June, 2010

If you are new to the world of credit cards, then you need to know the basics before going ahead and choosing the right credit card. Although all the terms and companies offering cards can seem confusing at first, if you do your homework then learning the basics takes no time at all. Here are some hints and tips regarding the basics of using and finding a credit card:

Borrowing money

Credit cards are probably the most common way of borrowing money. Credit cards are available from so many different sources, both offline and online. There is a wide variety of different types available, and at first glance it can be very confusing. However, what you need to remember with all credit cards is that you are borrowing money, and that the credit is not free. Once you realise this then you will be in a better position to get a card that suits your needs.

Interest rates

Unless you intend to pay your credit card bill off in full each month, then you need to be aware of the interest rates of cards. The rate is calculated as APR, or Annual percentage rate. The typical rates right now are around 13-18%, depending on the company you choose. Lower interest rates are obviously better, but remember that there can be other charges as well such as late fees or transfer fees, etc. Also, if you are going to pay the money off very slowly, then you should look at other types of money lending as credit cards do have high interest rates.

Paying your bill

The options for paying your bill vary, and some cards have different requirements. A few cards require you pay the whole bill each month, but most only require that you pay a minimum payment. This is usually around 2% of the entire balance. If you are not paying back your card in full each month, then pick a card that has benefits for doing so. Some cards offer cashback of around 0.5% or more, meaning that you get money back each time you buy something.

Fees

Most credit cards have a range of fees that you will be charged. These include fees for late payment, over-limit fees, and annual usage fees. If you know you might be late with payments sometimes, then pick a card with low late fees. Also, try and avoid cards with annual fees, unless the rest of the package is very good. Some cards have introductory offers, like no interest or fees on transfers for six months. These cards are good if you need to transfer debt or you know you can pay back the balance during the introductory period.

Debt

Remember, if you are not careful you can get into credit card debt that can be hard to get out of. Only spend what you can really afford, and try to pay back as much of the balance as you can each month. Credit cards are great for emergencies or spreading the costs of expensive items, and if you know the basics then you will get a better deal on your card.

HOW TO DISPUTE A CHARGE ON YOUR CREDIT CARD

You need to write to the creditor at the address shown on your statement for “billing inquiries. You must Include your name, address, account number, and a description of any errors.
Send your letter of dispute as soon as possible. It must reach the creditor within 60 days after the first bill containing the errors was mailed to you.
The creditor has to acknowledge your complaint in writing within 30 days of receipt. At the latest, the dispute must be resolved within two billing cycles, but not more than 90 days.
Unauthorized Charges. If your credit card is used without your permission, you could be held responsible for up to 50 per card.
If you report the loss before the card is used, you can’t be held responsible for any unauthorized charges. I
To minimize your liability, it is imperative that you report the loss as soon as possible. Most issuers have 24-hour toll-free telephone numbers to accept emergency information. If you have managed to notified your credit card company by telephone It’s important that you follow-up with a letter which includes your account number, the date you noticed your card missing, and the date you reported the loss.
If you have a dispute about merchandise or services. You can dispute charges for unsatisfactory goods or services. To do so, you must:
Have made the purchase in your home state or within 100 miles of your current billing address. The charge must be for more than 50. These limitations don’t apply if the seller also is the card issuer or if a special business relationship exists between the seller and the credit card issuer.
First make a good faith effort to resolve the dispute with the seller. No special procedures are required to do so.
If these conditions don’t apply, you may want to consider filing an action in the Small Claims Court.

Five Credit Card Billing Problems and How to Fix Them

It goes without saying that your first and best defense against paying fraudulent or unfair charges on your credit card is knowing what your bill says! When you receive your credit card statement each month, sit down with it and check each item to make sure that you actually DID purchase it. If you do run into inaccuracies or problems, there are procedures to follow to report and deal with the charges. If you don’t follow the procedure and the card company decides to notify a credit reporting agency, it could affect far more than just your balance on that one credit card. What are the most common billing problems and how should you deal with them?1.Hey, I didn’t buy that! If you notice a charge on your credit card statement that you didn’t make, take steps to deal with it IMMEDIATELY. It could be a store error – but it could be the first sign that someone else is using your identity. Heading off problems before they start is vital. Call your credit card company and report the charge that’s in error – but don’t leave it at that. Follow up with a written letter stating that you dispute the charge, and requesting that they investigate the situation. The credit card company has 45-60 days to complete their investigation and notify you of the result. During that time, they can not make any attempts to collect that amount from you, nor report you to a credit reporting agency because of it.2.Wait – I canceled that subscription!If you cancel a subscription for which you pay via credit card – to a magazine, a club or internet service provider for instance – it may take a month or two for the cancellation and ‘chargeback’ to show up on your credit card statement. Again, notify the credit card company that that account has been canceled and request that the charge be removed from the bill.3.My bill just doesn’t add up right!They’re rare, but mathematical and reporting mistakes do happen. If you notice a discrepancy on your bill between their reports and your receipts, write a letter to the credit card company – being sure to use the address for reporting credit card disputes. Include copies of both the bill and your receipts for the disputed charges.4.I returned that dress!Like a canceled subscription, it sometimes takes a billing cycle or two for charge-backs on returned items to appear on your credit card bill. Write to the credit card company and enclose copies of your return receipt, asking that the charge be removed from your bill. 5.What do you mean, there’s a late fee??Your best defense against late fees is to make sure you send your payment in plenty of time to reach the credit card company by posting date. Keep in mind that credit card companies date payments by date received andor posted, not by date mailed. Because of the effect a late payment can have on your credit card billing and your credit history, though, it’s sometimes worth a try to get them to ‘take it back’. If you have evidence along the lines of a check cleared to your bank account before the payment was posted to your account – and it’s before the late payment date, you can write to the credit card company and ask for a review of the charges.

Banks and their marketing associates and divisions are vying with one another to capture a thick slice of the credit card pie. Offers by phone and mail of free credit cards, pre-approved credit cards, cards with special bonanzas, money back schemes, low introductory rates, and umpteen other perks pour in tempting you everyday.

A credit card is just a form of borrowing that does not come free. Credit terms, interest rates, fees and more can lay a stress on your bank balance. Credit cards are a temptation to spend now and pay later. What invariably happens is that people spend more than they can handle.

Informed consumers must always weigh carefully the pros and cons and compare different options before deciding on a credit card.

Before you decide find out

The advantages of a credit card are that it is a safe alternative to cash. Prevents loss as well as theft of cash. Using a card wisely can build a good credit history which helps when you need a loan or subsidy. It is useful in emergencies like accidents, urgent hospitalization, and unavoidable circumstances like natural calamities and so on. It grants a breather and gives you time to pay the bill. Some memberships offer travel or accident insurance to the card owners at no cost. They also offer privileges like discounts at restaurants, shopping malls, and holiday packages.

The other side is that you can get carried away and live beyond your means, ultimately falling into debt.

To be eligible you need:

To be at least 18 years old.

Have some income or the backing of credit worthy parents.

Have an operational bank account.

A telephone.

A good credit rating. Your monthly expenses must not equal or exceed your income. Ideal expenses must account for approximately 50% of your income.

To get a Visa or Master card your income must exceed US 12,000 a year. Or, you need to apply for a secured credit card where you pay upfront a certain amount of money as security deposit.

There are many kinds of credit cards to choose from. Unsecured standard and classic cards are those with a credit limit of US 2000 and generally charge higher interest rates and offer lower or less favorable terms than the platinum and gold cards. Unsecured platinum and gold cards are for people with high credit ratings, and the limits for these cards are between US 2000 to US 100,000.

Here are a few links that will give information and opportunities to apply for cards online:

Visa at http:www.usa.visa.com?country=us&ep=v_gg_new provides information, gives tips, and has listed a number of financial institutions that offer Visa cards and a wide range of services. One can apply for a card online.

MasterCard International at http:www.mastercard.comindex.html is comprehensive with information, advice, and options of choosing and applying for a card online. They have an online form which when filled will give information of which card would be ideal and a channel which provides instant comparison of various card options.

CreditCards.com at http:www.creditcards.com has articles, FAQs, a site map, and online application channels.

Tips:

Pick a card because it has the lowest APR.

Pick a card because all its terms and conditions have been carefully vetted by you. Read the fine print.

Never pick a card because it is free for a year or life.

Do not choose a card because it offers a low introductory rate.

Do not choose a card because it has a cash back policy or great rewards programs.

Choose wisely and live debt free.