SavvySugar

Credit Limit Cut? Your State of Residence Could Be the Reason

SavvySugar — Tue, 22 Sep 2009 10:30:39 -0700

When it comes in the form of credit cards, plastic is dramatic. There are always consumers in the news discussing how they've been mistreated by a credit card carrier, and there seems to be an endless stream of hidden policies that rear their harmful heads when customers least expect it.

Take the case of Paul Smith (not of kitschy designing fame), a San Diego resident who was alarmed when his credit card limit was recently reduced from $7,000 to $1,400. Smith's credit score is 751 and he couldn't think of a reason why the company would take such rash action, so he called the carrier (HSBC) to get some answers.

A representative told Smith the action was "due in part to the financial situation in California. Also in Nevada, Florida and Arizona." If credit cards aren't all about personal finances, the credit cards sure are full of surprises.

Straightforward Credit Cards Could Be the New Trend

SavvySugar — Fri, 18 Sep 2009 04:30:13 -0700

Bank of America announced a new credit card that comes with, wait for it, a simple one-page explanation of terms and conditions. The BankAmericard Basic Visa card will be available in October and features a fixed rate tied to prime and a flat fee of $39 for late payments. Here's more:

The fixed rate is equal to the prime rate plus a margin of 14 percent, and the rate is the same whether you're making a purchase or taking a cash advance.
The rate isn't tied to a customer's payment history or credit rating like most credit cards.
There are no fees for going over the credit card limit.

The BankAmericard Basic Visa card doesn't come with a decent interest rate any way you look at it - the APR surpasses 17 percent - but it seems like it might be an option for people who have had credit problems in the past. According to The Wall Street Journal, simplification is now the primary focus for credit card companies and we can expect more cards with straightforward fees and policies in the coming months.

When a Credit Card Company Can Suddenly Cancel Your Card

SavvySugar — Thu, 13 Aug 2009 06:30:34 -0700

Credit card companies are beginning to clean up the profile of their average customer, and they're not doing so by offering lower interest rates that make it easier to pay off debt. Instead, they're just canceling the cards of those customers who are simply bad for business. There are few things more humiliating than discovering that your card is no longer active when you're attempting to make a purchase, but there are certain situations when your credit card issuer can legally cancel your account without warning. Find out what they are when you read more.

According to The Wall Street Journal, an issuer can cancel your credit card without notice if you've defaulted or are delinquent on the account, or if you haven't used the card in more than a year. If you have any cards that have been idle in your wallet for a while but they're important to your credit history, then use them now to make necessary purchases but pay the bills off immediately.

Credit card issuers are allowed to close your account - and send notice within 30 days of cancellation - if they've reassessed your financial situation and concluded that you're too risky to keep as a customer. Even if you've stayed on top of your bills recently, a late bill from your past could give the company reason to close your account.

Have any of your credit cards been suddenly canceled by your credit card company?

Woman Mistakenly Charged $23 Quadrillion For a Train Ticket

SavvySugar — Thu, 23 Jul 2009 12:00:16 -0700

Minor bogus credit card charges are usually the fault of identity theft or a simple business mistake, but imagine how you'd react if you found a $23 quadrillion bill on your monthly statement!

An 18-year-old Johns Hopkins University student recently returned home from a trip and received her first overdraft email ever. She suspected identity theft, but was shocked to find a $23,148,855,308,184,500 charge on her statement from what she thought was a $10 train ticket purchase. Plus a $20 negative balance charge from Wachovia Bank, of course.

After she Googled how to pronounce the sum, a call to Visa reversed the charge. The company had suffered "a temporary programming error" during a system upgrade that resulted in some pretty wacky and inflated transactions. A spokesperson told the NYT, "No one was actually charged $23 quadrillion."

Ask Savvy: Should I Transfer My Debt Balance to a 0% Card?

SavvySugar — Wed, 22 Jul 2009 06:30:59 -0700

Dear Savvy,

I have two credit cards with high interest. Should I pay them off with my one card that has zero percent interest to reduce paying over $750 annually in finance charges?

Savvy says: I'm assuming by "paying them off" you mean transfer your existing balances to an introductory rate, zero percent card. There are a number of questions you need to address before making this type of decision. To see my advice, read more.

You need to be clear about when the introductory rate ends and the new interest rate kicks in. Is it higher than the interest rates on your current cards? If so, you could end up paying more interest in the end. Zero interest cards do not exist because credit card companies are generous; they are tools for roping in new customers, and the companies hope to make money off you soon enough.

Also, you should only consider doing this if you can put the old credit cards to bed after you've transferred the balances, so that you don't have a huge amount of existing credit to fall back on. You could just end up deeper in debt. Don't actually close the accounts if they've been open for a long time because that could actually harm your credit score, but ignore them unless you're making small purchases a couple times a year to keep the accounts active (and paying off those balances immediately).

If you decide on this plan of action, use the interest-free period to work on paying down your debt. Put the additional $750 that you'll be saving toward the balance and come up with a plan to pay down your debt that includes making payments beyond the minimum. You don't want to get into the habit of continually opening up cards with low introductory rates and just shifting around your debt - that's not going to make you debt-free.

Don't Charge These Purchases to Your Credit Card

SavvySugar — Fri, 10 Jul 2009 04:30:10 -0700

Whether we like it or not (and I can't imagine anybody likes it), credit card companies have gotten into the habit of monitoring the behavior of their customers based on the purchases they make. Yes, your card issuer might be watching you. And they're making conclusions about your credit worthiness based on your spending behavior.

Robert Manning, author of Credit Card Nation, partnered up with Marketplace to compile a list of the 10 things you shouldn't charge to your credit card if you don't want credit card companies to question the state of your finances.

Traffic tickets: "A lot of people who have charged traffic tickets have defaulted on their cards."
Retreading your tires: "If you've bought new tires in the past, this can look like a desperate move."
Bargain binges: "If you haven't used your credit card at a 99-cent store or at Wal-Mart, don't start now!"
Adult playthings: "Porn is seen as escapism by card companies. And guess what they're thinking you're trying to escape from? Financial worries."
Marriage counseling and therapy: "Divorce can destroy your finances. Needing therapy may also make it look like you're unstable."

See the five other purchases to avoid when you read more.

Lottery tickets: "You don't want your card company to think you're irresponsible - or a gambler."
Cash advances: "Tapping your card for cash? Or using a credit-card check to pay other bills? Not a good look."
Personal pampering: "If you don't normally splurge at the spa, don't put your facial or massage on your plastic."
Income taxes: "Whenever you rack up one bill (by using your credit card) to pay another bill (your taxes) it raises a red flag."
Booze: "Springing for too many drinks may be a sign of job stress, financial stress, or relationship stress."

Sears Offers Payment Help For Jobless Buyers - With a Catch

SavvySugar — Wed, 08 Jul 2009 04:30:16 -0700

Sears may be a bit late to the game of providing greater purchasing security, but the company has announced a buyer protection program for those worried about losing their jobs. Starting Monday and until Aug. 1, the free program will cover home appliance purchases of more than $399. Here's the bigger catch: the coverage only applies to purchases made on a Sears card.

If you're employed and in the market for a new backyard grill, I could see how the Sears offer might be appealing. As long as the customer/cardholder was employed full-time for at least 60 days before buying the appliance, the program will credit 1/12th of the purchase price every month the person is unemployed. Still no luck finding a job after a year of searching? That's OK, Sears will take care of the remaining balance.

Sears is trying to look like the good guy helping out worried consumers who need new washing machines, but the fact that a store card must be part of the picture complicates the company's intentions. What's your opinion about the buyers program?

Have You Ever Opened a Store Credit Card Out of Sympathy?

SavvySugar — Wed, 24 Jun 2009 10:30:03 -0700

"No thanks" is my standard answer when salespeople suggest I open a store credit card. I know they're just trying to fill a quota placed on them by their managers, and in some cases they earn commission, but any sympathy I feel for them having to ask that dreaded question has never prompted me to open an account.

MSNBC recently shared the story of Mary Uhazi, who is struggling to repay the $60,000 she owes on credit cards. Mary's hours were recently cut at work, so it's tougher than ever to keep up with her debt, and she says the debt compiled without ever making any major purchases. She juggled 13 credit cards and admits that if someone asked her to open a store credit card, sometimes she would agree because she used to work in retail and knew the salesperson would get a commission.

Have you ever opened a store card out of sympathy?

Guess How Long It Would Take to Pay Off This TV?

SavvySugar — Wed, 03 Jun 2009 06:30:47 -0700

Americans are starting to smarten up about credit cards. Irresponsible spending on credit has caused a lot of trouble for too many people, and in light of the new credit card reform bill, Consumer Reports attempts to send a point home in its July issue.

It presents this scenario: You charge a $1,000 TV to a credit card with a 13 percent interest rate, and make only minimum payments of 2 percent each month. Can you guess how long it would take to pay off the TV?

Source

Take the quiz

Find Out If You Could Qualify For Lower Interest Rates

SavvySugar — Tue, 26 May 2009 04:30:01 -0700

The APR on your credit card determines how much interest you'll be charged on your balances. So why pay more if you don't have to? If your credit score reflects your ability to use credit responsibly, then you should at least have an APR equal to other borrowers with your score.

Find out if your card has an APR that's higher than the rate you deserve by checking out cardtrak.com. The site lists the average interest rates for your credit card; for example, the average APR for credit scores 760 or higher is 7.45 percent. If you're paying a rate higher than the average, perhaps it's time to call your credit card company and negotiate a lower APR.

Source