Taking advantage of credit card reward programs

This is definitely the best time of year to use your credit cards to take advantage of credit card reward programs. The best way to maximize your rewards is to check out the website and see the terms and agreements. If you prefer not to read, then you can always call the customer service number and ask them if there are any special offers by using their credit card this month.

Richmond Times Dispatch:

Card issuers have been ramping up the incentives lately, says Bill Hardekopf, CEO of LowCards.com and the author of "The Credit Card Guidebook." This means you might be able to put an extra $50 or $100 in your pocket. Here's how:

• Use extra spending to your advantage. If you're going to spend hundreds of dollars, you might as well get a little gift for yourself in the form of cash back. There are two cards that are offering big cash-back bonuses right now if you hit a certain spending level, Hardekopf says. One is the Chase Freedom Visa, which gives you $100 if you spend $799 within the first three months that you have the card. The other is the Discover More card. With that, you'll get $100 for spending $500 within the first three months.

• Select your cash-back categories wisely. A fairly new trend in rewards cards is extra cash back in certain categories. Sometimes they rotate and are chosen by the card issuer, but sometimes you can select them yourself. They often include things like additional cash back at drug stores, department stores, grocery stores and gas stations. It's worth investigating because you may be able to opt to get extra points by targeting your rewards to the categories where you plan to do your shopping. Selecting to get additional bang for your buck at a department store, for instance, would probably be a good choice during the holidays.

• Be pre-emptive. It's great to get a little cash back after the holidays that you can put toward paying off your bills, but it's even better to just spend less out of pocket from the start. If you already have points accrued from your spending throughout the year, now's the time to use them.

• Be careful with store cards. Store cards seem to be handing out more lucrative rewards than ever, says Ben Woolsey, director of consumer research for CreditCards.com. Still, you want to tread carefully, particularly if you're going to be shopping for a major loan in the near future. Store cards are notoriously bad for your credit score, for three main reasons, according to John Ulzheimer, a credit expert at Credit.com.

For one, they have low credit limits, which means even modest purchases will result in a high utilization ratio of that card. Retail inquiries are also among the most damaging kind in the eyes of creditors, and adding a new account to your mix will bring down the average age of accounts on your credit report (you want as long a history as possible).

Be sure  to only charge what you have budgeted for, otherwise, you will be in for a shocking reminder come your next statement.  Happy holidays!

New Basic Credit Card Rules and Changes

New Basic Credit Card Rules

This coming February we have many new basic credit card rules going into effect. Anyone who has a credit card or obtains one in the future will be affected.

Here are some examples that may be similar to your situation. Of course, this is just a small sampling.

Kiplingers:

Can the bank still raise my interest rate?Yes. The issuer can raise the rate on an existing card as long as you are given 45 days’ notice. If you apply for a new card, however, the issuer may not increase your interest rate for one year, and then it may charge the higher rate only on new purchases, not your existing balance. There are, however, some significant exceptions to this prohibition. Even on a new card, your rate can go up if it is based on an index that fluctuates, such as the prime rate, or if you are more than 60 days late making the minimum payment. (Your minimum monthly payment may increase, too.) Issuers have been switching cardholders from fixed interest rates to variable rates for months to take advantage of this loophole.

I changed cards to snag a low rate on balance transfers. But the rate for new purchases is much higher. What happens when I pay my bill? The CARD Act really helps here. It requires issuers to apply your payment to the balance with the higher rate. Previously, issuers automatically applied payments to the lowest-rate balance.

I lost my job, and I’m having trouble paying my mortgage. But I’ve kept up the payments on my credit card. Can the issuer cancel my card? No. Paying your mortgage or any other bill late no longer affects your credit card. Your payment record on the card itself is all that matters.

My credit score recently dropped to 680. Can I still qualify for a credit card? A few years ago, banks liberally offered credit cards to people with scores in the 650-to-680 range and then raised their rates if they paid late. With default rates hovering around 11%, however, issuers are making it more difficult to qualify for a card if your credit score is below 700. Try applying at an institution where you have a checking account, mortgage or certificate of deposit, recommends Ken Lin, of CreditKarma.com. If that doesn’t work, you could get a secured card – you’ll deposit a sum in the bank, which then becomes your credit limit. After a year of making on-time payments, you may qualify for an unsecured card.

My daughter is going off to college next fall. Can she get a credit card? It’s unlikely that she will qualify for one on her own. If she is under 21, she can obtain a credit card only if an adult cosigns or if she can prove she has adequate income to pay the bill. If you decide to cosign, you accept responsibility for all her expenditures, so you need to talk to her in advance about using her card wisely.

More Basic Credit Card Reasons For Card Cancellations and Limit Reductions

It is amazing how fast the credit environment has changed in the last 2 years. Everyone had become more credit savvy and understood the term and conditions of cards, annual percentage rates, FICO scores, debt to income ratios, and most things you could think of. We managed our credit cards and paid them all on time to maintain the best credit profiles as possible.


And yet all this effort seems for nothing. The banks and credit card companies are doing something unprecedented. They are taking preemptive action to eliminate risk regardless of the individual's personal situation. Across the board, they are cutting credit card limits and canceling cards because the recession dictates it. There are many stories of people getting their credit cards canceled or credit limits drastically reduced.

Federal Reserve Study Shows Banks Tightening Credit Card Approvals, Increasing Rates and Fees

The Federal Reserve issued a statement this month that essentially agrees with the findings of private studies and journalists about the state of the credit card industry. Releasing results from its quarterly survey of banks to journalists, the Federal Reserve noted that more banks rely on fees and finance charges from cardholders in good standing to offset losses from defaulted accounts.

Therefore, according to the Fed's survey results, many banks intend to increase annual fees, raise interest rates, and pursue more service charges on most credit card accounts. Some survey respondents told researchers that some of their companies' actions were prompted by pending credit card regulations. However, most bank officials responding to the Fed's request noted that credit card account changes were mostly designed to insulate lenders from the effects of a sour global economy.

Roughly one in four banks responding to the Fed's survey reported tightening their credit card approval standards in the past quarter. While that figure may sound high to casual observers, industry analysts note that a similar survey conducted in the summer of 2008 resulted in a 75% affirmative response to the same question. Lending industry observers note that this trend represents a more prudent approach to offering credit cards and setting credit limits, compared to the loose market of only a few years ago.

The best credit cards right now

Everyone has credit cards for different reasons. If you do use them, then you can take advantage of the perks they offer by understanding your own spending habits.

This was actually a nice summary I found at Money.com and wanted to share it with you. Each picture links to the credit card summary from the actual money article.

• 
  Simmons
• 
  Schwab
• 
  Citi
• 
  PenFed
• 
  AmEx
• 

Basic Credit Card help or assistance

In the climate that we are in, it is to your advantage to know basic credit card stuff, since it is easy to fall into a hardship caused by a change in income. There can be a death in the family, a layoff, an injury or illness, and numerous other reasons to fall behind on your credit card payments. Credit card companies are actually willing to help you.

There are companies who can help or assist you with consolidations but I would recommend you do it yourself. It will take some time waiting on the phone but it will be worth it. You may not get the result you want with the first call but something can always be worked out.

In this environment we are in, it is not only the consumer that is having cash flow problems but the credit card company themselves. They all want your money and if you call in and can get the right person to speak with, you should get some positive results.

Before calling in, you should have an idea of what you want to accomplish. The goal should be a payment plan that will fit into your budget. Assuming your income is back to normal and you are just behind a few months, try to get the credit card company to "recast" your credit card back to a current status without coming up with the payments in arrears. The credit card company will want at least a payment to get you back into a current payment status before putting you in a current payment status. Some credit card companies may even put your account temporarily at 0% interest rate.

Now, if your income is reduced permanently, then you need to put a budget on paper to see what you can reasonably afford. That means take you take home income after taxes and subtract on the necessities: mortgage/rent, car payment and insurance, utilities, and money for food. Take the amount that is left over, and divide that with the number of credit cards that you have. This is the goal you are shooting for, and when you talk with the credit card company, the representative may actually ask you for all this information anyways.

There are some situations where you can actually ask for a forbearance such as your student loans. Just ask if it is available on your credit card and what the requirements are to qualify.

If you are in the military, you can let the credit card company know you want to take advantage of the sailors and soldiers relief act.

The Soldiers' and Sailors' Civil Relief Act (SSCRA) of 1940 is essentially a reenactment of the 1918 statute. Experience during World War II and subsequent armed conflicts made certain changes in the statute necessary. The first of these amendments became law in 1942. In amending the Act, Congress was motivated, in part, by the desire to override court decisions that, in some instances, had led to restrictive interpretations of the Act. The latest amendment occurred in 1991 as a result of Desert Shield/Storm.

Reservists and members of the National Guard (when in active federal service) are also protected under the SSCRA. SSCRA (for all) begins on the first day of active duty, which means when the person ships out to basic training (Basic Training, and job-school are considered active duty for Guard and Reserve personnel, as well as active duty personnel). Some protections under the act extend for a limited time beyond active duty discharge or release but are tied to the discharge/release date. Additionally, some of the Act’s protections extend to the members’ dependents.

Whenever you get a payment plan or arrangement set up with the credit card company, please be sure to get it in writing. This will avoid any misunderstandings and protect you in the future in case the representative you worked with is no longer with that company.

One thing I would like to say most people would not agree with is don't access your IRAs, 401Ks, or other retirement accounts to pay off your credit card accounts or loans. Those are long term savings that should be left alone until you are ready to retire. It may be tempting to pull out those funds, but there are tax implications that will work against you.

If you have no income after your home payment and the basic necessities to take care of your family, then you might want to consider seeing an attorney in regards to filing bankruptcy. This is not an easy thing to do, but you should put your pride aside and make sure taking care of your family is the number priority.

0% interest rate credit cards still exist

Even though credit card companies are lowering credit limits and even raising interest rates for their current customer for one reason or another, there will always be other credit card companies looking to sign up new customers.

If you are one of these customers who have maintained a great payment history and it reflects in your FICO score and experian, transunion, and equifax credit reports, then definitely explore your options to get the best rates for yourself. There are a ton of credit card companies who offer 0% interest rates that are good from 6 months to a year. I am still aware of one card issuer who still offers 0% for 15 months.

Another great reason for getting cards with lower interest rates is saving money. If you carry a balance, this is a great way to save money every month and help pay down balances faster.

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Basic credit cards with rewards

One of the great thing about some credit cards are their rewards features. I have actually cashed in on many great rewards without changing my spending habits. Everything I would normally buy or pay for cash such as gas, utilities, groceries, I would just used my rewards credit card to build points.

So what have I been able to get for free from these rewards programs. I have received gift cards for BestBuy and was able to buy a laptop for free. I have also received gift cards for Apple Itunes, Starbucks, and other stores I shop at. I have also received 2 sets of travel luggage, airplane tickets, and hotel stays.

I think that is pretty amazing. I do use Discover too and usually just get cash when I get to a certain thresh hold. Planning is important when using your rewards credit cards. Discover is one of the cards that will increase their bonus points every 3 months into categories. Just check out their site in the rewards program and you will know what I mean.

Banks basically canceling credit cards

I recently received a letter from the bank for a credit card that I have had at least 8 years. No late payments, no balances, no recent activity. I have kept it for building credit and as an emergency card in case I needed for some unforeseen event. There is no annual fee so it met my needs.

By the way, this letter was from Washington Mutual. Unlike my American Express cards that just lowered my credit limits to the balances I owed, they sent me a letter that was a bit more upfront. They said since I don't use my card and have had no activity on it in the last 12 months, we are canceling it. I know some would be offended by this, but knowing that this bank basically failed how can you really get mad.

Even if they did charge me an annual fee and made some money off me from that, I think they would have canceled the account anyways. Because of our current state of economy, more credit card issuers are canceling accounts that are not profitable. Banks are basically going into defensive mode and will basically be canceling credit cards to survive for the long term.

My Basic Credit Card Stuff

If you have no credit, limited credit, bad or good credit, this blog will help you learn all the basic credit card stuff you will want to know. There are many sites out there that deal with credit cards, but this blog will be based on my own personal experience and knowledge. You should of course read other sites to confirm any information here.

I have over 20 personal and business credit cards including visa, mastercard, American express, and discover. They all have their advantages and disadvantages. Hopefully, you will find the information I post on my blog beneficial to your needs.

When I first started building my credit history, it was a challenge because creditors didn't want to be the first to grant you credit. I first started with the instant approval cards at the major retailers. This seemed to be the best way to get started for me. I didn't want to pay annual fees and I was just a student with a part time job. At the time, I didn't understand why the major credit card companies didn't want to grant me a visa or mastercard with a modest credit limit.

I have been in the credit industry for about 20 years now. My perspective has dramatically changed from what I thought was something I deserved vs what credit companies are really after. They are like any other business who want to make a profit and the way to accomplish this is to reduce risk by approving credit applications to those who have proven themselves.

When I was 18 years old, I wanted to have a credit card for the sake of having a credit card. That really doesn't make any sense, but when you are a kid like me you get obsessed with certain things. For me it was building my credit so in the future I could buy things on credit like a car and house and get those loans at the cheapest rates.

Originally, I applies to 4 major retailers for their charge cards. I was approved for 2 of them. I didn't shop at those places, but forced myself to buy things I didn't need so I could pay them back. That is simply how you establish credit.