Posts Tagged ‘credit cards’

The annual percentage rate (APR) applied to your credit card accounts is a calculation of the cost of credit. All credit card companies are required to fully disclose the APR in the credit card agreement, and every lender not only calculates the APR in a different way, but may also apply a different APR for purchases or cash advances on your account. When you’re comparing credit card offers and want to make the most informed financial decisions about your credit, it’s important to understand how APR is calculated, and what the difference is between variable and fixed APR.

How APR is Calculated for Credit Cards

The APR is calculated as the rate for the payment period, multiplied by the number of payment periods over the year. For example, if your credit card provider has stated a 20% APR, then your periodic rate would be 20% divided by 12 months, or about 1.67% per month. This periodic rate is applied to the monthly balance on the credit card. Every credit card company uses a different method to determine what balance to use when charging the periodic rate.

Some credit card companies will charge the periodic rate to an adjusted balance, a previous balance, an average daily balance, or an ending balance. Others may charge the periodic rate on a two-cycle average daily balance. Understanding how the company charges the periodic rate can help you decide which card really has the best terms.

Variable vs. Fixed APR

APRs on credit cards can either be variable or fixed. A variable APR is calculated by adding a marginal rate to a reference rate, such as the U.S. Prime Rate. In this case, whenever the Prime Rate changes, the variable APR rate also changes. Each credit card company will then adjust your APR on a monthly or quarterly basis. The methodology for charging the APR rate will be listed in your credit card agreement.

It’s important to understand what the difference is between variable and fixed APR. If misread, credit card deals can quickly become credit card traps.

Fixed APRs do not take any type of reference rate into account, so your account balance will be charged the same amount in every period. While fixed APRs are a little more stable than variable APRs, they can still change when the credit card company decides to adjust their rate. All credit card companies are required by law to notify consumers that they are changing the fixed APR rate.

Understanding how APR is calculated and what type of APR is charged to your account balance can help you make the best decisions when comparing credit card companies. Take the time to review your credit card agreement so that you can make the most informed financial decisions.

Sabah Karimi

On the new spy series Covert Affairs, Auggie Anderson (Christopher Gorham) is a good guy to have watching your back. A Technical Operations Officer for the Central Intelligence Agency (CIA), Auggie provides invaluable assistance to new recruit Annie Walker (Piper Perabo), despite the fact that he is legally blind.

From Special Ops to Tech Ops

Originally a member of a Special Ops team stationed in Iraq, Auggie made a bad judgment call that, in his words, turned him into Ray Charles. Now stationed at CIA Headquarters in Langley, VA, Auggie is a fixture in the computer room, at least until Annie needs his help out in the field. For his normal day-to-day duties, Anderson uses a mechanical Braille reader that lets him read computer displays by touch.

While at work, Auggie is practically never without his Grado RS2 Headphones, a favorite accessory of audiophiles because of their ingenious wooden earpieces. Anderson tells Annie that he uses his headphones to get immediate feedback on his typing or to simply listen to his favorite band, Mingus. Auggie also carries a talking watch and a cutting-edge, experimental laser “cane” that helps him navigate the halls of the CIA.

Living on Technical Operations Salary

According to the official CIA website, Technical Operations Officers make $60,669 - $89,365 per year, depending on their years of service and experience. Because he joined the CIA while he still had his sight, Auggie has served long enough to be at the top of his pay scale, especially since he can afford a $500 pair of high-end Grado RS2’s.

CIA Headquarters is located in Langley, a community in the affluent city of McLean, VA. According to City-Data.com, the median 2008 apartment rent in McLean was $1456; condos and townhomes were priced significantly higher. A ladies man, Auggie definitely is a popular guy at the local watering holes, but renting an apartment in McLean would take a large bite out of his take-home pay. Anderson probably saves money by living in a less-expensive Washington suburb or, as his friend Annie does, he may stay with relatives.

Auggie and His Credit Cards

Because it is difficult to identify different denominations of U.S. currency by touch without first labeling or folding the bills, many blind consumers prefer to use credit cards instead of cash. Even with technological improvements, many automated teller machines and point-of-sales terminals are not equipped with audio prompts or other cues for the sightless. This leaves many people vulnerable to scams and financial fraud.

For a busy working people like Auggie, a designer named Yongsuk Kim came up with a concept for a Braille credit card that contains both Braille readouts and a built-in speaker. Sight-impaired shoppers would have two ways to double-check exactly how much their credit card has been charged for a purchase.

As a technophile and a CIA Agent, Auggie would be first in line to get a Braille credit card as soon as they are commercially available. In the meantime, Auggie will have to rely on trusted friends when he uses his credit cards at stores and only use ATM’s that have convenient audio jacks where he can plug in his trusty Grado headphones.

Steven Bryan

Sometimes viewed as distant and uncompromising by his team, Aaron Hotchner is nonetheless an integral part of the Behavioral Analysis Unit (BAU) of the FBI, maintaining close relationships with the other profilers while leading them in organized hunts for serial killers all over the United States. Aaron “Hotch” Hotchner is the Unit Chief and a Supervisory Special Agent, often introduced as “SSA Hotchner.”

Family Finances

Hotch was married to his high school sweetheart, Haley, until the middle of the third season of “Criminal Minds”, and they have a son together named Jack. Haley gets tired of raising Jack alone while Hotch travels around the country in search of evil, and she finally serves him with divorce papers following their separation.

Divorce is always expensive, but it is obvious from the occasions when we see Hotch’s home that he does not want for money. FBI agents, according to PayScale.com, make between $54,000 and $109,000 per year, including bonuses and other adjustments. It is reasonable to assume that Hotch’s salary is on the higher end of the spectrum because of his supervisory position.

SSA Hotchner has a law degree and came to the BAU following a career as a prosecutor. Following the divorce, he would have had to pay child support at a minimum, and perhaps spousal support, in addition to covering his own living expenses.

Life on the Road

It is implied that the BAU team spends a significant portion of their time away from home, chasing serial killers in such locales as Boston, Houston and San Francisco. Hotch might not spend much money on entertainment, and he likely fills out an expense report for the money he spends on the road.

Professionals who travel for their jobs frequently use credit cards in order to keep their expenses straight. This means that while he racks up receipts to submit to the Bureau, he can earn frequent flier miles, cash rewards and other benefits from his credit cards.

Single Parenthood

Hotchner’s ex-wife dies in the middle of season five, at the hands of the Boston Reaper, whom Hotchner has been chasing with his team. Hotch is left the single father of Jack; he takes a temporary leave of absence from the FBI and considers retiring completely to take care of his son.

Washington D.C. has a high cost of living and high real estate prices, but Hotch doesn’t have to pay for ’round-the-clock care for Jack. Haley’s sister volunteers to watch her nephew while Hotch is out of town or on assignment, which relieves a significant financial burden.

Because Hotch does not lead an expensive lifestyle, he could easily profit from lucrative investments that supplement his current income.

Steve Thompson

Affinity Agreements Still a Moneymaker for Higher Education

A common moneymaker in collegiate circles is the sale of alumni and students’ information through the use of affinity agreements. Many believed that the passage of the Credit Card Accountability Responsibility and Disclosure Act of 2009 would curtail these business practices, but a clause allows these credit card programs to continue provided they disclose their dealings. The act does not cover other industries. The question many parents and students are asking is “Can the school sell my personal information?” The answer is yes and it is still legal.

In higher education, affinity agreements have become an excellent way to make money and many companies take advantage these programs. They provide car rental discounts, mobile communication packages, campus Internet access and even vending machine displays. Companies encourage students to sign up for special offers or services and the university financially benefits.

The Credit Card Accountability Responsibility and Disclosure Act of 2009 brought the use of these programs to the public’s attention, but it does not abolish the practice. It only limits banking affinity agreements and protects students until graduation. Pennsylvania Congressman Patrick J. Murphy (D-8th District) has proposed additional disclosure measures focusing on financial institutions. It is unclear as to whether Murphy supports abolishing the practice of all affinity agreements.

Under the Credit Card Accountability Responsibility and Disclosure Act of 2009, colleges and universities must publicly disclose their marketing relationships with credit agencies but it does not restrict the college or university from providing the names of alumni for marketing purposes. Credit card agencies must now submit an annual report containing full disclosure of their dealings on campus. The report includes all business, marketing, promotional agreements and an account of all credit cards issued to both student and alumni.

J.P Morgan Chase, Citigroup, Wachovia, Wells Fargo and Bank of America have signed affinity agreements with many universities and colleges. The media tends to focus on Bank of America since it has been the most forthcoming in the publishing the extent of their affinity agreements. According to a November 30, 2009 press release, the bank has 800 collegiate endorsements including 70 percent of the schools in the Big 10, Big East and Pac-10 athletic conferences and five of the eight Ivy League schools. The question alumni must ask is how are these revenues from banks and other companies used to benefit students. The 2009 the Credit Card Act did not require this disclosure.

Anastasia Zoldak

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.