Monitoring Credit Bureaus is Worth the Effort

Most people do not monitor their credit with the credit bureaus. There are two reasons for this: first, it costs money. The credit bureaus allow you to purchase your credit reports directly from them so that you can see what items they contain. Second, most people do not monitor their credit report because they are afraid of what is contained in them.

Do It Anyway - A proactive approach needs to be embraced however in keeping your credit reports clean and helping you remain aware of the consequences of not doing so. You can obtain a free report for all three reporting bureaus by going to annualcreditreport.com. You should comb through these reports and see what is there and needs to be changed if the data is in error.

Straighten It Up- Once you have copies of your reports, work with the credit bureaus to fix any legitimate errors. This will help your credit score go up eventually. This is the one of the best ways to influence your score to increase.

Face It and Change- After you see your credit bureau reports and see what is on them, you will be able to use that as motivation to change your money management activities. Pay all of your bills on time, make more than the minimum payments on credit cards, find ways to increase your income and reduce expenses.

Paying this type of attention to your credit cards and the tasks that goes with them is hard work. It is easy to get into debt, but more difficult to get out. If you make yourself do these things, then you will be able to use credit cards responsibly again. But, for now, get to work.

Is it Safe to Start a Credit Card Bar Tab?

You're at a bar. You want to have a few drinks. Before you begin, the bartender asks you for a credit card to secure your bar tab. What do you do?

First, realize that this is a common practice in most bars and clubs. If you don't want to use your credit card, bring enough cash to cover your purchases. The credit card-secured tab is a safety measure for the bartender; if a customer leaves without paying their tab, the bartender is often required to cover the charges from their own pay.

What if you handed over your credit card, and now you're seeing unauthorized charges on your account statement? Unfortunately, mistakes and fraud do happen sometimes. The best thing to do is check your account regularly. When you see questionable charges, give them a day or two to resolve. Sometimes they will come off. If the charges remain, get in touch with your credit card company and dispute the transactions.

For the most part, credit card bar tabs are good things. They're convenient for the bartender, and they keep your card filed away from others so that you're only charged for the drinks you actually order.

Check Your Balance Before You Leave

The practice of lowering credit limits on card holders across the board has affected many customers with good credit. Since then, they have learned to be more aware of their credit limit. Making these tasks a common activity every week before you shop and use your card will help.

Check Your Limit – Make it a point to check your credit limit regularly. Once per week is not too much. If you have Internet access, you can view it when it is convenient. Tie it into another online activity that you already perform on a regular basis, such as checking your email. Or, most card issuers allow you to check your balance and other items via a phone call to their toll free customer service number. Put the number on speed dial and use it often.

Pay Down Your Balance – Work hard to pay down your balance and keep it as low as possible. While this will not keep the creditor from lowering your limit, it will help if they do by making sure that you have enough of a ceiling to absorb such a decrease.

Protect What You Have – Learn to use your credit card wisely and pay more than the monthly minimum which will help protect what you do have and make it easier to manage your balances.

Smart card holders adjust their activities to make sure they are not caught in the tow of card issuers across the board adjustments to accounts. The days of running your credit card accounts on auto-pilot are over.

4 Things that Hurt Your Credit Score

Credit cards are still good to use if you use them wisely. However, your credit score can get damaged by a few things that are caused by your own activities. Here are four that you need to steer clear of in order to keep your score up.

Cash Advances - Taking a cash advance from your credit card might seem like an innocent thing, but it is a red flag with the credit card company. They view these as a desperation move. So, why do they continue to offer them? Because they make money on them. Using cash advances to pay for daily expenses is not a good thing to do anyway. It is a sign of a larger problem that you need to address. Either, increase your income or lower expenses – or both.

High Balances on Retail Cards- Retail cards are used less frequently than other credit cards. Large balances on these cards tend to indicate fewer financial options and signal that you might be under financial stress. Make a strong effort to pay these down and then use them only for necessary purchases that you know you have an income stream with which you can pay off within a month.

Too Many Opened Accounts Too Soon - If you try to open too many credit card accounts to close together, then that is another sign of financial desperation. Even if you are in financial desperation mode, do not try to get more credit cards. You will be adding to your frustration by putting off the facing of your situation.

Unpaid Medical Bills - If you have outstanding medical bills, those will be reported to the credit bureaus and your score will go down. These types of bills are not uncommon, but you need to manage them better. One way of doing this is to set up a repayment schedule with the medical provider before the account goes delinquent. Find out what they will do to work with you. Most of these offices are used to this and will work with you.

Monitoring Credit Bureaus is Worth the Effort

Most people do not monitor their credit with the credit bureaus. There are two reasons for this: first, it costs money. The credit bureaus allow you to purchase your credit reports directly from them so that you can see what items they contain. Second, most people do not monitor their credit report because they are afraid of what is contained in them.

Do It Anyway - A proactive approach needs to be embraced however in keeping your credit reports clean and helping you remain aware of the consequences of not doing so. You can obtain a free report for all three reporting bureaus by going to annualcreditreport.com. You should comb through these reports and see what is there and needs to be changed if the data is in error.

Straighten It Up- Once you have copies of your reports, work with the credit bureaus to fix any legitimate errors. This will help your credit score go up eventually. This is the one of the best ways to influence your score to increase.

Face It and Change- After you see your credit bureau reports and see what is on them, you will be able to use that as motivation to change your money management activities. Pay all of your bills on time, make more than the minimum payments on credit cards, find ways to increase your income and reduce expenses.

Paying this type of attention to your credit cards and the tasks that goes with them is hard work. It is easy to get into debt, but more difficult to get out. If you make yourself do these things, then you will be able to use credit cards responsibly again. But, for now, get to work.

What Does Your Credit Card Bill Say About You?

It’s no secret that credit card companies are using data profiling to decide which cardholders are risky and which ones aren’t. What do your spending habits say about you? Let’s scrutinize an imaginary credit card bill through the eyes of a credit card company.

Alcohol: If you’re spending a lot of time partying, credit card companies might take your alcohol consumption as a sign of stress - due to a job loss, too much debt, or a failing marriage. (Those are all considered qualities of high-risk cardholders, and your credit limit could be slashed because of them.)

Bills & Taxes: Paying other bills and even your income tax with your credit card is a troubling sign that you can’t come up with the money any other way.

Adult Services: Gambling and other 21+ activities don’t look good to credit card companies. These charges might be a sign that you’re trying to escape from your money woes. Surprisingly, spa services can also work against you for the same reason.

Therapy: In a trend that’s ruffled plenty of feathers, card companies are clamping down on the credit limits of people in therapy. Why? Most therapy revolves around money and marriage problems. Either of those could cause you stop paying your bills.

So what does your credit card bill say about you? It will paint a brighter picture if you can avoid putting controversial charges on your credit card.

What to do With Old Credit Card if Moving to a Better Card

If you’ve decided to move your balance from one credit card to a new credit card with better terms, you should think about what to do with your old card. Cutting it up with scissors isn’t going to cancel the account or ensure you can wipe your hands clean of responsibility from the old account. Here are some tips for handling an old credit card when you get a new one:

• If you haven’t moved an entire balance from the old card to the new card, call the credit card company to obtain the accurate pay off balance. Make the final payment, then determine if you want to leave the account open as available credit or close it completely.
• If you’ve decided to close the account, listen to the offers presented to you by the representatives when you call to cancel the account. They will most likely attempt to keep your business with better offers and deals. If they don’t offer anything better than the new card, or the offer just isn’t that great – continue to cancel the account and ask for a written confirmation that the account has been canceled.
• I f you decide to keep your old account open but unused – don’t forget to pay attention to the statements that come in the mail. Even though you won’t have a payment due, keep an eye on it to make sure that no one has compromised the account and made unauthorized transactions.

You Won’t Believe What Your Credit Card Company Knows About You!

 

It wasn’t long after credit cards were first introduced in America that the companies realized it wasn’t the people who paid their balances in full each month that would make them the money – it was the people who carried a balance from month to month that would help them become the multi-billion dollar industry they are today.

 

The trouble with giving credit to the riskier customers of course, was that they had to figure out how to decide which cardholders would pay something each month, and not just run up a huge bill and skip out completely.

 

Two solutions were created – the first was to create a number of different credit cards, each with different credit limits, terms, and interest rates and give them out to people based on their credit score and credit worthiness. The second solution was a strategy to learn how different types of customers pay their bills. Companies started analyzing how people behave based on what kind of purchases they made on credit cards – and you might be surprised just how detailed their investigations and research have gone.

 

In 2002, an executive at Canadian Tire had breakthroughs in credit cardholder research when he analyzed the information from every customer who paid with credit card at Canadian Tire stores. The stores sold electronics, kitchen supplies, automotive goods and sporting equipment. Martin could see what cardholders were purchasing. He was able to pinpoint which brands people bought who would continue to pay their bills on time versus the brands people bought that would result in late payments or no payments at all.

 

People who used their credit card at a bar would typically miss credit card payments, while 47% of people who used their cards at a specific bar could be expected to miss 4 payments in a 12 month period!

 

Math geniuses who did nothing but study the trends and statistics of credit card use versus how the cardholder makes their payments were hired by all the major credit card companies to analyze risk for lending.

 

People having babies or getting married were shown to be more responsible with their credit cards and suddenly credit card companies were marketing to people getting married or having babies. Signs of depression or desperation (like seeing marriage counselors or going to pawnshops) would result in credit card companies reducing credit lines since they were more risky.

 

"If you show us what you buy, we can tell you who you are, maybe even better than you know yourself," said Martin, who now works for Wal-Mart Canada. "But everyone was scared that people will resent companies for knowing too much."

 

Data driven psychologists are not only employed by credit card companies to determine a cardholders level of risk, but also to handle their credit card collection calls. They know how to talk to people and what to say to get money out of them based on the things they’ve bought and the things they say during the phone calls.

Learn more about credit card company psychology: NY Times article

Bar Tabs, Credit Cards, and Gratuities

There has been some recent debate over whether or not it’s fair for bartenders to require a patron to leave a credit card in order to open a tab. The general consensus among card holders is that the practice is only carried out in order to keep people from skipping out on a tab. Therefore, if the establishment is upscale or not at all crowded, asking for a credit card upfront might be considered rude. Small pubs and very busy bars can ask for credit cards with no breach of etiquette.

Some patrons found that if they forgot to collect their credit cards before leaving, a 15-25% gratuity was added to their tab. Bar owners claim that the automatic tip charge is justified because of the inconvenience. However, this policy has to be stated in writing on the bar’s menu or posted in a visible place for patrons to see. Then, when a drink order is placed, the patron is assumed to have agreed to the policy.

The best advice for card holders who want to get their drink on is this: Don’t be offended if you’re asked to provide a credit card, and don’t forget your card when you leave. If you do go home without your card, call the pub and ask when it would be most convenient to come and retrieve it.

New Year: Great Time to Review Your Credit Report

Reviewing your personal finance information (in your credit report) is a great way to start out the new year.  Individuals are entitled to receive a free copy of their credit report from each of the three major credit bureaus (Equifax, TransUnion and Experian) once in every twelve month period.

The federal Fair Credit Reporting Act has made it possible for everyone to receive one free credit report per year from each of the three credit reporting agencies since 2005.   Your credit report shows your credit history, and is what creditors and even potential employers view when determining whether or not you are credit-worthy or a good candidate for a job.  The report lists all of your current and past credit card accounts and loans, notations regarding how you make your payments and whether you’ve been sued or arrested before.

The information contained in credit reports are sold to credit card companies and other creditors, insurers, employers and businesses by the reporting agencies.  Poor credit histories and low credit scores make it impossible to obtain new credit, can prevent you from being hired for a job you want, and can raise the amount you pay for car insurance.

Many experts recommend getting one of your free reports every four months throughout the year, to make sure there are no mistakes made on your credit report that could result in problems.  If you notice any errors or accounts on the report that are not yours, you can report it to the reporting agency and have it corrected.

To get your free annual credit report, visit  https://www.annualcreditreport.com.

Got Mail from Your Credit Card Company? Better Open It.

Have you received a letter from your credit card company? Sometimes we toss these out, thinking they're just advertisements for card services or prescreened offers of credit. But you should open everything your credit card company sends you these days. It might have important information about your account.

Times are hard, and even banks are wary of lending to one another. With little available credit and record levels of default, many credit card issuers are trying to do whatever they can to recoup their losses.

Many times, the letters they send you will contain information about your credit limit. Namely, it might decrease significantly and with little warning. You don't even have to be a delinquent borrower to experience this effect; if you're considered a credit risk for any reason, your limit could plummet – and take your credit score down a few notches as well.

Letters from your credit card issuer might also contain amendments and changes to your cardholder's agreement. Credit card companies reserve the right to make changes when they deem necessary. For the convenience of carrying a credit card, we have to agree to those terms. Still, it can be frustrating when your fees and interest get hiked for no good reason.

Old-fashioned negotiation is one way you can fight back against unfair changes. Talk to a supervisor and ask them to work with you. (Note: this only works if you've been a good customer.) You can also keep a variety of cards, and transfer your balance to more favorable ones when terms get tough.

Layaway Could Be the Answer this Holiday Season

This year’s tight economy could make the holiday season more difficult for many shoppers. Typically at Christmas time you see credit cards come flying out of wallets at every possible opportunity. People, don’t worry about tomorrow, they just spend, spend, spend, in order to have a fabulous Christmas for friends and family

This year, however, we may see things a little differently. Many consumers are deciding to shop only with cash this year. To make it even more difficult banks are limiting credit card offers, approving fewer applications and reducing credit lines for current customers.

Typically, retailers make a fortune at Christmastime. However, with jobs declining all across the country the stock market bouncing around, but typically falling and global fears about this economic crisis, many people are friend afraid to use their credit cards this year.

There may be an answer to your holiday shopping needs this year, without resorting to your credit cards. Layaway, the process of setting aside your purchases with a small down payment and then making regular payments over a period of several weeks before you take your purchases home is making a comeback. Many big retailers such as Sears, Kmart, T.J. Maxx and Burlington Coat Factory still offer layaway and, in fact, Kmart company spokeswoman, Caroline Goldberg, says Kmart’s layaway request has increased this year.

If you do use your credit cards this holiday season, be careful, especially with store brand credit cards. They can carry a pretty hefty interest-rate and there may not be many new credit card accounts issued. This year, many store owners are counting on current cardholders to make it a Merry Christmas for them

This Holiday Season, Remember Some Basic Shopping Guidelines

Even in difficult economic times, it's not impossible to stay out of debt this holiday season. Use a few simple tips to keep yourself ahead of the game:

• Even though times are tough, remember to pay yourself first. This is always a good idea and in today's economy, it is critical.It isn't easy, but put money in savings and pay all your bills before you set aside money for holiday gifts.

• Next, develop a budget based on what you have not what you want. Buy only what you can actually afford. You may have a wish list- and certainly your children will- but this year, everyone may need to settle for a few less packages under the tree

• Don’t purchase the first thing you find- shop around. Sales will likely be big this year to encourage retail spending. Comparison-shop, save your receipts and try to find the best deal possible.

• Remember to keep your checkbook balanced. It’s very easy to just run and shop, but this year it is even more important than ever to keep very careful records. Don't fall behind when it comes to balancing that checkbook. If you do, the next thing you know, you’re going to be looking at red ink. No one wants to increase their expenses with nasty overdraft fees that multiply like snowflakes in a blizzard.

• Finally, don’t open a brand-new credit card just to get the 10% discount. It may sound wonderful right now, but sooner or later, that extra credit card could cost you a lot more than you think. Do you really want to spend the New Year paying off yet another credit card? Do yourself a favor and pass up that offer- it most definitely will come again.

 

Less Confusing Rewards Programs that Actually Reward Cardholders

In an effort to attract more customers, many credit card companies create rewards programs for their cardholders.  The trouble is, often times the rewards programs are so confusing or hard to redeem that cardholders don’t fully understand how to benefit from them - or the interest rates and annual fees for the rewards card cost more than the rewards you can earn.

If you are a fan of rewards programs, there are two cards with the American Express logo that might fulfill your need for an easy-to-use rewards program on cards with reasonable interest rates and no annual fees. Blue from American Express offers a reward point for every dollar spent on the card, and points are used to “buy” your rewards.  Simple.  There is no annual fee and the interest rates are extremely competitive.

The Blue Cash from American Express is for people who don’t want to deal with points and prefer the standard cash-back rewards card.  All of your purchases earn a percentage of cash back that gets applied to your credit card statement.  Blue Cash also offers no annual fee and competitive interest rates.

If you’ve given up on rewards programs because they’ve gotten too difficult or costly to use, take another look at Blue Cash and Blue from American Express.

Consider Layaway Instead of Your Credit Cards This Holiday Season

In a perfect financial world, every family would save for the holiday season throughout the year and have enough cash available come November and December to pay for their holiday purchases.  Since this is far from a perfect financial world, many of us come to rely on our credit cards to get us through the expense of the holiday months.

Walmart no longer offers Layaway programs (as of 2006), but an increasing number of stores have a layaway program that helps you pay for your holiday purchases without racking up hundreds of dollars (or more) in interest rates and finance charges paid over the next year… or two… or more.

Kmart, TJ Maxx, Burlington Coat Factory and Marshalls all have in-store Layaway programs.  Basically, you select the items you wish to buy and the store will place your items in storage.  Most charge a percentage of the total up front, and allow you to make payments weekly or bi-weekly until it’s paid in full.  Some will also require you to pay a $5 or $10 fee for the service - but when compared to a 10% or higher interest rate on a credit card (month after month until you pay off the balance) you can see how this would save you money.

If you don’t want to shop at these stores, try the online version of a layaway program: http://www.elayaway.com/

If the holidays cause you to overspend on your credit cards, try doing the bulk of your shopping now- in a store with a layaway program - and not only will you save money in interest fees - you’ll be forced to have the purchases paid for in full by the holiday in order to get them rather than allowing yourself to pay the minimum payment for months on end. ?

Do-it-Yourself Credit Card Processing

In an effort to speed up table turnover at peak hours and eliminate waitress credit card skimming (waitresses who take your credit card as payment and make a copy of the information for themselves or to sell), many US restaurants are installing swipe machines at each table at sit-down restaurants.
This do-it-yourself credit card processing is common at gas pumps and many retail shopping establishments in the US, but has barely even started in sit-down restaurants.  Mostly due to restaurant owners not wanting to pay to get the equipment.
Participating restaurants will have remote-control like units on each table that allows people to swipe their credit or debit cards at their tables and pay for both the food and a tip.  The card information is sent wirelessly to the restaurants computer and a printer will spit out the receipt that a server will bring to the table.
If this becomes popular in the US restaurants, I think they should take it a step further and have the hand held device act as both the menu and the order taker, as well.  Let me enter my order in the remote-control, and have the printer in the kitchen spit it out for the cooks.  That ought to speed up the process of waiting for the server to make it over to take our orders, too.