Who is Better, Visa vs Mastercard?

The four major credit card companies (Visa, MasterCard, American Express, and Discover) are all constantly trying to set themselves apart from the others. Whether by credit card services offered, credit cards offered, credit card terms offered, or rewards programs offered, to name a few, each company is constantly trying to convince the public that their company is the best when it comes to credit cards. However, with all of the conflicting advertising and consumer reports that you may have heard, read, or seen, how do you discover which card offers the best service?

With respect to Visa and MasterCard, the question of service can be broken down into two parts (1) acceptance around the world; and (2) customer service. The category "acceptance around the world" refers to the number of places that each card is accepted. Because of the vast amount of marketing and money that both of these companies have, the difference between the amount of locations in which each card is accepted is minimal. As such, it is very hard to distinguish between Visa and MasterCard on this subject. Because of this fact, neither credit card company gains an advantage over the other in regard to credit card service.

In regard to customer service, my personal experiences have led me to favor MasterCard over Visa. As far as telephone customer service, I found both services to be friendly and willing to help. However, as far as actual help is concerned, MasterCard actually delivers on its promises. My opinion on this situation is derived from the following experience.

My father and I have the same name. However, because I am named after my father, my name has the suffix "II" following my name. Despite this fact, from time to time I find my father's credit card activity being reported on my credit report. On one such occasion, both a MasterCard and a Visa belonging to my father were being reported on my credit report. After contacting both of the credit granting institutions and receiving instructions on how to remove my father's credit information from my credit report, the MasterCard account has since correctly been removed from my credit report while the Visa account belonging to my father still remains on my credit report.

Based upon this experience, I feel that MasterCard better protects its cardholders by correcting problems when they arise. On the other hand, it feels that Visa is more interested in protecting its own interests. Granted, your own experiences will dictate your opinion of each company. However, based upon my experiences, MasterCard has better credit card service.

Tips for Travel Rewards Credit Cards

Credit cards have become an integral part in the financial lives of many people. If used properly, a credit card can be a great financial asset that assists you (assist by way of a good credit score not by way of purchasing power) in making big purchases and enabling you to get important loans. However, if abused, credit cards can make your financial life a living nightmare. As such, always practice sound credit card and debt management. That being said, it is important to note that not all credit cards are created equally.

Companies are doing everything these days to entice people into obtaining a credit card. For example, many companies will offer no interest on cash advances, balance transfer, or purchases for the first year that you own the credit card. Some companies offer a great introductory interest rate and follow that up with a low, fixed interest rate. Still other credit card companies offer rewards in the form of points or airline miles that can be redeemed once the credit card owner obtains enough points. Of all of these rewards, airline miles can be the most beneficial.

If you are the kind of person that uses a credit card for one particular task (e.g., getting gas for your car/truck), a rewards card may be a great option for you. A rewards card is a great option because your credit card use is going to continue regardless. As such, why not get rewarded in more than one way for consistent and proper use?

With the price of fuel increasing and airlines going out of business, it seems that the average airline ticket has greatly increased in price. Additionally, things that used to be complimentary (e.g., an in-flight beverage, checking more than two pieces of luggage, and an in-flight snack, to name a few) now cost money. As such, using points to get discounts on or even free airline tickets, hotel rooms, and/or rental cars (especially if you travel a lot) can save you a lot of money. Therefore, a travel rewards card may be in your best interest.

Basically, a travel rewards card works the same as a "points" rewards card. Each dollar spent equals a certain amount of travel points. Once you have accumulated a predetermined amount of travel points, you can redeem them for flights, hotel rooms, and/or rental cars. However, if you get a travel rewards card, you still have to make sure it is a good credit card. For example, you should not pay an annual fee simply because it is a rewards card. Additionally, the rewards card interest rate should not be higher than your other credit cards merely because it is a rewards card.

Do not fall into the trap of paying too much for a rewards card merely because it offers rewards. Make sure that there is no annual fee, a low interest rate, and that the points can be redeemed for any flight at any time (i.e., no blackout dates). If your rewards card has these attributes, you will have added a great credit card to your financial arsenal.

How to save money and reduce your debt with zero percent credit cards

When it comes down to it, a zero percent interest rate credit card can save you money as long as (1) the fees for owning the card do not amount to more money than would an interest rate; (2) you do not spend more on the card just because the interest rate is zero; and (3) the default interest rate on the credit card after the promotional period ends is not astronomically high.

First things first, think about this interest rate issue logically. If a credit card company does not charge interest, how does it make money? In lieu of interest, the credit card company may be charging some kind of annual fee and some other maintenance fees. If the fees cost more than the interest would, you are not saving any money. Additionally, if you have a low credit limit, the ratio of annual fee to credit limit may be higher than an interest rate. This, again, does not save you money and in fact, costs you money. Therefore, should you decide to utilize a zero percent credit card, make sure that you actually save money by using it.

The most common way a credit card will have a zero percent interest rate is in the form of an "introductory" rate. Basically, a credit card company will charge you zero interest for a set amount of time if you obtain their credit card and transfer a balance from one of your other cards.

Depending on the amount of your debt on your older car, it may be advantageous for you to transfer that balance to one of these zero interest, "introductory" rate credit cards. Many credit care companies will give you a zero percent interest rate for a set amount of time on these transfers. Therefore, should you transfer your balance, all of your monthly payments during this time will go towards paying your principal and thus, you debt will be paid sooner.

It is important to note that there are some disadvantages to this method. First, you have to open a new credit card and thus, instead of having one, as in our example above, you will have two. If this is the case, you cannot use the old card again because this would negate the purpose of transferring the balance. Additionally, you have to make sure that the interest rate of the new card is not higher than your old card. Remember, the zero percent interest rate does not last forever, and thus, should the new card have a higher interest rate, you will offset any savings that you have made while paying zero percent interest.

The point is, a zero percent interest credit card can save you money. However, should the costs of the new card offset any savings you get from transferring, you should think twice before doing so.

How to Avoid the Credit Card Trap for College Students

For most people, college is the first time in their life that they are living by themselves. This means that they have to pay bills, get a job, make adult decisions, and take on adult responsibility. It is also usually the time when a person gets his/her first credit card. As such, this can be a time of tremendous financial hardship and temptation.

Many college students abuse their credit card. College students see a credit card as an extra bank account. However, they quickly forget that every dollar they spend with the credit card has to be paid back in full, with interest. Additionally, because these are college students, the credit card usually carries an extremely high interest rate. This means that it is very easy to accumulate more debt that you can handle.

In order to avoid becoming a victim of credit card debt, you have to know from the beginning that credit is a tool that can either make or break your financial future. You do not want to leave college with a low credit score.
Doing so can prevent you from getting student loans (should you want to go to graduate school) and can also prevent you from making the "big" purchases in life (for example, a home or a car). Therefore, the solution is to prevent yourself from being put into this position.

In order to prevent being put in the position of having too much debt, you have to realize that debt takes time. You do not go to bed one night with no debt and wake up the next morning with $10,000 of credit card debt. Debt accumulation is a process of bad choices. If you realize this and you notice that you are being careless with your credit card, you can break the cycle before it spirals out of control.

Another way to prevent a large accumulation of credit card debt is too limit yourself to one credit card.
By having only one credit card, you cannot get yourself in too deep should you start to abuse the privilege of having credit. Additionally, make sure that the limit on your credit card is no more than $500.
This is another "safety net" that you can put in place in order to avoid overusing your card.

The best way to prevent credit card debt accumulation while in college is to use the credit card for emergencies only. An emergency is not a late night run to your local fast food restaurant. An emergency means your car broke down on the highway in the middle of nowhere, you have no cash, and the tow truck costs money.

Realize that credit is a privilege, keep track of your spending and break the cycle before your debt gets too big to contain, keep only one card and make sure the credit limit is not above $500, and use your card for emergencies only. Follow these tips and you can leave college with an A+ credit score.

Can Applying for Loans Bring Down Your Credit Score?

A credit score has many components. Each component weighs differently on your credit score. For example, having a late payment recorded on your credit report will cause more damage to your credit score than will having too many inquiries on your credit report. However, it is important to know that regardless of what the negative information is, such information will stay on your credit report for many years. As such, you will want to weigh the consequences of the negative impact on your credit score against the advantage of applying for and obtaining a loan.

Applying for a loan can negatively impact your credit score in more than one way. First and foremost, whenever you apply for a loan (whether it is for a house, a car, a student loan, a personal loan, etc.) the bank or lending institution to which you applied is going to run a credit check on you to calculate the risk involved in lending you the money. The riskier you are, the higher your interest rates and/or fees will be. If you are too risky, you will be denied a loan.

When the bank or lending institution conducts a credit report check to calculate the risk level involved, each check is recorded as an "inquiry" on your credit report. Banks and lending institutions look to see how many inquires are on your credit report for a set period of time. If you have "too many" inquiries, this tells the bank or lending institution that you are trying to borrow money and thus, this means that you are acquiring or attempting to acquire a lot of debt. As such, you may not have the money to pay back a loan. Therefore, this makes you a risky loan and you will either have to pay more interest and fees or will be denied outright.

However, even though these inquiries are recorded on your credit report, this does not mean that every one of them negatively affects you credit score. The key is not to get "too many." The exact number that crosses the "too many" threshold is not exact, but to be on the safe side, you should try to keep the inquiries to no more than 3 per year. Remember, every time that you apply for a credit card or any type of loan, an inquiry is recorded on your credit report.

The other way that applying for a loan can damage your credit score is if you are approved for the loan. If you are approved for a loan, it will affect your credit to debt ratio. If you get a loan, this will create more debt. The closer you are to "maxing out" your credit limits, the worse off your credit score will be. The reason for this is because if you have no available credit, banks and lending institutions will be concerned that you have reached your limits and will have trouble paying off your debt. As such, there is a higher chance that you will default and thus, a higher chance that the bank or lending institution will not get paid.

As stated above, because of these negatives, you have to weigh the cost of getting a loan against the benefits of obtaining the same. Make sure you are applying for and receiving a loan for a good purpose (buying a home that you can afford, getting a college education, making a good investment) and are not obtaining a loan for something you do not need.

What Does a Credit Score Mean to You?

There are many frequently asked questions by people who are not entirely clear as to the significance of a credit score. These people understand that a high credit score is good because it will help them get loan approvals and lower interest rates, but these same people do not know how high their credit score needs to be in order to obtain these advantages.

A FICO score ranges between 300 to 850. Obliviously, if you have a credit score of 850 you have nothing to worry about. You have reached the pinnacle of credit worthiness and will get the best interest rate and best loan, guaranteed. However, what if I have a score of 720? Will a score of 720 get me a better interest rate than a score of 715? A score of 720 is higher than 715, thus, many would conclude that a 720 would get favorable interest rates and loans. However, such is not the case. Lender will treat a score of 715 and a score of 720 the same. Why?

In addition to being scaled between 300 to 850, most lenders create credit score categories. These categories have various different names depending on the lender, but generally, the credit scores are broken into 5 categories and have names similar to (1) Poor; (2) Fair; (3) Average; (4) Good; and (5) Excellent. The lender will then take your score and put it into the appropriate category. Once you are placed in a particular category, you are given interest rates and loan terms based upon that category.

Generally, a lender’s ratings are as follows: (1) Poor is equal to credit scores 619 and below; (2) Fair is equal to credit scores 620-659; (3) Average is equal to credit scores 660-720; (4) Good is equal to credit scores 721-749; and (5) Excellent is equal to credit scores 750 and over. So, what is the point I am making? The point is, a score of 715 is not different from 720 for lending purposes. Therefore, you do not need to worry about these couple of points when applying for a loan. The only thing you should worry about is the point difference between the categories. In other words, if you have a 720, you should try to boost your score a couple of points so that you can get the more favorable terms and interest rates given in the “Good” category.

Additionally, remember that your credit score is based upon the time it is pulled. Therefore, your 720 today could be 718 or 725 tomorrow. Everything such as paying a bill, taking out a loan, getting a new credit card, getting a larger credit line on an existing credit card, and/or having a credit card for more than three years will affect you credit score. Because many people do at least one of these things several times per month, your score will thus change several times per month. This is one of the reasons why lenders do the category system.

The point is, take care of your credit score, do not worry about the points in the same category (because, based on our example, a 660 will get the same rates and loans as a 720), and strive to get your score into the highest category.



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When Credit Cards Become an Addiction

There are many benefits to credit card ownership. You can develop a strong credit report and a high credit score. These will result in lower interest rates for you on loans that you may take. Additionally, your debt to credit ratio could help you apply for a big loan. Another advantage is the spending power that a credit card offers. Do not misunderstand what I am saying; a high spending power does not necessarily mean that you should utilize that power whenever you want. Doing so will result in financial hardship and probably, some legal issues.

One definition of “addiction” is “the state of being enslaved to a habit or practice.” Therefore, is it possible to be addicting to credit card spending? I believe that it is possible to be addicted to such a thing. Continuously using your credit cards without regard for the financial and legal consequences sounds like an addiction to me. Keep in mind, I am not a doctor of any kind and therefore am not qualified to give an opinion as to a person’s psyche. However, irresponsible credit card use can be a serve problem if a person does not know how to control the problem.

Solving the problem of irresponsible credit card use requires preventative measures. Teaching a person the possible dangers of irresponsible credit card use is the first step towards creating a responsible credit card user. Educate yourself as to the correct and responsible way to use credit cards. This is the best way to safeguard yourself against irresponsible credit card use.

Although this is sound advice, how do you kick the credit card spending habit after you are already “addicted?” Your primary concern should be for your financial welfare. Because of this, you may have to close all of your credit card accounts in order to achieve this primary concern. Closing all of your credit card accounts will negatively impact your credit score, however, it will save you from the continuous spending. Credit scores and credit reports can be repaired, however, your financial welfare is much harder to fix.

Remember, credit card ownership is a privilege. Therefore, if you cannot handle the responsibility of credit card ownership, do not get a credit card. There are other ways to build a credit score and credit report, and if you cannot do it with credit cards, you will have to utilize other methods.

Online Credit Card Approval

Needless to say, electronics and the Internet have changed the way that people maintain and conduct their financial affairs. Internet banking, Internet bill pay, and Internet credit card applications have paved the way for faster and more effective money management.

Pre Internet banking dominance, everything financial was done through the United States mail and telephone. Everything was a slow process. In regards to credit card applications, you had to go to your local bank and get one, or you had to wait for a credit card offer to be sent to you in the mail. You had to fill out the credit card application by hand and mail it to the credit card company. If your application was accepted, you would receive a letter a couple of weeks later telling you such. Another few days later, you would receive you credit card. On the other hand, if your application was denied, you had to wait those few weeks just to discover this fact.

Thank goodness for the Internet and instant credit card application decisions. Nowadays, all you have to do is go to the website of the credit card company in which you are interested. You select the credit card of interest. Next, you fill out the available credit card application. Once that is complete, you submit the application and get a credit card decision, usually, within thirty seconds. Thirty seconds sure beats a few weeks!

If you are in the market for a credit card and you have never used an Internet credit card application, I suggest you give it a try and get an instant credit decision.

Should you Transfer your Credit Card Balance?

A credit card balance transfer is when you take the balance on one credit card and pay off that balance with another credit card. The balance on the first card is thus effectively transferred onto the second credit card. Why would anybody do such a thing? Put simply, people do this to save money on interest rates. However, there are some dangers that can defeat the purpose of a credit card balance transfer.

As I stated, people transfer credit card balances in order to save money on interest rates. If you have a credit card that has a 23% interest rate and another card with a 15% interest rate, why not transfer the balance on the 23% interest rate card to the credit card with the 15% interest rate? You will save money and you will only have to make one payment instead of two.

The first problem that people run into is that sometimes a credit card does not have enough available balance in order to receive the transfer. Therefore, if you need to transfer $500, but only have $300 available balance on the card to which you want to transfer, obviously you cannot transfer the whole amount. I would caution transferring $300 of the $500 because then you will have one card “maxed out.” This will negatively affect your credit score, and could lead to trouble with fees (over the limit fees) down the road.

The second problem people face is that sometimes they transfer a credit card balance to a card with a teaser rate. You might see a credit card that advertises a 0% interest rate for six months on all credit card balance transfers. You may think, “This is great!” However, you have to check the fine print. Most of the time, the interest rate after the six month introductory period changes from 0% to 20%+. Make sure that the default interest rate is lower than the current interest rate on your credit card or else the whole purpose for transferring your credit card balance will be defeated.

Third, make sure that there are no fees associated with your balance transfer. You should not have to pay additional money for transferring money. If the credit card to which you want to transfer your balance wants to charge you a fee, find another credit card.

Balance transfers can be a benefit. Avoid the teaser interest rates with sky high default interest rates. Additionally, if you conclude that a balance transfer will save you money, make sure that the card to which you transfer has a noticeably lower interest rate. It is a waste of time to transfer from a 22% interest rate credit card to a 20% interest rate credit card. If you use balance transfers effectively, you could literally save thousands of dollars.

Credit Card Rebate Programs: Are They Worth It?

Of all the credit card rewards programs that are offered, cash back rewards cards are my least favorite. Many credit card companies offer many different types of rewards programs. The most common rewards programs are cash back, airline miles, and rewards points. Each card is different, and thus, you must carefully check the terms and conditions of each credit card so that a fancy rewards program does not blind you from a high interest rate and/or high fees.

Usually, when a card offers cash back rewards, the cash back reward is one percent (1%) of the amount you charge. Therefore, for every $1,000 you charge to your credit card, you will get a $1 reward. Is that really a reward? Think about it like this, in order for you to earn $1,000 worth of cash back rewards, you would have to charge $100,000. If a person is charging $100,000 to a credit card, do you really think that $1,000 is significant to that person? I do not think so either, therefore, I generally avoid cash back reward cards.

As I mentioned above, my favorite kind of reward card is a points card. I like the variety of options on which you can redeem your points. Additionally, some credit card companies offer “double points” or point bonuses on specific purchases (such a gasoline).

Regardless of the reward you choose, you must be aware of what you are giving back to the credit card company in order to obtain this reward. For example, if your rewards card requires an annual fee, do not get the card. Additionally, many rewards cards have a high interest rate. The point is, make sure that the rewards credit card is acceptable under regular credit card standards (this means a low, fixed interest rate and no annual fees) before deciding to obtain that rewards card.

Cash back rewards cards are not worth the effort, therefore, look for a rewards card with more benefits and better options. However, make sure that you are not sacrificing suitable credit card requirements in order to get a “rewards card.”

What are Platinum Credit Cards?

Traditionally, credit card companies have levels for their credit cards if they offer more than one card. Usually, the credit card company has a base card. There is usually no color scheme attached to this card and it usually has the worst interest rate and credit limit. As you use that card and establish a good credit score, the company many offer you its gold card. This is the next level in the credit hierarchy. This card usually has a better credit limit and a lower interest rate. Additionally, this gold card probably comes with benefits like concierge service, roadside assistance, rewards points, or some other incentive. Eventually, you may be offered the platinum card. This card is usually the flagship card for the company. It will have the best interest rate and the best credit limit. In addition, it will have the best incentive and benefits package. Some companies offer a card that is “higher” than a platinum card. These cards are super exclusive and are very hard to obtain.

You need to beware of these gold and platinum cards. Sometimes, they are better by way of lower interest rate and higher credit limit. However, many times credit card companies will throw in annual fees on these “higher” cards. I am a firm believer that there is no reason for an annual fee, therefore, unless some amazing benefit is offered by the card, you should be wary of this fact.

Another thing you need to be cautious of is that credit card companies use the terms “gold card” and “platinum card” as marketing terms. Basically, you think you are getting something special, but it ends up being a terrible card in a shiny, attractive color. Do not be fooled by these marketing techniques. Always take a look at the credit card’s interest rate, fees, credit limit, and rewards options before you make any decision. Think about it like this: would you rather have a blue card that has a 9.9% interest rate, no annual fees, a credit limit of $5,000, and rewards points or a platinum card that has a 12.9% interest rate, a $50 annual fee, a $5,000 credit limit, and rewards points? To me, this is a no-brainer. I say, keep your platinum card if it is worse than my regular card. The point is, do not be deceived by marketing. Get the card that is best for your situation.

In a traditional sense, platinum cards can be a better card to possess and usually has to be earned, however, beware of marketing tricks and annual fees that tarnish the attractiveness of a platinum card.

Credit Card Woes to Consider Before you Apply for your Credit Card

Put in simple terms, you need to be responsible with money before you should even consider applying for credit. If you have trouble managing your finances, obtaining a credit card is only going to add to the problem. You may be tempted to purchase expensive items even though you do not have the money to pay off the charge; you may build a large debt with improper credit card use; you may also be paying more in interest than you ever do in principal. All of these things will damage your already struggling financial situation. Do not add to the stress.

Assuming you are responsible with your finances, a credit card is a powerful financial tool that can help you achieve whatever financial goals you may have. However, high fees, high interest rates, and improper use can quickly plague any advantage a credit card may give. Beyond that, there are also other factors to take into account before applying for a credit card.

There is an old saying, “out of sight, out of mind.” This is true when it comes to credit cards. The temptation of using a credit card is strong if you really want to buy something. This temptation can be avoided if you do not have the means with which to buy the item. Therefore, if you have a “temptation problem” leave you credit card at home. If you have a serious “impulse buy” problem, you need to consider this before applying for a credit card, and you may need to reevaluate your purpose for getting a credit card.

Another problem or woe you need to consider before applying for a credit card is the time frame of credit card bills. Many people do not consider the fact that their bank account decrease during a standard billing period. Therefore, if you have the money to pay your bill at the first of the month, that does not necessarily mean that you will still have the money at the end of the month. Other bills such as gasoline, food, water, mortgage or rent, utilities, cell phone, etc are also paid monthly. Therefore, consider whether you can really afford to pay another bill (in this case a credit card bill) before you decide to apply for the credit card.

Last, because credit cards are so easy to use, many people do not keep track of their spending. Not until they go online to look at their statement do people realize how much they have really spent. If you are a person that keeps track of his/her finances only because the internet provides you with a balance statement, you need to establish better spending tracking practices so that you do not end up spending more than you can afford.

The common woes will always be interest and fees, however, temptation to buy, time frame budget considerations, and keeping track of your spending are big considerations that need to be evaluated before applying for a credit card.

Things You Need to Know Before Applying for a Credit Card

Applying for a credit card is an interesting step along the financial journey of a person. There are many rewards and pitfalls accompanying credit card ownership and use, however, if you use credit responsibly, the rewards will shine through and the pitfalls will be minimized.

First, you need to know your purpose for getting a card. If you want a credit card to buy something you cannot afford or because it makes you feel like a responsible adult, then a credit card is probably not right for you. However, if your purpose is to establish a solid credit report and credit score and to build your creditworthiness, then a credit card can be an important tool to achieve these goals.

Second, you need to know if you have a credit report or a credit score. If you do, you need to obtain a copy and know what is contained in the report. If you do not have either, this information is also helpful. The point of discovering this information is to help you determine the credit cards for which you qualify. There is no need to apply for a card that has requirements that you cannot meet. Therefore, find out this information to narrow your available options.

Third, you need to know your limits. This means that you need to know your yearly salary and how high of a limit you can afford. Additionally, you need to know whether you want to pay over time or in a lump sum every month. Knowing these limits (i.e. yearly salary, affordability, flexibility of payment, etc.) will help you make a wise credit decision.

Last, you need to know the interest rates and fees associated with the card in which you are interested. Never get a card with an annual fee and focus on cards with low, fixed interest rates. Avoid cards that have a low introductory interest rate that resets to a high interest rate. Additionally, avoid cards with a variable interest rate. If undervalued by the applicant, these rates and fees can add up quickly and make the credit card have more pitfalls than rewards.

Discover your purpose for getting a card, find out your relevant credit information, know your limits, and find a card with good rates and little to no fees. Knowing these specific points will help you make a wise credit decision from which you could benefit for years to come.

Credit Card Applications for Beginners

Credit card applications are fairly straight forward and need no special training or education to fill out. However, there are some things you should know.

First, put your full, legal name of the credit card application. The credit card company uses this name to check your credit report to determine whether or not you are approved. Therefore, if you use a shortened name (for example, if your name is Christopher, do not put Chris on your application) on your credit card application, you are going to cause confusion amongst the credit reporting bureaus and are thus going to set yourself up for a credit report dispute in the future. Avoid all of this by always using your full, legal name.

Second, do not lie about your monthly or yearly salary. You are not going to get a higher credit limit by doing this, and additionally, your credit report is not going to support this contention. The point is, do not lie on your credit application.

Third, sometimes you are a student and you are employed, therefore, which should you put down when the application asks for employment status? In my opinion, you should use whichever job title (student or full-time employed) gets you the most benefits for the card for which you are applying.

Last, use internet applications whenever you can. I do not feel comfortable mailing or giving so much personal information (e.g. phone number, address, full name, social security number, employer, employment status, yearly income, etc.). Therefore, submit your credit applications through secure websites. Additionally, when you apply online, you usually can get an answer on your application within 30 seconds.

Following these tips will help make your credit card application go faster and more successfully.

Getting a Second Credit Card Without Good Credit

First thing first; if you have bad credit, you should really evaluate your reason as to why you want a second credit card. If you have bad credit, that means that you were not using credit responsibly, and therefore, getting another credit card may get you into more trouble and more debt.

Reasons you should not get another credit card if you have bad credit include, but are not limited to: (1) to pay bills (this is probably the worst reason); (2) to go on vacation or any other trip; (3) to buy something you cannot afford; and (4) any other reason that does not include improving your credit report and raising our credit score.

If you have bad credit, your primary reason for getting another credit card needs to be to improve you current credit score. If this is your purpose, then I applaud your efforts and know what you are going through. Just know that your second credit card is not going to be as good as your current card.

First, because you now have bad credit, the second card is probably going to have a higher interest rate and a lower credit limit. Additionally, you may be subject to some fees that you did not have to pay for your first card.

Second, make sure that you do not get a card that has too many fees. The point of your second card should be to increase your credit score. However, you should not go broke on credit card fees to achieve this purpose. If worst comes to worst, do not get another card. Use your current card responsibly and gradually build your credit score over time.

The point is, do not put yourself in more debt just because you feel that a second credit card will help you achieve your purpose sooner. The ends have to justify the means, and thus, you should not obtain a card that requires the payment of tons fees and a higher interest rate. As I stated above, if you can only qualify for cards with high fees and high interest rates, do not get a second card.

The Truth about Secured Credit Cards

A secured credit card is a credit card that is that is tied to a monetary fund of some kind (whether it is a deposit, bank account, or some other account). The monetary fund can be accessed and used by the credit card company in the event that the credit card holder defaults on a payment. These kinds of credit cards usually have an obscenely high interest rate and an inordinate amount of fees. Basically, they are terrible credit cards that target people with bad credit.

First and foremost, never get a secured credit card unless you absolutely have no other choice at all. In fact, even if you have no other choice, you should again analyze whether you should get a secured credit card. As I stated, secured credit cards have terrible interest rate and a vast amount of fees (including an annual fee, program activation fee, deposit fee, etc), therefore, they are bad credit cards to own. However, they are attractive options for people with bad credit because the requirements to get a secured credit card are very easy to meet.

As an alternative to getting a secured credit card, you should look at non-major credit cards. These types of credit cards include credit cards from various retail stores, department stores, and even gasoline cards. These cards usually have a high interest rate, however, the usually have no fees attached to them as secured credit cards do. Additionally, these “non-major” credit cards are unsecured, therefore, you do not have to put up a big deposit or tie the credit card to a bank account. It is easy to qualify for non-major credit cards, and thus, they provide an attractive alternative to secured credit cards.

Secured credit cards can help restore your bad credit, however, they come with a heavy cost. It might actually be cheaper to dispute negative information on your credit report. If some of the negative information gets removed, your credit score will increase, and therefore, you will have a better chance to qualify for an unsecured credit card.

The point is, if you have a choice, do not get a secured credit card. If you do not have a choice, make sure that you seriously consider whether or not obtaining a secured credit card is worth the potential credit score benefit.

Should the Rules on Applying for Credit Cards be Tighter?

This is a question of much debate among people of all kinds of financial and educational levels. The proponents of such a measure believe that “tightening” the requirements to apply for and obtain a credit card will help protect people against irresponsible credit card use. These people think that credit is evil and that only a select few, if any, should possess it.

The opposition to such a measure believes that credit itself is not evil and that financial education is the means by which to prevent credit misuse. These people also believe that restricting the means to obtain credit will have an overall negative economic effect.

I agree with the latter. Restricting the means to obtain credit effectively prevents poor and middle class people from obtaining credit. One cannot restrict the obtainment of credit based upon credit score because one cannot have a credit score until one obtains credit. Additionally, one cannot restrict the obtainment of credit based upon monthly or yearly income because, as stated above, this effectively prevents the poor and middle class from having credit.

The truth is, I have yet to hear one good reason as to why credit requirements should be “tightened.” Some people point to the current real estate market and credit crunch as reasons why credit card obtainment should be restricted. This is a very unreasonable way to think. Basically, these people have concluded, “it is bad, therefore, is should be taken away.” The first flaw in this conclusion is that credit is not bad; credit is a powerful financial tool that can help you achieve monetary success.

The second flaw in the conclusion is the remedy (that credit should be taken away). If this is the case, how are people supposed to purchase a home, a car, or pay for college, to name a few. The people that propose such a remedy do not consider all of the good things that credit can provide (most notable a place to live, a car to drive, and an education).

The point is, credit card requirements should not be “tightened.” In my opinion, the answer is to better educate people as to the dangers of credit misuse and as to the advantages that credit can provide if proper credit use is practiced.

Rewards Cards?

Rewards programs are supplements to credit cards and should not be the primary reason as to why you get the card. In my opinion, the best reason to get a card is a low interest rate (and of course no annual fee, because there is absolutely no reason to have a card with an annual fee).

Look carefully at rewards card advertising. Many commercials state that you can get cash back from using your credit card. The commercials go on to show a person stating that they got $100, $200, or more back due to his/her “cash back” rewards card. These commercials are not telling you the whole story. Do not get me wrong, it is very possible get this amount back, but you have to charge upwards of $10,000 to get it. That is not a typo, $10,000 to get $100. That is 1%! Is it really worth it to apply for a card that offers 1% cash back, but has a higher interest rate than other cards? I do not think so either.

Also, make sure that the rewards card you want actually offers rewards that you want. Almost all credit card companies offer some kind of shopping mall in which you can redeem your rewards points. What if you do not like or need any of the merchandise in these credit card malls? What you end up with is a bunch of reward points that you will never use or, if you redeem your points, you will end up with a piece of merchandise that you do not want.

The point is, do not be awe struck by a credit card solely because it offers rewards. Get a credit card that has no annual fee and has a low, fixed interest rate. If you find a couple of credit cards that meet these criteria, then you can choose based on rewards. Just make sure you look into the rewards first so that you are not stuck with a 1% cash back rewards card or a point redemption mall full of unusable and unwanted merchandise.

A Basic Guide to Credit

A credit guide can be summed up in three steps: (1) establish it; (2) maintain it; and (3) use it responsibly. There is nothing easier. This is the shortest way to credit success and also happens to be one of the best plans you can follow.

(1) Establish It

A person that tells you to never get a credit card is giving you bad advice. It is that simple. Despite what some people may think about credit card companies or credit in general, the fact is that we live in a time when a credit score is a powerful financial asset. Becoming monetarily successful is difficult enough without cutting off a significant financial asset. Establish credit by getting a low interest rate credit card.

(2) Maintain It

Many people have no idea what is in their credit report. Always do monthly checks of your credit reports in order to prevent identity theft. Additionally, you should check your credit reports monthly in order to make sure that no inaccurate information exists. Inaccurate information will affect your credit score.

(3) Use It Responsibly

This is the most important step. Credit is a privilege, not a right. Do not misuse your credit and you will have nothing to worry about. Do not charge something unless you have the money to pay it off; a credit card is not an alternative to lack of cash! Pay more the minimum balance in order to minimize interest payments. If you use your credit responsibly, you can always negotiate with your credit card company for a lower interest rate and a higher credit limit.

Following these three easy steps is the most basic and most successful guide to credit. In sports, the best teams are the ones that do the simple things well; the same is true in credit.

How to Negotiate Credit Card Interest Rates

Only two circumstances exist in which you can successfully negotiate to reduce your credit card interest rate: (1) when you account is in good standing; and (2) when your account is so badly defaulted that your only way out is bankruptcy. Hopefully your situation is the former and not the latter.

First, if your account is in good standing, you will have a better bargaining chip than you would have if your account is in severe default. In order for you to strengthen your bargaining position, make sure you have an offer from another credit card company. You do not have to apply for the other card, you only need to be able to qualify for the card and the card must have a lower interest rate than your current card. You can get this other credit card offer very easily. You can find this other offer by looking on-line, checking your “junk” mail, or going to your local bank and grabbing an application.

If your account is in good standing, give your credit card company a call. Do not be secretive or discreet about your reason for calling. Tell the card representative that you are calling because another company has offered you a better interest rate. Continue by telling the representative that you are happy with their card and you want to know if they can match the lower interest offer. At first, the representative may tell you that it is not possible or that he/she does not have the authority to authorize such a request. At this point, ask to talk to a supervisor/manager.

Tell the supervisor/manager the same line you told the representative. If the supervisor/manager seems reluctant, express you disappointment in a stern yet polite way. Yelling or getting abusive will not help your situation. It may take a few minutes but you should be able to work something out.

The problem that exists is that you do not want to close your account. Closing your account could negatively affect your credit score. The credit card company knows this, therefore, they will be reluctant at first. However, customer retention is important for credit card companies, therefore, they will work with you.

Be polite yet stern and present the situation intelligently. Make sure you have another offer for which you qualify. Doing all of these things will increase your bargaining strength and will help you succeed in your purpose.