Posts Tagged ‘credit cards’

During “Confessions of a Shopaholic,” Rebecca Bloomwood (Isla Fisher) says she fell in love with shopping as a little girl, a time when she saw grown women using “magic cards” to buy things. For a long time, most people shared Rebecca’s love for the plastic money known as credit cards, but the unstable economy has made folks more cautious about what they carry in their wallets.

Before filling out an application, it is important to look at the four basic types of credit cards:

• Charge cards
• Credit cards
• Check cards
• Debit cards

Be sure to weight the pros (credits) and cons (debits) of each.

Charge Cards

A Forgotten Wallet Leads to the First Official Charge Card

Frank McNamara gets the credit for creating Diner’s Club, the first official charge card. After he forgot his wallet and was unable to pay the check at a popular New York City restaurant in 1949, McNamara came up with the charge card concept, where diners would sign for meals during the month and then settle up just one tab at the end of the month.

Although McNamara’s first card was made of cardboard, the charge card became a hit, inspiring the American Express Corporation to come up with their own charge card designed with business travelers in mind. Credit cards are still king with consumers, but the charge card continues to thrive.

• Credits: Typically, charge card issuers set no upper limit for purchases, which means no worries at the checkout line. Because the balance must be paid in full at the end of the month, you aren’t carrying a debt load from month to month. Annual fees tend to be high, especially for premium American Express cards, but these cards come with personal concierge services.
• Debits: With no ceiling on the credit limit, it is all too easy to overspend each month. Companies like AMEX also offer the option to carry a balance on many of their cards, which means paying monthly interest.

Credit Cards

From Babylon to Bank of America

Historians have said that credit was extended as far back as 3,000 years ago with the “bill of exchange” in places like Babylon and Egypt. In the 20^th century, Mr. McNamara once again gets the credit for creating one card that could be used to purchase goods and services at various businesses. Instead of maintaining credit accounts at several places, consumers needed just one or two credit cards like McNamara’s Diner’s Club.

These days, Citigroup, Bank of America and other issuers have several different credit products, some tailored to students, business travelers and those who covet frequent flyer miles. You can get a card tailored to your exact business and personal needs.

• Credits: Merchants around the world accept MasterCard and Visa, making them an invaluable credit product. Other cards, such as Citigroup’s Chairman, carry excellent concierge services and allow the cardholder access to special events.
• Debits: Until the new credit card reforms started taking effect on August 20, credit card companies had a pretty free hand with their products. If you missed making the minimum monthly payment just once, for instance, your interest rate might skyrocket. Late fees also could, in some cases, be more than your regular monthly payment. Even with the new reforms, lenders are warning that interest rates might increase to compensate for lost revenues.

Carrying a balance from month to month also increases the cost of an item purchased on credit. Banks sometimes mail out cash advance checks with a low interest rate, but if you miss a payment, that super-low interest rate goes up.

Check Cards

Cards to Access Your Bank Account

The 1990s became the decade of the debit card, which is linked to your checking and/or savings accounts. Instead of writing a check, you simply swipe the debit card, which carries the MasterCard or Visa logo, and the money is automatically drafted from your account. Debit cards also work like traditional ATM cards, allowing cash withdrawals.

• Credits: A debit card offers consumers a way to control their spending because you typically can’t charge more than your account balance. This piece of plastic carries much of the weight of a credit card without the crushing interest rates.
• Debits: Debit cards are just as vulnerable to fraud as credit cards. If thieves steal your account number, they could wipe out your entire checking account in short order. When using a debit card to secure a hotel room, the front desk will “block out” a certain amount of money in your account to cover room charges. Even if you don’t charge anything to the room, it takes several days for this hold to go away.

Debit Cards

A Reloadable Credit Card

More than ever before, consumers are having trouble getting credit cards because of their credit history. People need plastic to rent cars and make airline reservations, which makes the reloadable or prepaid card an option for those with a history of late payments or defaults. Walmart even offers incentives to consumers who cashed their paychecks at a local store and put the money on a prepaid card.

• Credits: A reloadable card is good for people who have a habit of misusing credit because you can’t spend more than the amount available on the card. To get a prepaid credit card, you simply have to open an account and deposit money into it.
• Debits: The fees required to open an account, monthly maintenance charges and the cost of reloading the card can add up quickly. Merchants such as Walmart do offer free reloads, though, if you set up a payroll direct deposit.

Do the Debits Exceed the Credits?

When weighing the pros and cons of each type of card, the biggest factor to consider is your own spending habits. If you are a careful shopper and a good saver, a credit card could be your best option. If your credit score is below 600, however, preloaded and debit cards can give you all the power of plastic.

Steven Bryan

Getting out of credit card debt is very important. Out of all the types of debt to have, credit card debt can be the most expensive and the hardest to pay off. However, with a little hard work, determination and discipline, it is possible to eliminate your credit card debt once and for all. Here are five things you can do to begin your journey to financial freedom.

1. Pay more than the minimum amount

Making the minimum payment indicated on your credit card bill isn’t going to get you anywhere when you are trying to rid yourself of this debt. How long it takes to pay off a credit card by only paying minimum payments will depend on your interest rate and debt load. Use this calculator to figure out how long it will take to eliminate your debt by only paying minimums. Use this as a motivating factor to send in those extra payments each month.

2. Don’t use your credit card

Once you are determined to pay off a balance, stop using that card. In fact, place the card in a place that is difficult to get to. Carrying it around in your wallet is only going to make it that much more tempting to use. It will become harder and harder to eliminate a balance if you keep adding to it. If you must use your card for a purchase that only accepts credit cards — pay off that purchase amount immediately.

3. Ask for an interest rate reduction

Sometimes, a simple call to the credit card company will yield you thousands of dollars in savings. Sometimes, companies will lower your interest rate to keep your business. Every little bit helps, and this will ensure that the payments you make are devoted to paying off your principal balance instead of paying the company’s fees.

4. Never go over your limit or pay late

Going over your limit or paying your card late can trigger astronomical fees. In addition, your interest rate can adjust to the default rate, which is sometimes as much as 25 to 30 percent. If this happens, you can only imagine how long it will take to pay off your debt. Pay on time. If you are forgetful, schedule your minimum payments to draft monthly from your bank account.

5. Pay off high-interest cards first

If you are trying to pay off multiple cards, focus on the debt that is most expensive first. If you have two credit cards — one at 8 percent and the other at 12 percent — pay off the 12 percent balance first, even if it’s significantly lower than the balance on the 8 percent card.

Paying off credit cards can be somewhat intimidating. However, with a little determination and discipline, you will discover that it is a lot easier than you think.

Meg C.

By now, most people either use Twitter to communicate online, or at least know what Twitter is. What you might not know is that Twitter founder Jack Dorsey is now out to release technology that could drastically change the credit card industry.

Enter SquareUp.com, a program operated by Dorsey’s new venture, Square, that allows users to make and accept payments with their Apple iPads. It’s billed as a simple, secure way for money to change hands, whether you are paying or getting paid. Simply download the free iPad app and enter your mailing address when prompted. You’ll be delivered a tiny plastic device to attach to your iPad that allows you to swipe a credit card, and the transaction is processed via the company’s Web site. Over time, any mobile device with the ability to access the Web could be used with Square.

So what does this mean for the credit card industry?

Low cost

Traditional credit card processing equipment can be expensive, from the card readers to the software required to operate them. Then there are the costs involved with operating a credit card merchant account. With the Square service, you pay only a few dollars for the software, nothing for the tiny “Square” device, and a small fee for each transaction.

True mobility

The Square service means that business owners are no longer tethered to their stores or offices. With their iPads, they can accomplish just as much on the road as they can from work, including processing credit card payments. Those who sell wares from stalls, at farmers markets or any other mobile area can now accept payments from anybody who has a credit card.

Not just for merchants

Square also enables individuals to pay back small debts and lend each other money quickly and easily.

Another major benefit of Square is that it cuts down on the paper used during a transaction. Receipts are e-mailed or sent to you by text message so that you can choose to print them or not as needed.

With the iPad release, Square closed its iPhone Beta phase so the iPad is currently the only device that runs the app. However even with the iPad, Square could potentially benefit regular cardholders, business owners, traveling sales professionals and anyone else for whom credit cards are part of daily life.

Steve Thompson

Thomas Wolfe once wrote a novel called “You Can’t Go Home Again,” whose title emphasizes how much people and places change, no matter how fondly we remember them or how much we wish they would remain as we once knew them. For Deputy U.S. Marshal Raylan Givens, the antihero of the FX original series “Justified,” going home entails discovering how much he, his hometown and his credit score have changed.

From Florida to Kentucky in One Shot

The son of a notorious con man, Givens left his home in Harlan County, Ken., as a young man, hoping to escape life in the coal mines. As a U.S. marshal, Givens specialized in fugitive retrieval in Miami until he shot a known gun thug in a restaurant.

During the media frenzy that followed, Givens’ angry superiors sent him back home to Harlan County, the very last place that he wanted to go. According to a pay scale published on Indeed.com, Givens was making approximately $51,000 per year in Miami, which is about 5 percent less than the national average.

Since the transfer to Harlan County also is a demotion, Givens probably sees his pay grade reduced to an even lower level. The government pays its marshals based on their geographic location, so Raylan’s annual salary could easily take a $10,000 hit thanks to that one careless shot and his transfer back to Kentucky.

Relocation Costs Can Affect Credit Scores

In a turbulent economy, many people must pack up and move to a different city to take a new job. Relocation is stressful enough, but Givens has to leave Miami in a hurry, which means he may have to leave some essential things behind and have them shipped later. If he takes an apartment or rents a house in Kentucky, that means additional credit checks, and too many of those can lower a credit score to an unacceptable level.

Suits, Stetsons and Sidearms

Even at the top of his game, Givens is a man of simple tastes, with the exception of his clothing. Cultivating a modern cowboy look, Givens is rarely seen without a tailored suit and a well-fitting Stetson hat; his ever-present sidearm and holster complete this ensemble. The Stetson Retro Fedora that Givens favors costs around $50, but a more stylish Stetson Brewer Panama Fedora carries a price tag three times that price.

Raylan also enjoys wearing cowboy boots and, depending on the material used to make them, these can become a pricey accessory. With Givens’ devotion to Cowboy chic, it is a safe bet that he carries at least one credit card from a men’s specialty shop or department store. Department store cards like these tend to carry an annual interest rate that exceeds 20 percent.

Rebuilding a Reputation, Career and Credit Score

In the blink of an eye, Deputy U.S. Marshal Raylan Givens lost nearly everything he had worked for. Given a second chance, Givens has to live on a lower annual income and avoid the credit traps that come with relocation. If he doesn’t scale down his fine taste in clothing, though, he may watch helplessly as his credit score spirals out of sight.

Steven Bryan

It comes as no surprise to today’s moms and dads that parenthood is expensive. Some parenting choices, such as a stay-at-home parent or private-school tuition, can add considerably to the costs of raising a child. “Parenthood,” NBC’s new drama based on the Steve Martin film of the same name, offers a fine example of what it costs to juggle family life with a professional career.

Julia Braverman-Graham is one of the four Braverman siblings around whom the series is based. Julia, played by Erika Christensen, is a high-powered corporate lawyer in Berkeley. Her husband Joel stays home full-time and raises their 5-year-old daughter Sydney. The family lives in a beautiful and immaculate home, send their daughter to an expensive private school, and spend money on expensive meals, auction items and lessons for their daughter.

How Much Does a Lawyer Like Julia Make?

Working in the private sector in California, Julia will make substantially more than her public servant counterparts. SchoolAAH notes that 2007 Berkeley Law School graduates working in the private sector have an approximate starting salary of $160,000 a year. With some experience under her belt, Julia will make at least $200,000 a year.

What Debt Would Julia Have?

A pricey house in Berkeley like the one that Julia and her husband own probably costs at least $1 million. In addition, her law school debt could be upwards of $100,000, though it appears likely that she has paid off some or all of that debt at this point in her career. In addition, Julia and her husband send their daughter to private school, which could run $15,000 to $20,000 a year based on estimates from the Online Guide to Bay Area Private Schools.

What are Julia’s Spending Habits?

Though Julia spends much of her time working or trying to grab a few minutes with her daddy’s-girl daughter, you do see them spending money rather extravagantly. In order to show off in front of a threatening woman at her daughter’s school, Julia spends almost $2,000 on a premium parking space. In addition, the family has their daughter enrolled in various lessons and classes, decorates their home beautifully, drives nice cars and dresses well.

Are Their Spending Habits and Financial Outlook Realistic?

Based on what we see on “Parenthood,” Julia and her husband have some pretty expensive tastes, striving to keep up with the rest of the families on the block and to provide their daughter with the best life possible. Thankfully, Julia’s career choice does allow the family to afford some of life’s finer things. However, they should remember to save money and invest well and use their credit cards only when they can pay off items immediately. Otherwise, expect that when college tuition, retirement or future children arise, they won’t be as comfortable as they are now.

Kelly Herdrich

Spring 2010 has sprung and so have the season’s new credit card designs. In keeping with the spring season, these credit cards sport vibrant colors, fresh backgrounds and novel patterns. They are the credit cards that will have you thinking about making a fresh start this spring.

#5: Facecard Prepaid MasterCard

The Facecard Prepaid has a soft, green background that will have you thinking of lime sorbet and freshly cut grass. The green background emphasizes the MasterCard orange and red logo, which is nestled in the lower right corner. The Facecard logo is located at the upper left. Credit card numbers are raised and outlined against the gentle background.

#4: ACE Pink Visa Prepaid Debit Card

This Visa Prepaid Debit Card shows a delicate pink background with a large white ribbon to the right. This design is meant to help support breast cancer awareness and detection. Located at the ribbon’s lower right side is the blue Visa logo. The ACE Pink Visa Prepaid Debit Card offers a great design for a great cause.

#3: First PREMIER® Bank Secured Credit Card

This Secured Credit Card showcases a vibrant green and yellow background. On this background, the MasterCard orange and red logo, located at the card’s bottom right corner, is emphasized. The soft green “P” of PREMIER Bank is set at the card’s center like a fresh spring bud. You feel like you can make a fresh start with this newly designed credit card.

#2: Zync from American Express^SM

The Zync from American Express has no spring colors to speak of. Instead, it features a fresh white background. The American Express wording remains at the top of the card in dark blue letters, while its graphic resides at the card’s center. This card is ideally suited to fresh starts and new beginnings.

#1: UPside Visa Prepaid Card

The UPside Visa Prepaid Card portrays gentle waves of greens and blues. This sea of colors gives way to orange and red waves on the left side of the card. The orange and red waves are indicators of the hotter days ahead. The blue Visa logo remains visible at the bottom right.

Hally Z.

If you’re into social gaming, there’s a new form of payment for the variety of virtual goods available in many online games: Kwedit.

The Concept

Here’s how it works. Gamers create a Kwedit account, complete with a Kwedit score. Just as in real life, the score enables them to take on debt. However, in this case it is virtual debt, established by purchasing “items” online such as enhanced abilities for their characters. Upon purchase, the user agrees to pay a certain amount of real money within a few days. Money can be paid through the mail, or users can print out a bar code that can be scanned and paid for at 7-Eleven convenience stores. If a user is unable to make a Kwedit payment, they can opt for the “pass the duck” option, where the user asks a friend or family member to make the payment on their behalf.

With more completed purchases, the user’s Kwedit score goes up. Conversely, if a user simply looks at this as a great opportunity for stealing virtual products and doesn’t make good on their Kwedit promise, that user’s Kwedit score goes down. In that case, the user will find it harder and harder (just as in real life) to take on debt in the online gaming world.

So, what’s in it for game designers looking for a payout? Kwedit does actually encourage gamers to keep up a high Kwedit score if they want to continue using the system. It is also a payment system for users (especially young users) who may not have a credit card or other online payment system available to them. And if those users end up not paying? Likely not a big deal, since the goods purchased were virtual anyway, so no money is actually lost in that instance.

The Kwitic

Kwedit was recently skewered on the Colbert Report. To defend themselves, the company removed its duck mascot Kwedie and the CEO posted a response on the site’s blog.

Will Kwedit become the new PayPal? Probably not. For one, it deals strictly with the virtual world, hence the ability to easily buy now but pay later (or skip payment altogether). Because of this, it doesn’t scale well to a real world application. But for younger computer users looking to experience what earning an actual credit rating is like, and the effects of poor credit management, it may indeed be a popular choice. However on March 3rd, 2010, Kwedit received $3.3 million in a second round of financing led by Maveron.

Currently, games powered by Social Gold accept Kwedit payments, including FooPets, Puzzle Pirates, Greenpatch, Tetris Friends, Island Paradise and hundreds more.

Eric Fleming

If you are trying to reduce your credit card debt, you may be tempted to start cutting up your credit cards. However, this is not the best option for properly closing a credit card account. To begin with, there may be unaccounted for charges on your credit card. Left unpaid, these can result in late fees and even collection agency notices. Such oversights are not only costly but may also negatively impact your credit score.

How, then, do you properly close a credit card account? Here are 10 simple steps to ensure the smoothest account closing possible.

1. Assess the costs and benefits of your current credit cards. Which cards have the highest APRs, fees and other costs? Do any cards offer benefits such as cash back or airline miles? Close those credit cards that are the least beneficial or the most expensive to maintain.

2. Pay off your balance in full. Do not continue using that credit card just because it is now “clean.”

3. Wait at least one billing cycle after you pay off your credit card before you close it. When the next billing cycle starts, check your credit card statement to make sure that the balance is indeed zero. Sometimes there may be leftover charges, interest and fees that still need to be paid off.

4. Obtain the customer service phone number and mailing address of the credit card issuer. This information is usually printed on your billing statement.

5. Make the call. Most credit card companies require that you call them to cancel a credit card. Set aside at least 20 minutes to properly cancel your credit card.

6. Maintain your resolve. The credit card customer service representative may try to dissuade you from closing your account. You may be offered a lower interest rate, additional rewards, etc. If the only reason you are closing your credit card is because of its high interest rate, you could use this occasion to negotiate better terms.

7. Obtain written confirmation. Request that the credit card issuer send you written (or e-mailed) notification of your cancellation. Also obtain the name of the agent you spoke with and a cancellation number.

8. Define the reason for the cancellation. Request that your credit report state that the credit card account was “closed at the consumer’s request.” Some agents may not input the correct reason for your credit card’s cancellation, resulting in your credit report stating that a credit card was closed at the issuer’s request.

9. Check your credit report. Once a month has passed, obtain a copy of your credit report. Look over the portion of the credit report that mentions your closed credit card. Make sure all information regarding this credit card is correct, and that the card has indeed been canceled.

10. Keep records. Maintain a file with the contact information of the credit card issuer, a copy of the final payment made on the balance, and the cancellation notice from the credit card issuer. Such information will be vital in case of future discrepancies.

If you feel that you’ve done everything necessary, yet the account remains open, the Federal Reserve can help mediate your particular situation.

Hally Z.

Did you know that you can pay your tax bill with a credit card? Here are some benefits to doing so.

Convenience. Imagine this: It’s April 15, 3 p.m. There’s no way you can make it to the post office in time. You don’t get paid until April 25 and you don’t have enough money in your account to cover your payment. What do you do? Don’t write the government a bad check — that’s illegal. Instead, pay your taxes online with a credit card.

Safe and secure. Worried that Uncle Sam will wipe out your credit card? Don’t sweat it. The IRS uses third-party service providers that store your credit card information on secure servers. The IRS never finds out your account numbers, so you can rest easy.

Earn rewards. Paying your tax bill is a great way to earn rewards. Whether you have a cash-back credit card, a credit card that pays down your mortgage or earns airline miles, you can rack up the benefits and pay a critical bill at the same time.

Confirmation number. When you pay your taxes with a credit card, you will be given a confirmation number. This confirmation number will allow you to show that you did indeed pay your tax bill should a dispute arise. This is extremely useful.

Paying taxes isn’t the highlight of anyone’s year. However, paying your tax bill with a credit card is an easy way to make sure that your debt to Uncle Sam is paid on time. In addition, you will have a confirmation number to show that you did pay your bill and you will even earn rewards through your credit card company.

Meg G.

You already share your mood status and your thoughts on current events on sites such as Twitter and Facebook, so why not share your latest credit card purchases, too? That’s what Blippy.com is helping people do. The service offers a real-time snapshot of what people are buying, where they’re buying from, and how much they’re spending.

Shoppers can now link their credit and debit card accounts to their Blippy.com account. The site automatically updates each time a purchase is made from online merchants including Blockbuster, Netflix, Amazon.com and the iTunes store. Blippy.com has tracked more than $4.5 million dollars in transactions to date and reports that the average purchase amount of its 5,000 users is just over $40 per purchase.

Blippy describes itself as a “fun and easy way to see and discuss the things people are buying.” There are currently 16 stores listed on the site but users are encouraged to recommend a store they don’t see on the list.

Yet why would people want to share what they’re buying at any given moment? One benefit of joining Blippy is that the public time line of posts will give friends and followers a chance to see what the current price is for certain products from their favorite merchants. Blippy users can essentially compare purchasing notes with the world, and perhaps make more informed decisions about their next purchase.

People can also connect with other savvy shoppers with similar interests. Users sign into the service using their Facebook or Twitter accounts and handles, can leave comments on other users’ purchases, and they can indicate whether they “like” a certain buyer’s activity. Blippy is a live, interactive display of buyer habits across some of the most popular Web merchants, and ultimately creates an online shopping community with very specific price information.

Blippy assures users that all consumer credit card information and identifying information is confidential and takes security measures to make sure account information doesn’t enter the community in any way. As the site moves out of beta testing, more people will be able to participate in this emerging community to post their thoughts about friends’ purchases and send out updates about their own.

Sabah Karimi