Voices in Finance » Credit Cards

What Does the Bank of America Sale Mean for You?

Mike — Tue, 30 Aug 2011 08:11:28 +0000

This month, Bank of America has announced that it is leaving its UK and Ireland credit card businesses.

This follows other moves to transform Bank of America’s credit card operations such as the sale of the UK arm of the business lending portfolio and its sale of the Spanish credit card business.

The Bank of America credit card business was huge in Europe, amounting to $19 billion in credit card loans in Europe alone.

However, after reporting record losses of $8.8 billion in the quarter ending June 2011, Bank of America has decided to sell elements of its portfolios outside the U.S.

But if you hold a Bank of America credit card in the UK or Ireland, what impact will this announcement have on you?

Your debt will be moved on to whoever purchases Bank of America’s credit card loans portfolio. In April 2011, Bank of America sold £200 million of small business card loans to Barclays.

Generally, whoever buys Bank of America’s credit card loans will honor any existing promotional rates you had with Bank of America. But be warned, if you miss a repayment your interest rate will automatically switch to the standard APR.

Similarly, if you spend on the card, that new debt will be subject to the standard APR also. You should receive a letter stating to whom your outstanding credit card debt has been moved to.

It should also let you know if your existing terms and conditions remain the same and whether any direct debit payments will be automatically transferred over. It may be time to investigate transferring your debt to a credit card with a promotional rate.

If you are worried about the extent of your outstanding credit card debt or are unable to secure any more lending due to your credit history bad credit credit cards may be an option for you.

Bad credit credit cards allow you to borrow while you work on improving your credit rating. These credit cards will not offer any special interest rate; in fact, they will probably be above the average APR on the market as you are viewed as high risk.

The way to operate these cards is to pay off your balance in full every month so you do not incur any interest charges. By operating the card perfectly for a period of time, maybe six to twelve months, you should be able to rebuild or improve your credit score.

This should give you access to more and better borrowing options in the future. It should also help you adopt a responsible lending approach, only borrowing what you need and making repayments in full.

The unstable economy has made lenders much more cautious about lending and credit is certainly not as easy to get as it was a few years ago. Seemingly stable institutions like Bank of America with a long and successful history have stumbled in the global recession.

Clawing back losses for banks means higher interest rates, more conservative lending and passing on your debt to other institutions.

It is prudent to keep an eye on the companies you are involved with and make sure there is not a better deal out there that will give you a better interest rate.

10 Ways to NOT Fall Victim to Debt Nightmares

Mike — Fri, 19 Aug 2011 12:17:36 +0000

More and more news stories these days feature individuals and families in the midst of debt nightmares. Unfortunately, thousands of Americans every day are experiencing serious financial problems because of debt. If you want to avoid these debt nightmares, here are ten things to think about:

1. Keep Your Health Insurance Whenever Possible

It’s not always possible to keep good health insurance, but when given the option for a lower-paying job with decent coverage and a higher-paying job without medical insurance, opt for the insurance every time. According to The American Journal of Medicine, medical bills cause over 60% of personal bankruptcies in America! With decent insurance, you can keep your medical bills from getting completely overwhelming.

2. Limit Your Credit Card Spending

This is kind of a no-brainer when it comes to keeping clear of your own personal debt nightmare. Credit cards can be good tools, but they can also be an easy way to continually live beyond your means. Limit your credit card accounts to one or two, and only use credit cards for specific purchases, preferably ones you can pay off by the end of every month. If you must use a credit card to finance a major purchase – like a new washer and dryer or furniture – be sure you can pay down the total in a reasonable amount of time.

3. Make More Than Minimum Payments

Another way to roll yourself right into a debt nightmare is to make only the minimum payments on your credit cards. If you charge $1,000 to a card with a decent 15% interest rate and pay the minimum of $22.50 per month, your original purchase will end up costing over $1,700 (almost double!), and it will take 106 months to pay off the debt. Put just $50 a month toward the debt, and you’ll only pay $1,160 total and will have the debt paid off in 24 months. Who can’t come up with an extra $28 a month for those kinds of savings?

4. Live on Cash When You Can

It’s not always practical to live completely on cash, but a cash budget has been proven to rein in spending for most consumers. Consider taking out cash for groceries, eating out, and fast food at the beginning of each month. When the cash runs out, you stop spending. See how much that helps you get your budget – and your debt! – under control.

5. Watch Your Vehicle Spending

If at all possible, you should never finance a car for more than two years, and the total of all your vehicle costs should be under 10% of your total gross income for the year. It can be tricky to keep costs this low, but buying used, getting a good deal on interest rates, and keeping your car well maintained can all help you keep this debt down.

6. Use The 36% Rule

Many mortgage companies use this rule to determine how much you can afford in monthly house payments. In general, it’s a good idea to keep your total monthly debt payments at or below about 36% of your income. If you rent a house, count your rent towards this, as well. Obviously, the more credit card debt you have, the less room you have for other expenses – like student loan payments and car payments!

7. Cut Back on Education Costs

According to FinAid.org, the average student loan debt among graduating seniors in 2007-2008 was about $23,000, which didn’t include private loans that many students end up taking out. Student loan debt seems like a good idea at the time because an education is so worthwhile, but if you can cut back on your debt, you should. Graduating and having a starting-wage job with high student loan payments is one way many young people end up rolling in credit card debt, since they have to use credit cards to keep up with their basic living expenses. Go to a cheaper school. Sit out a year and save up some money, or live at home instead of in campus dorms if possible.

8. Stay On Time

Sierra Dawson from CreditDonkey says, “One of the best ways to turn minor debt into a nightmare is to get behind on your payments.” Credit card companies and other lenders will often slap you fees for being late, and those fees are then rolled into your monthly payments. The later you are, the harder it becomes to catch up on your payments! Keep a schedule of due dates so that you always pay bills on time, even if it means skipping a meal out with your friends that weekend!

9. Keep Your Credit Score High

One great way to get better deals on loans and to thus save money is to keep your credit score high. Do this by making payments on time, keeping your debt to credit ratio low – especially on revolving debt like credit cards – and only taking out new loans when you genuinely need to. A higher credit score makes it easier to get low-interest loans in the future, so you can save money down the road by being proactive about your score now.

10. Get Help Before You’re In A Debt Nightmare

Between 2 and 2.5 million Americans seek the help of a credit counselor each year because they’re on the verge of bankruptcy. Why wait that long, though? If you’re starting to struggle with your debt and aren’t sure where to turn, look into free local programs for credit counseling. Often, these counselors can help you take practical steps to get your spending and debt under control so you can regain some control over your life and your spending.

Are Credit Cards a Good Way to Help Small Business Cash Flow?

Mike — Fri, 05 Aug 2011 08:30:54 +0000

Many small businesses, even ones that have been well-established, run into cash flow problems. Rather than taking out personal loans for business needs, consider signing up for a business credit card.

Credit cards are always the smarter choice for small businesses when compared to loans, but many business owners steer clear of them. They’re often afraid that they will overspend, that the fees and finance charges will be exorbitant, or that they’ll lose control of financial management.

The advantages of a small business credit card outweigh the risks. Making all the company’s purchases on one credit card makes bookkeeping easier. This actually makes financial management simpler.

The business owner can even opt for certain employees to have their own card. Employee spending limits are easily monitored on the credit card billing statements and each individual card can even be preset with its own spending limit.

Business owners may also benefit from the card’s rewards program. If your company frequently travels, you could end up saving money on airfare.

A business credit card will boost your credit rating, providing you make timely payments and manage the account wisely.

Most small businesses find that the high credit limits on business cards can replace business loans, although you should determine extra fees and interest rates with a loans calculator.

This is especially vital for new businesses that have not yet had the chance to establish credit. Newer businesses have not built up the credit rating to qualify for business loans.

Since small business credit cards can boost your company’s credit score quickly, you may qualify for loans and other lines of credit sooner than you think. Remember to always use a loans calculator before applying for any line of credit.

Company credit cards are not just limited to small companies. Individuals who run home-based businesses can also apply.

Having a small business credit card demonstrates your company’s reputation and credibility. Think of it as helping put your brand out there.

If your business has already established credit, utilize a loans calculator before taking out any business-related lines of credit. Since small business credit cards generally come with high limits, it may be a good idea to stick with the credit card unless a loan becomes absolutely necessary.

When you determine that a business credit card is right for your company, compare all major companies.

Look at grace periods, interest rate percentages, rewards programs and annual fees. A card that comes with a higher interest rate may be a better deal than another card with an annual fee. Do the math.

Never apply for more credit cards than your small business can handle. A good rule of thumb is to have no more than two or three credit cards. A business that smartly manages funds can get by with only one.

While personal credit ratings are not affected by multiple credit card accounts, a small business with too many credit cards will show up as a negative on your business’s credit report. Opt for one business credit card and manage the books wisely.

Instant Credit Application Decisions

J. Hamilton Fraser — Tue, 02 Aug 2011 13:19:10 +0000

Those wishing to apply for instant credit may encounter several different opportunities to do so. Even when these opportunities are different, they can appear to mean the same as instant credit approval. This process entails a great deal more. Consumers may be subject to detailed credit checks, income verification, and an inability to use the account right away.

There are many consumers that ignore cards that offer instant approval because of their own past experiences with the process. However, these consumers are outnumbered when compared to those who take advantage of these offers because of their desire to instantly receive gratification for themselves. Instant approval accounts eliminate wait times for college student credit cards to be delivered through the mail, the process of calling in or interviews with credit representatives, and worry about whether or not the consumer will be approved. While instant approval has its advantages, consumers will benefit from avoiding instant decisions altogether.

Instant decisions for credit applications are far different from other credit application processes. When applying for a credit card offering an instant decision, the fact is that consumers have been approved for credit on a conditional basis. There are various restrictions and conditions placed on these type of accounts. The term alone implies that consumers are immediately approved and are able to use the credit instantaneously. However, there are stringent background and credit checks to follow before consumers receive full unconditional approval.

Instant decision credit cards are not the worst thing consumers can encounter and they can actually help with unconditional approval of a credit card account. Most of the time, only a small percentage of Americans are able to pass the specific credit restrictions that accompany these accounts. They must have a minimum credit score and past income information must be available immediately so that companies granting the credit are assured that you will pay.

Remember to research the terms of any credit agreements prior to applying and only select those credit accounts that are in your best interest.

Tips on Doing Credit Card Debt Negotiation on Your Own

J. Hamilton Fraser — Thu, 09 Jun 2011 17:26:04 +0000

There are several programs or methods that you can do in order to help reduce credit card debts. There are methods such as balance transfers, consolidation options, and debt negotiation. There are several companies that now offer their debt negotiation services to people who want to have their debts reduced. Although it can be of great help to have professionals negotiate on your behalf, there are certain debts that can be negotiated on your own. Another benefit of negotiating debts on your own is that you can save yourself from paying those fees that are being charged by debt negotiation companies.

Here are some tips that you can keep in mind when trying to negotiate debt on your own:

Always keep your communication lines open – If you are planning to have your debts negotiated, it is important that you keep your communication lines open with your creditors. It is important that you show them that you have no intentions of hiding from them, and your negotiation attempt is your way of prioritizing them even if you are already having your own financial problems. Keeping your communication lines open will also help to establish trust and will rapport with your creditors.
Come up with a goal – Before you even attempt to negotiate your debts, it is important that you come up with a goal of how much you actually want to have reduced. When negotiating , it is a good idea to set your goals up high because your creditors are likely to negotiate with you as well. Starting high will still help you reduce a significant amount of debt even if your creditors try to negotiate with you.
Negotiate for lower interest rates or better instalment terms – The first areas that you need to tackle when negotiating is the interest rate. This is because interest rates are the factors that can shoot up your credit card debts as you continue to delay payments or miss payments. Even a small percentage of reduction from your interest can already spell big savings for you. Also by negotiating for better instalments, you will be able to catch up with your monthly debt payments.
Always be aware of the consequences – Like in any other credit card debt relief programs, you should also be aware of the possible consequences that you may get with negotiating your debts. Debt negotiation may actually have a negative effect on your credit. So, if you are already suffering from bad credit you need to carefully assess whether it is still worth the risk.

Beginner’s Guide To Credit Cards

Mike — Tue, 31 May 2011 17:57:40 +0000

It’s the truth – it is a scary world out there when you are first starting out. If you haven’t heard the horror stories about credit cards and spending gone amok, you haven’t been listening very hard. Foreclosures are at an all-time high as are bankruptcies, and many attribute this trend to out-of-control spending and easy credit. Caution is the byword if you are just beginning to compare credit cards to assess whether or not they have a place in your financial life.

These days, it is difficult, if not downright impossible, to receive any credit without any credit. It is a catch-22 – how are you supposed to establish credit with no credit? The solution is to start small and build slowly and to keep in mind just because you can qualify for and receive a number of different credit cards doesn’t necessarily mean you should.

For those beginning in the credit card game, here is a short guide to help you on your way:

Research the credit cards you are interested in carefully. Consider their benefits, the interest rate, their payment schedule and any credit card rewards programs. It may be a help to detail all this on a spreadsheet to see them side-by-side and compare credit cards.
Request a copy of your credit rating and determine your credit score before you begin so you know what you are up against. You are allowed on free inquiry per year from the three major credit reporting services.
Limit your initial applications. The more inquiries that are made into your credit rating, the more they count against your total credit score.
The two things that matter most in managing your credit for optimal benefits is to make your payments on time and keeping your balance under 50% of your total maximum limit. The closer you are to maxing out your credit cards, the more it negatively affects your credit score.
Even better, pay your balance off and don’t carry over any debt. This avoids interest fees all together. A good rule of thumb is to never charge more than you can pay off by the end of the billing cycle.

For some beginners, a credit card can be difficult to attain without an established credit history. In that case, a better choice may be a prepaid credit card, in which you deposit an amount of money with a lender and receive a card in order to access the credit. This card, also known as a secured credit card, will help you establish a credit history and in the future will lead to unsecured credit. This is a great place to start whether you establishing new credit or repairing a damaged credit history.

Paying Off Credit Card Debt The Right Way

J. Hamilton Fraser — Fri, 18 Mar 2011 03:11:06 +0000

Paying Off Credit Card Debt

Credit card debt can be eliminated in several ways. You must first have a plan based on your current financial status. You can look into the various debt elimination programs out there that will create a plan based on your individual debts and responsibilities will make sure the payments and time-frame meet your specific needs.

First, you will need to prioritize your debts. Making a list of your debts starting with the most important will give you a good overall view of who you owe, and how much you owe. Collect your current statements including the total balance, interest rate and minimum monthly payment. Prioritizing debts in this manner will help give you a better picture of where you stand, and help you to devise a strategy for paying debts off.

From this list you can easily see which debts have the highest interests, service charges, and annual fees. Accounts for which you are billed additional costs are time-sensitive. The longer you owe a balance, the more you will have to pay. So, it’s best to try to rid your budget of those bills where there are extra fees that increase what you actually owe.

The most common way to reduce debts is to pay more than the minimum amount due each month. This credit card debt elimination plan does not work for most people simply because it suggests that there is no problem with paying the bill in the first place. Because we know interest and other surcharges may be applied, we always strive to pay the bills on time or earlier. It is when we are unable to make those higher payments the debt becomes a problem.

Banks and other lending institutions offer consolidation loans. This plan combines your credit card debts into one loan that can be repaid at a lower interest rate. This decreases the monthly payments, and limits the added charges incurred to once per month. For people who have no additional funds to add to monthly payments, this may be the best option.

Online Credit Card Fraud Is Falling

Louise — Thu, 17 Mar 2011 21:06:01 +0000

Figures released by the UK Cards Association have revealed that 2010 saw credit card fraud hit a ten year low.

During the last year the UK recorded credit card losses of £365.4 million, a 17 per cent decrease on 2009 and the lowest level of loss since 2000 when credit card fraud accounted for £317 million.

And although the numbers released still show a sizeable increase over that ten year period, it is worth noting that the 2010 figures are almost half of what they were just two years ago when credit card fraud hit a record high of £610 million.

This fall in fraud has been attributed to improved security techniques, fraud detection tools and a greater public awareness of the problem.

The introduction of chip and pin technology in 2004, whereby pin numbers replaced signature strips as proof of the cardholder’s identity, had an immediate impact on fraudulent transactions.

The downside to this was that it precipitated a rise in online fraud as criminals exploited the growing popularity of online shopping and banking.

Retailers and banks subsequently joined forces to fight back against the fraudsters and schemes such as MasterCard’s SecureCode and Verified by Visa, which prompt customers to enter additional security information when shopping online, have helped to reduce the instances of online fraud.

In addition, improved fraud detection software coupled with successful campaigns to encourage the use of antivirus software on personal computers saw online banking fraud drop by five per cent.

Furthermore, a greater awareness amongst retailers on how to protect their chip and pin equipment contributed to a massive drop counterfeit card fraud, the process of cloning or ‘skimming’ cards, which fell by 41 per cent over the past year.

The figures also showed a 15 per cent drop in ‘card-not-present’ fraud, that is when goods are fraudulently obtained via telephone, internet or post, whilst fraud from lost or stolen cards fell by 7 per cent.

2010 saw a three per cent drop in check book fraud but, whilst this may be due to increased vigilance amongst banks, retailers and consumers, it could also be a reflection of the fact that checks are being used less and less as paperless transactions continue to rise in popularity.

But whilst the last 12 months have seen a decline in the instances of online and electronic fraud, there was an increase in more ‘old-fashioned’ types of fraud such a phone and mail interception.

Telephone banking fraud, whereby criminals telephone consumers and ask for their personal details, rose by five per cent and mail interceptions, when cards are stolen before they reach their registered owners, was up by 22 per cent

This would suggest that banks, retailers and consumers are winning the fight against online credit card fraud and, although it still accounts for major losses year on year, internet shopping and banking is getting more and more secure

The fact that criminals are turning to more ‘traditional’ ways of getting credit card information backs up this assertion but this should also serve as a reminder to always be vigilant with your personal finance details.

Business Credit Cards Can Assist With Slow Cash Flow Issues

J. Hamilton Fraser — Mon, 14 Mar 2011 18:23:08 +0000

Small business owners are aware of the effects that a slow cash flow can have on their bottom line. With the current economic crisis, customers are paying their bills slower than ever, leaving business owners looking to other sources to cover their own expenses. 0 percent credit cards offer a solution to cash flow problems by supplying funds to pay for immediate costs without charging high interest rates.

Many companies today offer credit cards that offer 0 percent interest rates for purchases and balance transfers. Transferring balances from credit cards and loans that are charging higher interest rates can save money and potentially lower monthly payments. Credit cards can be obtained in the business owner’s name, or under the company name.

If there is insufficient credit history to get 0 percent credit cards under the company name, secured business credit cards are another option to provide operating capital. Secured business credit cards use assets as collateral, usually in the form of a certificate of deposit or savings account. Although they generally do not offer 0 percent interest rates, paying the balances off each month will alleviate interest being charged to the credit account.

When choosing a business credit card, it is important to look at more than just the interest rate. Some cards charge high annual fees, statement processing fees, and even a monthly fee just for generating the plastic card. Transfer fees vary, and can range anywhere from $0 to 6 percent of the amount being transferred. It is important to calculate all additional fees before filling out an application to locate the card that best suits the business needs.

Credit card companies often run 0 percent interest rates as an introductory special. Be mindful of the length of the special rate, and make sure the card will not default to a ridiculously high rate once the introductory period is over. If the business owner does due diligence and learns all the particulars about the cards, using 0 percent credit cards and secured business credit cards can save a considerable amount of money and free assets to help keep the business running smoothly.

All About Easy To Get Credit Cards

J. Hamilton Fraser — Fri, 11 Mar 2011 04:22:07 +0000

Easy to get credit cards are everywhere, even in such a poor recession. If you are considering getting one of those easy credit cards, you need some money or at least a very good credit score. The easiest type of credit card to be approved for is a secured credit card.

There is a difference between secure and unsecured credit cards. You need to deposit money in order to get a credit card that is considered secured. It usually requires about a two hundred dollar deposit. After you send in the deposit, they will send out your credit card. The credit limit is usually based on the amount of your deposit but be aware that sometimes it is less.

Easy to get credit cards for business

These are similar to your personal credit cards- apply for a secured credit card.

Easy to get store credit cards

If you want an easy to get credit card for a store, check out any department stores, they usually are the easiest to get.

Easy to get student cards

Plenty of places allow students to apply and they are easy to get. Search the internet to find the particular credit card offers available. If you have any Military connections, they often have the easiest access to the best cards through U.S.A.A.

There are Orchard bank secured credit cards; they are one of the finest around. Even though they have a high interest rate, they do approve all who apply. This is a good card to begin to rebuild your credit. After about a year and half of timely payments, you can ask to be switched to an unsecured credit card. If they approve this, they refund your money.

Bank of America has some great offers as well. There is a lot of information online about getting credit after bankruptcy.So if you need help do some research on the internet.