Credit card companies

Credit card companies

Credit card companies can be a little confusing regarding who actually owns the credit card and who is issuing you the credit card, at first glance they may seem synonymous and common sense suggests that they are, but in actuality they could be two different firms.

A major confusion is the fact that the majority of credit card issuers are from the banks, but the credit card companies such as Visa, American Express, MasterCard, Discovery, Captial One e.t.c are the actual owners of the credit card, and provide them to the banks who issue them to us.

So how do the credit card companies and the banks actually make money from issuing credit cards?

The banks make money from the interest rates applied on the card, while the credit card companies make money from charging retailers for accepting the card. The rates charged on retailers are roughly about the same hence Mastercard and Visa are accepted virtually on the same basis with many retailers.

However certain credit card companies also issue their cards, i.e. American Express and Capital One, meaning they make money both from retailers accepting the card and from the interest charges, they also make money from late payment and other fees associated with usage of the card.

To ease the confusion, you should always select a credit card that has a great promotional rate, as well as offers, i.e. certain cards have a points offer for utilising the card, as well as points off gas and air miles, these incentive offers are issued by the card issuer to generate interests from their potential consumers, however it’s a good idea not to select offers you have no intention of using such as selecting air miles when you have no intention of travelling.

In general credit cards do prove their worth if you can keep up with the minimum payments, and avoid some of the traps that the card issuers are hoping you fall for, such as late payment fees, over limit fees, and the high interest rates that might seem excessive especially when the promotional period ends; usually people try to avoid this by moving some or the majority of their balance onto a new card with its own promotional rate once the promotional rate on the existing card ends, but you have to have a reasonably good credit to be able to do this.

Visit Debt consolidation for some great consumer credit counseling services, and dealing with credit card debts in general.

Best Credit Card

Best Credit Card

Best credit cards are ideal if you can find the one with the features you want, but with so many credit cards being offered by the banks, it can be a minefield, finding one that you want, or indeed the best one.

There are so many options available with banks so eager for new business that they have a plethora of promotions available for choosing their credit card; with air miles, points for grocery shopping, and money off gas, it would be a good idea to select which one you would like, i.e. there would be no point going for a credit card that offers air miles, if you never have any intention of travelling by plane for the foreseeable future.

However despite the myriad of options, there are still a few ground rules that should be applied to when selecting the best type of credit card, not only should it be one that suits you, but also has the range of promotional offers and interest rate that you are comfortable with.

Always ensure that the card has a promotional period, a promotional period usually has lower APR (Annual Percentage Rate) and sometimes 0% on purchases and balance transfers throughout the promotional period, some people take advantage of this promotional period offered by various credit cards, by simply moving the balance or most of their balance to a newer card offering another promotional period, meaning they take advantage of new offers as soon as one ends.

Although credit card rates vary, they universally charge a lot more for cash withdrawals, so if it can be avoided try not withdrawing cash from a cash machine with your credit card as the APR can be extortionate.

Credit cards do have the added advantage of you not being loaded with cash in order to buy things, we all know the feeling of being at the checkout and scrambling for the right change to pay for a purchase, as long as you keep up with the required payments, having a credit card removes this unnecessary hassle.

Credit cards do prove their worth in externuating circumstances, for example if youare stuck in a rural area with no cash machine for miles, but a local convenince store, you can ask for cashback, although the interest rates will be high, it can prove useful in an emergency.

Visit Debt consolidation for some great consumer credit counseling services, and dealing with credit card debts in general.

Credit Cards – How to Apply For One

Credit Cards – How to Apply For One

Credit cards are a fundamental necessity in this day and age, but not many people are aware of how to about applying for one.

This is compounded with the vast amount of promotional offers and credit card deals available, from airmiles, to points to use for grocery shopping or to get money off gas, and many available to apply online, the enormous choice can be overwhleming for a new customer deciding on which credit card to go for.

However there are some key steps to apply when selecting a credit card, don’t try to apply for several cards at once. Credit companies regularly monitor your credit file, and any credit card applicaton or indeed any loan or any financial service that requires a loan such a mortgage is noted on your credit file. Many of the banks and credit card offering firms have notices in place to flag a credit file if something sounds suspicious, especially online, such as if someone is applying for various credit cards, loans, or mortgages within a short period. The usual time span for a credit card application that will not raise red flags on your credit fle, is an application every six months to a year.

Ensure that the credit card you are applying has a promotional period, usually credit cards with promotional peirods, have one lasting from a year to fifteen months, for example you might get 0% APR (Annual Percentage Rate) on purchases for that period, some people have been able to take advantage of these promotional periods by simply applying for another card when the promotional period ends, and transferring the balance or some of the balance from the old card to the new (usually there is a balance transfer fee involved, but it also comes with its own promotional offer).

Credit cards vary in term sof the rates they offer, but all universally chaege a lot more for cash withdrawals than for purachases, and it is highly recommended not to use a credit card for cash withdrawals due to this high interest charge.

Credit cards do provide the convenience of not having to carry cash on your person, and we can all identify with the shopper who turns up at the till, but cannot find that last piece of change to pay for their purchase.

Credit cards can also prove extremely useful in areas where there isn’t a cash machine for miles, as you can request cashback, albeit this is deemed a cash transaction and is charged accordingly, this can prove useful in certain scenarios, for example in an emergency.

Visit Debt consolidation for some great consumer credit counseling services, and dealing with credit card debts in general.

Consumer Credit Counseling

Consumer Credit Counseling

Consumer credit counseling has been generally accepted as one way of consolidating one’s debts. The aim of consumer credit counseling and indeed any debt consolidation program is to reduce the amount of debt over time and also the frequency of regular payments for the debt.

How it works is the consumer credit counseling service or debt management company liasions with your creditors on the debtor’s behalf.

They first make a proposal of how much debt is owed and how much the debtor is willing to pay to the lender on a regular basis, i.e. once a month of weekly. The lender doesn’t usually dismiss this offer of payment as it means they will be getting their oney back, and if the debtor continues the payment through to the end, they will also collect a sizeable interest on the debt, so it would nothing but a gain for the lender to accept the payment terms, especially if they are coming from a reputable third party that has an excellent record with getting clients to settle their debts

Credit counseling services can significantly reduce the regular payments for the debt, but it should be noted that the debt is not wiped out, the debtor is still responsible for 100% of the original debt, which will still be paid in full plus any interest charges; even with the use of a third party consumer credit counseling service, just that using a credit counseling service reducs the minimum payments each payment cycle.

While undergoing a credit counseling service the FICO score of the debtor is not affected, however certain lenders frown on giving more credit to an individual undergoing credit counsel services, as it sometimes means they might have filed Chapter 13 bankruptcy procedures, for the fear that they might be unable to repay their debt, and it is not such a bad thing, as the temptation to fall back onto old habits would be extremely high seeing a line of credit has been made available.

The usual time frame for a credit counseling service is approximately five years, and if the debt is successful cleared in that period, the credit score and rating of the debtor goes even higher than before.

However credit counseling services should only be used if the debtor is confident of being able to clear the outstanding debt during the time span, which can seem like a chore if the payments are sizeable and last for upto five years.

Visit Debt consolidation for some great consumer credit counseling services, and dealing with credit card debts in general.

Debit card

Debit card

Debit cards and credit cards can sometimes get new customers easily confused.
The major differences between debtit and credit cards is that debit cards are usually given by your bank where you have a relationship and an account with them, while credit cards you don’t necessarily have to have an account with the bank offering them.
Another major difference between debit and credit cards, which can get confusing for many customers, using a debit card is simply extracting available funds from your account, as if you wrote a cheque in lieu of a purchase and the vendor withdraws the amount from your account, when the check clears.
A credit card on the other hand is basically a loan from your bank, and with loans there is interest charged once the loan is obtained.
Banks on the other hand obtain the loan from credit unions which basically is what the credit card providers such as Visa, Mastercard, and Discovery act as.
Since using a debit card is basically accessing your own money, the banks don’t feel the need to entice customers, credit cards on the other hand, can be very lucrative for the banks and they are eager to entice customers via a vast array of promotional offers.
These promotional offers range from a 0% APR (Annual Percentage Rate) for a fixed term (usually about a year to 15 months), voucher points for grocery shopping, and points for air miles which can get very competitve (if you’ve ever seen Up in The Air!)
For those who are worried about credit card charges, and getting into debt, a debit card is a good alternative, although debit card providers do not offer payment protection, as many of the credit card providers do.
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Secured credit card

Secured credit card

Secured credit cards are becoming a growing trend especially in this financial climate as lenders want some kind of security for giving us credit.
A secured credit card is simply a credit card that is secured against your belongings be it your home, or car, or some other asset.
This is in contrast to an unsecured credit card, which isn’t used as collateral against any of your assets.
Obviously with a secured credit card, banks and mortgage societies are more willing to grant acceptance of a credit card application if they have something of yours they can hold onto.
And since there is collateral from your belongings, the APR (Annual Percentage Rate) can be much lower than standard credit cards.
As is to be expected where the banks can make a pretty penny on our behalf, secured credit cards are made relatively easy to obtain, with online applications made as seamless as possible.
Although secured credit cards are not as popular as unsecured credit cards, with the state of the economy, and the current recession, this might be set to change.
Some people maybe a little worried having to secure their home or car for a credit card, especially if the credit limit is nowhere near the value of the property they have secured it against, but if they need a credit card urgently, and are financially able to meet the monthly payments, it might be a good idea for the applicant concerned.
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Credit card offers

Credit card offers

Credit card offers are all the rage these days, especially with so many people being upwardly mobile, in the Internet world we live in.
However with so many credit cards vying for your business, you have to be careful which offer you would like to select.
One of the ways of selecting the best credit cards is to choose the ones with the best promotional offers.
To choose the best credit card with the best features, you have to be careful that the promotions associated with the credit card is suitable for you, for example no point choosing a credit card with excellent airmiles points, if you have no intention of travelling by plane.
Some of the best credit cards also offer grocery or voucher points, which you can use to get money off your weekly shopping or off gas, which can come in handy.
Credit cards also offer balance transfers from an existing credit card, however this is where banks and building societies who are offering the credit cards tend to make a lot of money, as balance transfers is one of those credit card purchases that accumulates the highest interest, and payments to your credit card balances, tends to go to the payments accruing the lowest interests first, and those accumulating the highest interests (like balance transfers) least, meaning unless you make more than the minimum payment, the high interest debt just keeps accumlating.
Don’t be surprised during the sign up process for a credit card, or when applying for one in person, that the banks would try to encourage you to go with balance transfers.
Ofcourse depending on your credit rating your APR (Annual Percentage Rate) rate might be low, and your balance might be high, if on the other hand your credit rating is poor, don’t be surprised if your credit balance is low, and the APR is high.
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Prepaid credit cards

Prepaid credit cards

Prepaid credit cards provide the benefit of a credit card with less of the hassles.
It has the added advantage of having a credit card and regulating your spending so the chances of oweing money on the card becomes minute especially if the prepaid credit card does not carry with it a monthly fee.
And since most of the prepaid credit cards available do the minimum of credit checks, it is virtually a 100% acceptance for anyone who applies.
That said certain companies do find prepaid credit cards a lucrative venture as they charge circa 20% interest for using the card.
To those who have standard credit cards this does seem like a very bad deal, where the applicant is given no credit and what they spend is what they put into the balance of the card, no to mention the monthly and other usage charges, but it does afterall provide the benefits of a credit card, and helps those who want to be prudent and avoid getting into debt by having the freedom and advantages of having a credit card, but a small modicum of the risks.
Some of these advantages include the voucher points for grocery shopping and airmiles, which can become easily addictive trying to get as many miles as possible, especially with George Clooney’s Oscar noinated movie Up in the Air, the possibilkities of getting your name on a plane if you achieve a million miles is an incentive enough.
However taken in general a prepaid credit card is just as good as a debit card or vice versa depending on your point of view
And ofcourse you can always get cashback from a retailer (albeit the interest rate can be a little high), and in an emergency this can prove especially useful.
Visit credit cards debt help, for credit cards debts and general debt consolidation advice from our debt experts.

Credit cards explained

Credit cards explained

Credit cards are now an almost necessity for anyone who uses the Internet or who needs to do their grocery shopping, but unfortunately not many people are well versed on credit cards.
We look at some of the advantages and disadvantages of using credit cards.
The advantages of credit cards depending on which view point you aspire to, in some cases outweight the disadvantages.
First off credit cards are extremely convenient to not having to carry cash around, and saves many people who would have porbably lost their money or fidget endlessly for some change at the checkout (we’ve all been there).
Credit card especially with so many banks providing them; can be quite good for the benefits they bering, such as airmiles for free trips, there is almost an addiction amongst those who work with international companies to create a rivalry amongst themselves as to who can get the most air miles, and voucher points for using the card, it comes as no surprise that large transactions are carried out via credit cards.
Credit cards can only be useful to obtain cash (although this practice is not recommended as the interest rates can be quite astronomical) when stranded, or when the nearest cash macine is miles away, you can simply ask at the grocery store for some cash back.
More importantly having a credit card establishes a line of credit which will become extremely useful at stages of your life such as applying for a loan, or a mortgage, as having a credit rating is fundamental to obtaining this, and having a credit card boosts your application as you are already someone that can be trusted with credit.

The disadvantages as many people are familiar with is the various charges on the card, from late payment fees, to over limit fees, to cash withdrawals fees, the charges can seemoverwhelming especially when an introductory period ends.
Another major disadvantage is not a lot of people pay attention to the small print of the terms of their credit cards, terms such as the order of payment, which many assume simply goes towards their exisitng balance, not knowing many credit cards apply the payments with the lowest interst charge first, leavig the higher interest debt accumulating more interest.
A further disadvantage is once the promotional period on the credit card runs out, usually in about a year to fifteen months, if there is no money to clear the balance or exceed the minimum payments the charges could suddenly seem daunting especially with a host of credit cards, many people are tempted to obtain.
Visit credit cards debt help, for credit cards debts and general debt consolidation advice from our debt experts.

Student credit cards

Student credit cards

Student credit cards are an absolute necessity for the college or university student.
Not only are they useful when times are hard, as when a loan or overdraft hasn’t arived or has been activated yet, they also usually have an instant approval process as they are geared towards students.
Credit cards be it Mastercard or Visa are usually given out by the banks, and each bank has different features, such as APR (Annual Percentage Rate), bonuses as in air miles, or vouche points; that make them all individual, and fuels competition, the credit cards themselves make their money from charging vendors for using them.
Banks are always keen to issue credit cards to students as they know they have disposable income usually from their student loan, and a number of banks have made relationships with colleges and universities to brand the credit card in their logo.
The interest rates for student credit cards are also pretty good, and are not as high as standard credit cards which can go as high as 39.9%.
Credit cards have always been the advantage of not just not geting benefits for using the card, you also get the convenience of not having to carry so much cash, which for a student can easily get misplaced or borrowed by your fellow flat mate, leaving you high and dry.
Student loans have always had a low interest rate and so it should come as no surprise for credit card companies and banks to equally target students with equally low APRs, but ofcourse once your student days are over the rates quickly change to standard ones, which is where the banks hope to make most of their money from.
Visit credit cards debt help, for credit cards debt and general debt consolidation advice from our debt experts.