge from the date you use your card or from the
date each transaction is posted to your account. If your card
includes a free period, the issuer must mail your bill at least
14 days before the due date so you'll have enough time to pay.
Annual Fees. Most issuers charge annual membership or participation
fees. They often range from $25 to $50, sometimes up to $100; "gold" or "platinum" cards
often charge up to $75 and sometimes up to several hundred dollars.
Transaction Fees and Other Charges. A card may include other
costs. Some issuers charge a fee if you use the card to get a
cash advance, make a late payment, or exceed your credit limit.
Some charge a monthly fee whether or not you use the card.
Balance Computation Method for the Finance Charge. If you don't
have a free period, or if you expect to pay for purchases over
time, it's important to know what method the issuer uses to calculate
your finance charge. This can make a big difference in how much
of a finance charge you'll pay-even if the APR and your buying
patterns remain relatively constant. See page 4 for examples
of how the methods can affect your costs.
Examples of balance computation methods include the following:
Average Daily Balance. This is the most common calculation method.
It credits your account from the day payment is received by
the issuer. To figure the balance due, the issuer totals the
beginning balance for each day in the billing period and subtracts
any credits made to your account that day. While new purchases
may or may not be added to the balance, depending on your plan,
cash advances typically are included. The resulting daily balances
are added for the billing cycle. The total is then divided by
the number of days in the billing period to get the "average
daily balance."
Adjusted Balance. This is usually the most advantageous method
for card holders. Your balance is determined by subtracting
payments or credits received during the current billing period
from the balance at the end of the previous billing period.
Purchases made during the billing period aren't included. This
method gives you until the end of the billing cycle to pay a
portion of your balance to avoid the interest charges on that
amount. Some creditors exclude prior, unpaid finance charges
from the previous balance.
Previous Balance. This is the amount you owed at the end of
the previous billing period. Payments, credits and new purchases
during the current billing period are not included. Some creditors
also exclude unpaid finance charges.
Two-cycle Balances. Issuers sometimes use various methods to
calculate your balance that make use of your last two month's
account activity. Read your agreement carefully to find out if
your issuer uses this approach and, if so, what specific two-cycle
method is used.
If you don't understand how your balance is calculated, ask
your card issuer. An explanation must also appear on your billing
statements.
Other Costs and Features-Credit terms vary among issuers. When
shopping for a card, think about how you plan to use it. If
you expect to pay your bills in full each month, the annual
fee and other charges may be more important than the periodic
rate and the APR, if there is a grace period for purchases. However,
if you use the cash advance feature, many cards do not permit
a grace period for the amounts due-even if they have a grace
period for purchases. So, it may still be wise to consider the
APR and balance computation method. Also, if you plan to pay
for purchases over time, the APR and the balance computation
method are definitely major considerations.
You'll probably also want to consider if the credit limit is
high enough, how widely the card is accepted, and the plan's
services and features. For example, you may be interested in "affinity cards"-all-purpose
credit cards sponsored by professional organizations, college
alumni associations and some members of the travel industry.
An affinity card issuer often donates a portion of the annual
fees or charges to the sponsoring organization, or qualifies
you for free travel or other bonuses.
Special Delinquency Rates. Some cards with low rates for on-time
payments apply a very high APR if you are late a certain number
of times in any specified time period. These rates sometimes
exceed 20 percent. Information about delinquency rates should
be disclosed to you in credit card applications or in solicitations
that do not require an application.
Receiving a Credit Card. Federal law prohibits issuers from
sending you a card you didn't ask for. However, an issuer can
send you a renewal or substitute card without your request.
Issuers also may send you an application or a solicitation, or
ask you by phone if you want a card-and, if you say yes, they
may send you one.
Cardholder Protections. Federal law protects your use of credit
cards.
Prompt Credit for Payment. An issuer must credit your account
the day payment is received. The exceptions are if the payment
is not made according to the creditor's requirements, or the
delay in crediting your account won't result in a charge.
To help avoid finance charges, follow the issuer's mailing instructions.
Payments sent to the wrong address could delay crediting your
account for up to five days. If you misplace your payment envelope,
look for the payment address on your billing statement or call
the issuer.
Refunds of Credit Balances. When you make a return or pay more
than the total balance at present, you can keep the credit on
your account or write your issuer for a refund-if it's more than
a dollar. A refund must be issued within seven business days
of receiving your request. If a credit stays on your account
for more than six months, the issuer must make a good faith effort
to send you a refund.
Errors on Your Bill. Issuers must follow rules for promptly
correcting billing errors. You'll get a statement outlining these
rules when you open an account and at least once a year. In fact,
many issuers include a summary of these rights on your bills.
If you find a mistake on your bill, you can dispute the charge
and withhold payment on that amount while the charge is being
investigated. The error might be a charge for the wrong amount,
for something you didn't accept, or for an item that wasn't delivered
as agreed. Of course, you still have to pay any part of the bill
that's not in dispute, including finance and other charges.
If you decide to dispute a charge: Write to the creditor at
the address indicated on your statement for "billing inquiries." Include
your name, address, account number, and a description of the
error. Send your letter soon. It must reach the creditor within
60 days after the first bill containing the error was mailed
to you.
The creditor must acknowledge your complaint in writing within
30 days of receipt, unless the problem has been resolved. At
the latest, the dispute must be resolved within two billing cycles,
but not more than 90 days.
Unauthorized Charges. If your card is used without your permission,
you can be held responsible for up to $50 per card.
If you report the loss before the card is used, you can't be
held responsible for any unauthorized charges. If a thief uses
your card before you report it missing, the most you'll owe for
unauthorized charges is $50.
To minimize your liability, report the loss as soon as possible.
Some issuers have 24-hour toll-free telephone numbers to accept
emergency information. It's a good idea to follow-up with a letter
to the issuer-include your account number, the date you noticed
your card missing, and the date you reported the loss.
Disputes about Merchandise or Services. You can dispute charges
for unsatisfactory goods or services. To do so, you must: have
made the purchase in your home state or within 100 miles of
your current billing address. The charge must be for more than
$50. (These limitations don't apply if the seller also is the
card issuer or if a special business relationship exists between
the seller and the card issuer.) and first make a good faith
effort to resolve the dispute with the seller. No special procedures
are required to do so.
If these conditions don't apply, you may want to consider filing
an action in small claims court. Questions about a particular
issuer should be sent to the agency with jurisdiction.
National Banks
Comptroller of the Currency
Compliance Management, Mail Stop 7-5
Washington, DC 20219
State Member Banks of the Reserve System
Consumer and Community Affairs
Federal Reserve Board
20th & C Streets, NW
Washington, DC 20551
Federal Credit Unions
National Credit Union Administration
1776 G Street, NW
Washington, DC 20456
Non-Member Federally Insured Banks
Office of Consumer Programs
Federal Deposit Insurance Corporation
550 Seventeenth Street, NW
Washington, DC 20429
Federally Insured Savings and Loans, and Federally Chartered
State Banks
Consumer Affairs Program
Office of Thrift Supervision
1700 G Street, NW
Washington, DC 20552
Other Credit Card Issuers (includes retail/gasoline companies)
Consumer Response Center
Federal Trade Commission
Washington, DC 20580
Qualifying for low interest credit cards
A credit card is a great financial tool. It can be more convenient
to use and carry than cash and it offers valuable consumer protections
under federal law. At the same time, it's a big responsibility.
If you don't use it carefully, you may owe more than you can
repay, damage your credit rating and create credit problems for
yourself that can be difficult to fix. Chances are your mail
is full of offers from credit card issuers. How do you know if
the time is right for a credit card? Here is some important information
that may help you determine whether you're ready for plastic,
what to look for when you select a company to do business with
and how to use your credit card responsibly.
Qualifying: If you're at least 18 years old and have a regular
source of income, you're well on your way to qualifying for
a card. But despite the invitations from card issuers, you'll
still have to demonstrate that you're a good risk before they
grant you credit. The proof is in your credit record. If you've
financed a car loan or other purchase, you probably have a record
at a credit reporting bureau. This credit history shows how
responsible you've been in paying your bills and helps the credit
card issuer decide how much credit to extend. Before you submit
a credit application, get a copy of your credit report to make
sure it's accurate. Contact the credit bureaus listed in the
telephone directory under "credit" or "credit
rating and reporting." Because more than one credit bureau may have a file on
you, call each until you locate all the agencies maintaining your file. The three
major national credit bureaus are:
Equifax-(800) 685-1111
Experian-(888) 397-3742
Transunion-(800) 888-421
Anyone who takes action against you in response to a report supplied by a credit
reporting agency-such as denying your application for credit-must give you the
name, address and telephone number of the credit bureau that provided the report.
Establishiing a credit history: Suppose you haven't financed a car loan, a computer,
or some other major purchase. How do you begin to establish credit? First, consider
applying for a credit card issued by a local store and use it responsibly. Ask
if they report to a credit bureau. If they do-and if you pay your bills on time-you'll
establish a good credit history.
Second, consider a secured credit card. It requires that you open and maintain
a bank account or other asset account at a financial institution as security
for your line of credit. Your credit line will be a percentage of your deposit,
typically from 50 to 100 percent. Application and processing fees are not uncommon
for secured credit cards. In addition, secured credit cards usually carry higher
interest rates than traditional nonsecured cards.
Third, consider asking someone with an established credit history-perhaps a
relative-to co-sign the account if you don't qualify for credit on your own.
The co-signer promises to pay your debts if you don't. You'll want to repay
any debt promptly so you can build a credit history and apply for credit in
the future on your own. A positive credit history is an asset, not only when
you apply for a credit card, but also when you apply for a job or insurance,
or when you want to finance a car or a home.
If your application gets denied: If you're turned down for a card, ask why. It
may be that you haven't been at your current address or job long enough. Or that
your income doesn't meet the issuer's criteria. Different credit card companies
have different standards. But if you are turned down by several companies, it
may indicate that you are not ready for a credit card. If you've been denied
credit because of information supplied by a credit bureau, federal law requires
the creditor to give you the name, address and telephone number of the bureau
that supplied the information. If you contact that bureau within 60 days of receiving
the denial, you are entitled to a free copy of your report. If your file contains
accurate negative information, only time and good credit habits will restore
your credit-worthiness. If you find an error in your report, you are entitled
to have it investigated by the credit bureau and corrected at no charge. You
should dispute any inaccuracy in your report with the credit bureau and also
with the company that furnished the information to the credit bureau.
Credit Card Best Values: Fees, charges and benefits vary among credit card issuers.
When you're choosing a credit card, shop around. Compare these important features:
Annual Percentage Rate(APR): The APR is a measure of the cost of credit, expressed
as a yearly interest rate. Check out the "periodic rate," too. That's the rate
the issuer applies to your outstanding balance to figure the finance charge for
each billing period. For example, if you have an outstanding balance of $2,000,
with 18.5% interest and a low minimum monthly payment, it would take over 11
years to pay off the debt and cost you an additional $1,934 just for interest,
which almost doubles the total cost of your original purchase.
Grace Period: This is the time between the date of a purchase and the date interest
starts being charged on that purchase. If your card has a standard grace period
you have an opportunity to avoid finance charges by paying your current balance
in full. Some issuers allow a grace period for new purchases even if you do not
pay your balance in full every month. If there is no grace period, the issuer
imposes a finance charge from the date you use your card or from the date each
transaction is posted to your account.
Annual Fees: Many credit card issuers charge an annual fee for granting you credit,
typically $15 to $55. Some issuers charge no annual fee.
Transaction Fees: Some issuers charge a fee if you use the card to get a cash
advance, if you fail to make a payment on time, or if you exceed your credit
limit. Some may charge a flat fee every month whether you use the card or not.
Customer Service: Many issuers have 24-hour toll-free telephone numbers and online
systems.
Other benefits: Issuers may offer additional benefits, some with a cost, such
as: insurance, credit card protection, discounts, rebates, and special merchandise
offers.
Responsibility: Once you get a card, sign it immediately so no one else can use
it. Note that the accompanying papers have important information, such as customer
service telephone numbers, in case your card is lost or stolen. File this information
in a safe place. Call the card issuer to activate the card. Many issuers require
this step to minimize fraud and to give you additional information. Keep your
account information to yourself. Never give out your credit card number or expiration
date over the phone unless you know who you're dealing with. A criminal can use
this information to steal money from you, or even assume your credit identity.
Keep copies of sales slips and compare charges when your bill arrives. Promptly
report in writing any questionable charges to the card issuer. Don't lend your
card to anyone, even to a friend. Your credit privilege and history are too precious
to risk.
You are responsible: While a credit card makes it easy to buy something now and
pay for it later, you can lose track of how much you've spent by the time the
bill arrives if you're not careful. And if you don't pay your bill in full, you'll
probably have to pay finance charges on the unpaid balance. What's more, if you
continue to charge while carrying an outstanding balance, your debt can snowball.
Before you know it, your minimum payment is only covering the interest. If you
start having trouble repaying the debt, you could tarnish your credit report.
And that can have a sizable impact on your life. A negative report can make it
more difficult to finance a car or home, get insurance, and even get a job.
Federal Protection: Federal law offers the following protections when you use
credit cards:
Errors on your bill: You must notify the card issuer in writing within 60 days
after the first bill containing the error was mailed to you. In your letter,
include: your name; account number; the type, date, and amount of the error;
and the reason why you believe the bill contains an error. In return, the card
issuer must investigate the problem and either correct the error or explain to
you why the bill is correct. This must occur within two billing cycles and not
later than 90 days after the issuer receives your billing error notice. You do
not have to pay the amount in question during the investigation.
Unauthorized charges: If your credit card is used without your authorization,
you can be held liable for up to $50 per card. If you report the loss of a card
before it is used, the card issuer cannot hold you responsible for any unauthorized
charges. If a thief uses your card before you report it missing, the most you
will owe for unauthorized charges is $50. You should be prompt in reporting the
loss or theft of your card to limit your liability.
Types of Credit accounts: Credit grantors generally issue three types of accounts.
The basic terms of these account agreements are:
Revolving Agreement: A consumer pays in full each month or chooses to make a
partial payment based on the outstanding balance. Department stores, gas and
oil companies, and banks typically issue credit cards based on a revolving credit
plan.
Charge Agreement: A consumer promises to pay the full balance each month, so
the borrower does not have to pay interest charges. Charge cards, not credit
cards, and charge accounts with local businesses often require repayment on this
basis.
Installment Agreement: A consumer signs a contract to repay a fixed amount of
credit in equal payments over a specific period of time. Automobiles, furniture,
and major appliances often are financed this way. Personal loans usually are
paid back in installments.
Credit Insurance: Is it right for you?
The next time you apply for a mortgage or personal loan, you may be asked if
you want to buy credit insurance, or it might already be included in your loan
proposal. Credit insurance protects the loan on the chance that you can't make
your payments. Credit insurance usually is optional, which means you don't have
to purchase it from the lender. In fact, the Federal Trade Commission (FTC),
the nation's consumer protection agency, says it's against the law for a lender
to deceptively include credit insurance (or other optional products) in your
loan without your knowledge or permission.
There are four main varieties of credit insurance: Credit life insurance pays
off all or some of your loan if you die. Credit disability insurance, also known
as accident and health insurance, makes payments on the loan if you become ill
or injured and can't work. Involuntary unemployment insurance, also known as
involuntary loss of income, makes your loan payments if you lose your job due
to no fault of your own, such as a layoff. Credit property insurance protects
personal property used to secure the loan if destroyed by events like theft,
accident or natural disasters.
Shopping Tips
Before deciding to buy credit insurance from a lender, think about your needs,
your options, and the rates you're going to pay. You may decide you don't need
credit insurance. If you do, credit insurance can be an expensive form of insurance.
For example, it may be less expensive and more practical for you to get life
insurance than credit insurance. Before deciding to buy credit insurance, you
should ask:
• How much is the premium?
• Will the premium be financed as part of the loan? If so, it will increase
your loan amount and you'll pay additional interest, and more for points (if
points are on your loan).
• Can you pay monthly instead of financing the entire premium as part of
your loan?
• How much lower would your monthly loan payment be without the credit insurance?
• Will the insurance cover the full length of your loan and the full loan
amount?
• What are the limits and exclusions on payment of benefits-spell
out exactly what's covered and what's not.
• Is there a waiting period before the coverage becomes effective?
• If you have a co-borrower, what coverage does he or she have and at what
cost?
• Can you cancel the insurance? If so, what kind of refund is available?
Before you sign any loan papers, ask the lender whether the loan includes any
charges for voluntary credit insurance. If you don't want credit insurance, tell
the lender. If the lender still pressures you to buy insurance, find another
lender. And review your loan papers carefully to be sure they have been drawn
up correctly. Lenders can't deny you credit if you don't buy optional credit
insurance-and if you don't buy it directly from them. If a lender tells you that
you'll only get the loan if you buy the optional credit insurance, report the
lender to your state attorney general, your state insurance commissioner or the
FTC. Consumers should ask these same questions about other extra products offered
with their loan, such as auto or shopping clubs, home or auto security plans,
and debt cancellation products.
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