Credit scores of the 5 richest neighborhoods in America

By Michael Bratton

A credit score is a number a credit agency assigns to individuals that lenders use to determine risk for repaying loans and credit card debt. According to Spendonlife.com, a website that helps educate consumers about personal finance and credit, credit scores range from 349 to 849. The higher your credit score the more likely you are to secure low-interest bank loans, credit cards and other financial products.

Recently, Spendonlife.com compiled data on five zip codes in the U.S. with the highest credit scores and five zip codes with the lowest. Interestingly, the cities with the lowest scores are in landlocked southern or Midwestern states while the top five are exclusively coastal. To give you some context on where the five most affluent zip codes stand, the average credit score for the entire U.S. population is 683 and the average income per return $55,019.

1. Weston, MA, 02493

Weston, MA, with a population of about 11,787, is located just over 15 miles west of Boston. The average credit score in Boston's wealthiest suburb is 715 with a combined average income of $400,022. Included on CNNMoney's list of America’s best small towns and "Best Places to Live" in 2011, credit card debt in Weston is $1,540, auto debt is $14,854 and the average mortgage balance is $298,028.

2. West Atherton, CA, 94027

A San Francisco Bay Area city located less than five miles northeast of Silicon Valley, West Atherton has a population of about 7,000 residents. With an average credit score of 708, West Atherton has the second-highest credit score in the country. Included on a CNNMoney list of neighborhoods with the highest percentage of million dollar homes, the average mortgage balance is $518,706, average credit card debt is $2,554 - the highest on this list - and average auto debt of $18,224.

3. Greenwich, CT, 06831

Greenwich, CT is an affluent suburb situated just 37 miles north of New York City. With a population of just over 15,000, Greenwich has the third-highest average credit score in the country at 702 and average income of $414,686. This Fairfield county town, which Money magazine ranked number-two in its 2012 "Biggest Earner" category, in part for being home to several financial service companies, has an average credit card debt of $1,856 and auto debt of $16,607. The mortgage balance in Greenwich comes to about $425.887.

4. Palm Beach, FL, 33480

Palm Beach, FL, located 65 miles north of Miami, has the fourth highest average credit score in the U.S. at 691 and average income of $457,517. Originally established as a resort town, thanks to its tropical climate and miles of stunning coastline, residents on this 16-mile long barrier island have an average credit card debt of $1,449 while auto debt averages $16,494. The mortgage balance of Palm Beach’s roughly 10,000 yearly residents averages $314,165.

5. Los Angeles, CA, 90067

Known for being the entertainment capitol of the world, Los Angeles has the fifth highest average credit score in the U.S., at 685. The average income in this west coast paradise is $546,627. Compared to the country's other wealthiest zip codes, L.A. has the second highest average credit card debt at $2,112. But where they falter in debt, they make up for in income with an average income per return of $546,672, making the City of Angels the number-one earner on this list. Auto debt in L.A. averages $19,264 and the average mortgage balance is $407,998.

While the income disparity between the richest and poorest neighborhoods in the country is staggering - the bottom earner of the top five is $400,922 for Weston, MA, and the top average income of the bottom five is $13,951 for San Antonio, TX - the average credit score for wealthiest five zip codes is 700 compared to 676 for the poorest five zip codes. However, since credit score is just one consideration lenders evaluate in a potential borrower's financial profile, clearly those at the top five are in a much more advantageous position when purchasing a home, applying for financing, buying a car and making other big-ticket purchases and loan requests.

The author of this article is Michael Bratton, PR Director of Best Credit Repair Companies.

Retailers battling over swipe fees: Who pays the price?

By Michelle Latham

With tight profit margins and savvy consumers who want the best deals possible, retailers constantly fightto keep their bottom line from collapsing. In a world where every cent counts and no one wants to pass the buck to customers, retailers and banks battle over the cost of swipe fees. In 2011, retailers won a partial victory when Congress enacted legislation to limit the amount banks could charge retailers when customers swiped debit cards. Now, retailers are looking for a win in the credit card arena.

The cost of credit card processing

Credit card swiping was more expensive for retailers than debit card activity even before Congress set limits on the latter. One reason is due to the types of cards consumers are more likely to use. Cards with airline miles or cash back rewards cost the credit card company money. The price of those rewards has to be found somewhere, and one area is swipe fees, which are generally higher than with non-reward cards. Since customers are likely to use reward cards more than non-reward cards, retailers are racking up part of the cost of card benefits.

Why retailers want to push back
 
Retailers with merchant services accounts are tired of footing the bill for extra customer service measures on the part of the bank. There are many retailers who believe the bank is better able to absorb the cost of credit card processing, especially since the card is a product of the bank, not the retailer. On the surface, this argument makes logical sense. Printed money ultimately comes from the bank, as well, but retailers are not paying fees every time someone pays in cash. Another reason some believe banks should take the hit is a feeling that financial entities do not need the millions of dollars in revenue generated by these fees.

Of course, the banks feel differently about it. When Congress threatened debit card fees in 2011, the banks stated that lost profits would need to be recouped elsewhere. In most cases, those profits were made up by increasing interest rates for customers, adding or increasing annual fees, and cutting back on free or low-cost service items like free checking and online banking.

Even though no one wants to pass costs to the customer in an open forum, it is the end-user who ends up footing the final bill. Retailers can markup goods to help cover costs and banks can charge service fees and raise interest. The question for consumers is whether they want their favorite store pushed out of business due to unfair merchant services fees. The answer is probably no.

The battle over credit card fees seems to be one that cannot end with a win-win proposition. Retailers will continue to fight in order to save their businesses. If history is any indication, they may be successful with legislation to limit fees, but will Congress also enact legislation to help protect the cardholder from financial reprisal associated with a retailer victory? It is a question for which consumers, retailers, and banks share an equal interest.

About the Author

Michelle Latham is a Credit Specialist at Switch Commerce, a merchant services provider based out of Irving, Texas.

5 riskiest places to use your credit card

Most of us assume that swiping a debit or credit card is going to be a secure transaction. While that is true in most cases, there are places that are easy targets for identity thieves. Here are five points of sale that can be easy pickings for the dishonest people of the world.

Non-Bank ATMs

There is no way to say enough bad things about ATMs that are not owned by a bank. The encryption is often less secure than at bank ATMs, free standing ATMs can be more easily hacked, card readers have been attached to the legitimate swipe area, and some of these machines are actually fake. Thieves have been known to place defunct ATMs around large cities then sit back and wait for the card information to flow to them.

Flea Markets

Flea markets are great places to shop, but risky places to use a card. Many of these venders travel from market to market making it hard to resolve any card issues. Very few of them have point of sale terminals, so they make carbon copies of your card. While these vendors may be legitimate, there is a chance that they will lose the copy.

Foreign Hole-in-the-Walls

Credit card issuers report that small shops and quaint restaurants in foreign countries have a high percentage of credit card fraud. Issuers generally write off these fraudulent charges with no consequences to customers, because the merchants can't be located. Why take a chance. Use cash if you go to a shop that may not be on the ''beaten path.''

Public WiFi

Buying online can be risky. That is not to say that you shouldn't shop online. Always check to see if the site has a Better Business Bureau stamp of approval and look for a secured shell logo. It is even better if you are directed to Paypal or another online payment system. That will give you an option to request your money back through a third party.

Shopping online is commonplace today. In the vast majority of cases the transactions are secure when made from you home computer. Problems arise if you use Wi-Fi hotspots or public computers. Even if you are on a secure page, your information can be stolen by a savvy hacker using the same Wi-Fi or who uses a public computer after you.

Many identity thieves count on the complacency that most cad users display in their everyday lives. After all, swiping a card is as automatic as breathing. It is up to you to protect yourself and ensure your financial security at every terminal that you approach.

Citations:

• FTC Identity Theft Resources

Taylor Brown's company, Credit Repair Zoom, teaches you how to repair your credit after identity theft.  He hopes this article will make you think twice before swiping your card under high-risk circumstances.

Guest post: Why debt protection insurance doesn't make sense

When you get a new credit card and some types of loans, the lender may ask you if you want to enroll in a debt protection, or credit protection, insurance program. The lender will tout the benefits of not having to worry about your payments if you lose your job or become disabled, but is this insurance really worth the cost? Usually not, and here is why.

Caps and Limitations

The devil of these plans can be in the details. Some cover all of your debt, while others will only tackle part of it. That sounds great, but you have to read the fine print carefully. There are usually caps to the payments. Sure your payments will be covered, but only up to $500 on some plans. Unemployment benefits may only apply to full time employees who have qualified for state unemployment benefits. The disability benefits may only pay out if your submit proof of disability on a monthly basis. Be sure to ask about limitations, waiting periods, and how to cancel before signing up for one of these plans.

Ridiculous Costs

The cost of these plans can be outrageous. They are based on your balance. If you pay off your balance every month, then the plan is free, but carry a balance and you could pay as much as $1.35 per month for every $100 you owe. The average American has a little over $5,000 in credit card debt. That means a plan of this type could be costing you $67.50 per month. Lenders collected about $2.4 billion in premiums last year, but only paid out less than $500 million in benefits. That is close to $2 billion in profit or close to $2 billion wasted dollars depending on your point of view.

Legal Issues

Then there is the legal trouble that several banks have been facing over debt protection plans. Capital One has been fined $210 million for ''deceptive'' practices related to debt protection. HSBC has a $1.3 billion fund set up to repay British customers because they ''pushed customers'' into buying one of these plans. Hawaii has successfully sued HSBC, Bank of America, and JPMorgan Chase for similar tactics.

Your best bet is to skip the debt protection racket and take these steps to create your own ''insurance'' plan: calculate what your premium would be (take $1 per $100 owed) and put that amount into your savings account. Attack your balances by increasing your monthly payments and putting the cards away for 60 days. If you feel the need for life or disability insurance, get a plan from a licensed agent that will cover all of your needs instead of limited coverage for your debts.

This article has been provided by the experts at NorthCarolinaAutoLoan.com.  They help people get approved for auto loans in Wilmington, NC, and across The Tarheel State.  Learn more at their YouTube channel.

Tips for using debit and credit cards

Image attribution: Elph; GFDL, CC BY-SA 3.0

The security of credit card transactions is subject to stricter legal safety requirements and higher liability protection than debit cards. However, the security policies implemented by card networks and issuers differs leading to variance in the level and functionality of the fraud claims process among both credit and debit cards. Even though credit card transactions are thought to be safer than debit cards, other factors also influence and test this belief. These factors include the card's unique security features, safety practices of the card carrier and the technology used to process and monitor transactions.

Credit cards and debit cards operate differently, and this affects their security in some ways. Sally Herigstad, a certified public accounting reporting via CreditCard.com suggests credit cards offer more financial protection in terms of actual cash-flow because with credit cards a disputed charge is not immediately drawn from an account as is the case with debit cards. Additionally, the Bank of America states credit cards are more secure for shopping via the internet because consumer fraud protection is stricter than debit cards for these kind of purchases. 

The brand and issuer of both debit and credit cards also affects the quality of their security. For example, a Visa credit card issued by Bank of America has different security features and services than a MasterCard credit card issued by the Navy Federal Credit Union. Moreover, according to Visa, both its credit and debit cards are protected by perpetual fraud monitoring via its no liability policy. MasterCard also has its own trade marked security features such as a holographic magnetic strip called “Holomag” on the back of its card.

Demographic factors can also influence if credit cards are safer than debit cards and by how much. For example, according to CreditCard.com, women are more likely than men to be victims of identity theft. Thus, if a woman is carrying a credit card and a man carries a debit card, the probability is higher that a woman will be victimized regardless of what card is carried by the man. In other words, in this example, gender plays an increased role in security than the type of card.

The Federal Reserve Bank of San Francisco states the Credit Card Fraud Act protects both credit and debit cards. However, also per the San Francisco Federal Reserve Bank, debit cards are regulated by the Electronic Funds Transfer Act whereas credit cards are protected by the Fair Credit Billing Act and the Truth in Lending Law. Since these laws are not the same, and more laws exist for the regulation of credit cards, the security afforded to debit cards is less expansive than that protecting credit cards.

Guest Post: Paper or Plastic? The Pros and Cons of Business Credit Cards

US-PDGov

With constant talk of mounting government debt, student loan debt soaring to higher rates than ever before, and fear of an overall failing economy, credit cards are not necessarily the most desirable thing to boost financial security right now. However, there are a number of advantages business credit cards can offer small business owners in today's economy. Of course, there are several facets to of credit building that business owners and professionals need to consider before switching to plastic. As with all business decisions, professionals should examine all aspects of using credit to facilitate their business needs before opening a business credit card.

Business credit cards can be a useful tool for small business at any stage of their development. As any business owner knows, financial flexibility can be one of the most important things when it comes to running a business successfully. There are times that spending exceeds earning and your budget as a business can vary greatly from one month to another. Business credit cards are a convenient way to quickly access financing for short-term needs, while also increasing your company's spending ability. But, of course, credit use as a small company must be very carefully managed. To decide if a small business credit card might be the right option for you and your business explore these pros and cons.

The Pros

There are many reasons business credit cards may be a great option for small business owners:

1. Convenience: Credit cards offer the business owner immediate access to funds and financing for purchases or cash withdrawal. With the business world being particularly unpredictable, this immediacy and ease can be extremely important. While making hasty decisions concerning spending is not advised, sometimes business owners need to act on their feet and be prepared.

2. Online access: As our world becomes more and more mobile, online accessibility has become ever more essential. Many businesses use online vendors and suppliers to meet their business needs. These online purchases can be made more easily using a business credit card.

3. Bookkeeping assistance: One advantage to using credit that many small business owners rarely consider is the bookkeeping guidance cards can provide. Cardholders not only receive monthly statements detailing their purchases, but many cards provide online tools to help manage accounts and keep track of spending. These tools can be extremely useful with maneuvering taxes, audits, and employee spending.

4. Incentives and rewards: One of the biggest perks that business credit cards can offer are incentives and rewards to their users. Business owners choose cards that provide cash back rewards, airline discounts, accommodation discounts, no fee offers, and much more. These incentives can make a huge different for small businesses that do a lot of spending in order to properly operate and thrive. When choosing a business credit card, consider what type of reward program might be most useful for you and your business. If you do a lot of business travel, consider an airline reward business credit card. These programs can help you save a lot of money in the long run, if you choose them wisely.

The Cons

As with anything, there are two sides to opening a business credit card. Before rushing out and opening the first line of business credit you find, consider these potential downsides:

1. Security issues:

Owning a business credit card (or any credit card) boils down to use it carefully. Business owners should carefully monitor their accounts and regularly check on the security of their finances. Credit cards open individuals and businesses up to some security threats that are worrisome. If cards or card information is compromised, malicious individuals can wreak havoc on your business and finances. With careful monitoring and diligent security measures in place, credit card safety can be found.

2. Finicky interest rates: Interest rates are likely the biggest worry involved with credit card use. Unlike a loan or fixed line of credit, a credit card company can change the interest rate on your card. This fluctuation may be in your favor or not.

3. Sometimes pricey: Because business credit cards offer so much ease and convenience to their users, they can be more expensive than other credit cards. While this is not always the case, many business credit card issuers will charge a higher interest rate than a bank or fixed line of credit. That higher interest rate can become a problem if business owners do not pay back their credit on time or in full each statement.

Eliza Morgan is a full time freelance writer and blogger. She specializes in writing about business credit cardsand other business related topics. If you have any questions email her at elizamorgan856@gmail.com.

Advantages and disadvantages of BJs credit cards

A BJ's Visa card adds two percent to the savings already garnered through having a membership at BJ's and any use of manufacturers coupons, and store coupons. In other words, provided a BJ's credit card balance is paid off before the end of each billing cycle, the potential for cheap groceries rises. The overall savings can be well over 10 percent if all the potential benefits of shopping at BJ’s are considered.

Pros:

• Increases potential savings

To illustrate a potential money saving transaction using a BJ’s credit card the following example is used. To purchase 3lbs of coffee $15.00, 1 gallon of milk $4.00, grapefruits $5.00 and various brand name items $30.00 with no savings would cost $54.00 before tax. After applying manufacturer and store coupons the savings is 15 percent for a new total of $45.90. After using the BJ’s credit card the additional savings is  .91 BJ's bucks for a total of $43.99 before tax if one transfers the value of BJ's bucks to the purchase.

• Temporarily lowers existing credit expense on balance transfers

For people with existing credit card balances looking to consolidate and benefit from a BJ’s credit card, a 0 percent Annual Percentage Rate applies for the first six billing cycles following credit balance transfer. If a responsible shopper can pay that balance off within the six billing cycle allowance, the remaining cost of that credit card debt can be potentially reduced to little or nothing of the original cost.

• Good for frequent BJ’s shoppers

With no annual fee and bonus points on BJ's specials and promotions, the BJ’s Visa card may be just the credit card for families and budget conscious consumers who regularly purchase items in bulk or through the BJs wholesale club, BJ's online, or at BJ's gas stations. For example, if  a BJ’s shopper spends an average of $295 at BJ’s every two weeks, that’s $7,670 or 76.7 BJ’s Bucks per year. Although it doesn’t seem like much, this type of saving habit can be multiplied when used across a higher percentage of household purchases.

Cons:

• High interest rate

The BJ’s Visa credit card is still a credit card and inherently carries risks associated with credit card use. These risk include accumulation of high interest credit balance, overspending, and potential for a lower credit score. The interest rate on BJ’s Visa card is quite high,  13.99-24.99 percent on purchases not paid before interest is assessed. The penalty APR for late payments, spending over the credit limit and bad payments is a 30.24 percent APR so paying off balances in a timely manner is important with the BJ’s credit card.

• Can cause credit issues

If the possibility of not being a responsible credit card user exists, it may be better to not use a BJ’s Visa credit card as the savings are relatively small in comparison to the savings acquired through the use of coupons. Moreover, since coupons can save 10 percent or more on an already discounted item, the use of a credit card is really more of an added bonus on future purchases than the majority of one’s savings. Potential credit issues include, high interest rate balances, overspending, and credit score damage.

• 30 BJ's bucks must be earned

In order to redeem BJ's bucks, 30 BJ's bucks have been earned. This is the equivalent to $1,500 in spending at a rate of .02 BJ's bucks per dollar spent. For shoppers who don't plan on spending this much on BJ's gas, or other retail items, the card's benefits may be lost. The potential for accumulating enough BJ's bucks may also lead to overspending on un-needed items in order to benefit from the BJ's card and bonus BJ's buck program.  Also, if a BJ's membership expires, a non-member surcharge can negate the advantages of spending with the BJ's credit card.

Source: http://tinyurl.com/34gdro8 (Barclaycard U.S.)

Beware of Gratutity Reductions on Visa Gift Cards

One might think a Visa Gift Card could pay for a restaurant meal without any complication, but there is one little technicality involved with the process. According to Visa, restaurant order terminals deduct gratuity off the total balance of Visa Gift Cards. This means the card will be declined if the check balance is higher than the card's balance after the reduction.

Perhaps restaurants did this because clientele were putting tips on cards with no balance in an attempt to mess around with the debit card system. To get around this card limitation the card either has to have a high enough balance to include gratuity or the remainder of the check with gratuity can be paid with the rest of the gift card's balance plus cash or with another payment card.

The restaurant will not actually deduct the tip from the Visa Gift Card's balance until the client Visa receipt is signed according to Visa. If the restaurant is able to close the check at the terminal before reconciling the tips via the Visa payment system the card may still be able to be used to pay the check in full using the gift card. However, this would require shrinking or transferring the tip by enough to allow the balance of the card to pay the check amount.

Best Credit Cards for Students

The best credit cards for students aim to build financial responsibility, save for college, and encourage good grades. Several credit cards exist on the market that address one or more of these student related goals with different card programs.

Some credit cards claim to be 'student credit cards', but don't necessarily offer services that different from other credit cards issued by the same company. The following credit cards are some of the better credit cards for students because they can be utilized with a higher return on spending, or are more likely to meet one or more of the aforementioned financial goals, especially if they are used alongside a budget or financial plan.

1. Student Upside Visa

The Student Upside Visa is a prepaid credit card that parents can fund and track expenditures for. What makes this credit card one of the best for students is that it can be funded directly from a parent's checking account without transfer fees. The Indiana Department of Financial Institutions provides student credit card tips and techniques to make the most of cards like the Student Upside Visa, and to assist with a real life financial education for students.

2. Fidelity Investments 529 American Express  

The Fidelity Investments 529 Rewards American Express offers up to $1,500 per year to be contributed to a Fidelity 529 College plan.  No annual fee is required for this card and a 0% APR on purchases and balance transfers is allowed for the first 12 billing cycles. This is among the best credit cards for students because it is focused on an educational goal.

3. CITI MTV U Platinum Select Credit Card

This card actually rewards good grades by offering reward up to 4000 points per year in addition to a 10 percent discount on music purchases made at shop.mtv.com. GPA rewards are offered on a two semester basis  and are divided into four levels from 2.5-4.0; a semester GPA between 2.5-2.99 earns 250 points and a 4.0 GPA earns 2000.

4. Upromise World Mastercard

The Upromise World MasterCard is another college savings plan card, and is one of the best credit cards for students for this reason. The difference with this card however is the benefits can be as high as 25 percent if the Upromise shopping network is used. Money earned through the Upromise student rewards credit card is put directly into a 529 college savings plan, or used to pay down student loans or college expenses.

5. Discover Student Mix Tape Card

Similar to the Upromise World MasterCard, the Discover Student Mix Tape Credit Card offers high, up to 20 percent, cashback rewards when the discover shopping mall is used. This card does not fund a college savings plan however, and consequently requires a greater amount of financial responsibility to benefit from the rewards.

Additional credit cards that students may benefit from are the Capital One Student Rewards Card, and the AccountNow Prepaid credit card. Using credit cards for school expenses alone, then paying them off before the grace period ends is a good way to build credit and earn up to 25 percent back for college savings or school expenses in some cases.

The downside of even the best credit cards for students is they require a fair amount of financial discipline to maintain a manageable balance and good credit score. Credit card companies bank on card users not being financially responsible enough to pay their balance off every month, especially if the cards have no annual fee or service charges associated with regular use.

Sources:

1. http://bit.ly/bjrjGd (Credit Card Assist)
2. http://bit.ly/f8f9t (Creditcards.com)
3. http://bit.ly/9VCLNh (U Promise)
4. http://bit.ly/9cFsmM (529 Rewards card)

A Look At How Interest on Credit Cards is Calculated

Credit cards differ in the way they calculate interest, but the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) does pose some universal restrictions  on credit card interest calculations within the jurisdiction of the United States. One of the more clear benefits of the credit card law is a postponement of changes to interest rates on new and existing accounts. Some factors that may influence how your credit card interest is calculated are described hereafter.

Image source: Petr Kratochvil

Interest on credit cards is determined using periodic calculation of interest on existing account balances. If interest were not calculated periodically, one would essentially have more time to pay off one's credit card debt without interest being calculated on the balance. The method of interest calculation used by credit card companies is disclosed in the information within the credit card agreement. However, a credit card may promote a low interest rate in its advertising, but that interest rate may not necessarily be fully representative of the credit card agreement which itself may include additional interest rate calculations and variables not made evident in the credit card's advertising.

Looking at how interest rate on credit cards is calculated in more detail can be more useful than simply knowing what the Annual Percentage Rate (APR) is because the APR does not include important aspects of interest calculation such as the inclusion of fees and method of calculating balance as part of the interest rate function i.e. interest on a credit card is typically more dynamic than the application of an APR to a monthly balance because of variability in balance due, credit card terms, and interest rates.

• Fees included in interest rate calculation

Finance charges are often dollar values or percentage rates. In the case of percentage rates, finance charges are added to the total amount of credit card interest charged. For example, if Mr. X incurred a finance charge for paying late or using a fee only credit card service, that charge may either be an added fee such as $5.00 or an added interest rate such as .01%. The more finance charges apply and are allowable under the credit card terms, the greater the potential interest charged.

The difference between a dollar or interest rate charge can be of significance in regard to finance charges. For example, if Mr. X has an unpaid credit card balance of $450.00, $15 of which is unpaid fee carried over from the previous month, interest will be calculated with that fee included.

• Interest on outstanding balances

It is usually clear that interest is charged on a credit card's outstanding balances outside of that credit card's grace period. However, how this balance is determined is also variable. In other words, how the balance is calculated, and there are more than one ways of doing this, can affect how much interest is charged.

For example, Mr. X's credit card agreement uses the average daily balance method to determine what the balance is, and what time period within the billing cycle the balance is taken from. Another method deducts payments made and charges interest on the average daily balance thereafter. Consequently if payment is not included in the balance calculation, until the next billing cycle, more interest will be charged.

• Frequency of calculation

A credit card company may calculate interest daily, weekly or monthly depending on the terms of agreement; these rates are called periodic rates. Periodic rates are determined by dividing the APR by the amount of periods for which interest is charged. For example, if a daily periodic rate is used, the APR is divided by 365 and then the resulting number is the rate charged to any unpaid balance past the billing cycle. If calculated daily, the total interest accumulated by the end of the payment period will be higher than monthly periodic interest calculations.

• Base and added interest

Credit card interest rates themselves may be divided in to two numbers, so it can be important to read the fine print on a credit card agreement because it may tell you if the quoted APR is all inclusive or if it excludes the base rate. A base rate may be a national bank rate such as the prime rate which is an interest rate determined by the Federal Reserve Bank and fluctuates with increases and decreases with the Federal Funds Rate.

• Variable Vs Fixed rate interest

If a credit card has a variable rate, the interest calculated on the balance may differ between billing cycles. A variable rate may be used to changes in the banks cost management, base interest rates, market conditions and bank policy. Fixed rate credit cards do not experience fluctuations in interest rates so long as the contract between the bank and card holder allow such.

Source: http://www.ftc.gov (U.S. Federal Trade Commission)

About Stored Value Credit Cards

Stored value credit cards are cards that are able to serve as credit cards even though they aren't credit cards in the traditional sense. A stored valued credit card is a credit card that can be purchased over the counter, bears a credit card service provider logo, but does not have the same features as a regular credit card. For example, a stored value credit card does not necessarily have monthly statements unless it's for the account from which a temporary credit card has been issued. 

A credit card that has stored value may be sold by a number of different financial institutions, however, if one refers to credit in a broader sense, department store gift cards, prepaid credit cards, service access cards, government issued social assistance or "electronic benefit cards", and employer compensation cards may also be considered stored value credit cards in the sense they have a credit limit. A difference however, is that some of these cards are more like stored value secured credit cards. All these cards have slightly different premises, usability and sources of funding. They all however, "store" value that can be used as credit for the purchase of merchandise or in the redemption of services.

Traditional credit card providers distribute stored credit cards for people who do not want the inconvenience of applying for credit cards and paying monthly bills. These cards can be obtained with a balance by paying the balance amount to the authorized stored credit card distributor. These types of cards may be used in similar ways as traditional credit cards except in instances in which a name is required on a stored value credit card without a name.

Stored value credit cards may be purchased as gifts, and hence are transferable so long as a balance remains on the card and the card can still be registered and/or activated. Stored credit cards may reduce the need for carrying cash and lower risk of theft or loss. The cards may renewed or increased in value by adding funds at any time before the cards expiration date.

Redemption of card value may be restricted to certain locations in the case of department store credit cards. If a new stored credit card is stolen it may be difficult to track the funds without the original receipt and/or card activation number. Stored credit cards do not improve credit ratings and therefore do not have all the advantages of a traditional credit card.

Balances on stored credit cards may not be redeemable for cash and in some cases adding service credits to the card may incur a service fee. The costs associated with using such cards can depend on the issuer's policy and service guidelines in which case reading terms of agreement may be advantageous especially for larger card amounts. The use of stored valued credit cards has become more widespread however legalities associated with use of such cards vary with the type of card.

The 5 Worst Credit Card Mistakes

Credit cards are small plastic banks that you can put in your pocket and take pre-authorized loans from as needed until the credit limit is reached. There's already something disturbing about having a bank in one's pocket, but it gets worse if you make mistakes with your credit card. The worst credit card mistakes can cost money, lead to identity theft, and contribute to financial ruin, especially when more than one of them happens at the same time.

1. Losing your card

Losing a credit card puts your debt into the hands of the unknown. Not knowing you've lost your card makes it difficult to report the card lost or stolen. If it's not bad enough losing a credit card in a public place, try losing your credit card at a crowded public place where there's dubiousness and alcohol involved. It's possible there's some chance it won't be there when you get back and you might not realize its gone until the next day after you've bought 100 people free drinks without even realizing it.

2. Deciding bills can wait

Credit history makes up more than a third of your FICO score. Not taking credit card bills seriously means losing a proportional percentage of your credit score as time goes by. This is a credit card mistake as the longer bills wait without payment, the lower your credit score becomes, and the higher your interest rate might go on new credit. If the credit card is never paid and becomes an unpaid collection account, it usually goes on a credit report as unpaid delinquent debt which can have a medusa affect on lenders.

3. Authorizing and using overdraft

Credit cards are overdrafts in the sense the money isn't actually yours and they're generally supposed to be used as a short-term alternative to cash. Authorizing overdraft on a credit card is a credit card mistake because its like asking for overdraft protection on an overdraft card because credit cards can be used to bridge gaps. Once you allow a credit card issuer to provide you overdraft protection, overdraft fees kick in, your debt to credit ratio can rise, your budget can get thrown out of whack and your credit score can go down.

4. Maxing out lots of credit cards

It's not really a good idea to have more than three credit cards, maxing all three out is even less wise. Credit cards aren't collectible toys, and in addition to being like little plastic pocket banks, they're also like miniature candy machines. A few calories here a few calories there; it all seems manageable until the candy's all gone and you've mysteriously added 5 pounds to your weight. In other words, having lots of credit cards, and then maxing out on them is a credit card mistake because it increases the chance of transaction exposure, applying for more credit cards, and can also lower credit score while reinforcing uncontrolled spending.

5. Not shredding credit records

Credit card statements, applications, pin numbers, and correspondence are all important, but they also all leave a paper trail. Not shredding or controlling old credit card records is a bad credit card mistake because it can lead to accumulation of unnecessary financial records, and also increases the chance of identity theft. Calling the credit bureau to freeze credit when no additional credit is needed prevents future applications being mailed in your name and reduces credit records. Going paperless is another way to avoid paper credit records and shredding.

An Overview of AARP Financial Credit Card Services

American Association of Retired Persons (AARP) Financial credit card services are administered by Chase bank, also known as JPMorgan Chase & Co. The AARP Financial Credit Cards include a choice of three credit cards, the 1) AARP Platinum, 2) AARP Rewards and 3) AARP Travel Plus. AARP Financial Credit Card services issue Visa credit cards through the affiliate bank and in accordance with the terms agreed to with AARP. The services on these AARP Financial credit cards are threefold and include the benefits sponsored by AARP, Visa account services and Chase affiliate provided services.

AARP Financial credit card benefits

AARP credit card services depend on the credit card however, all three AARP credit cards have basic services available to cardholders such as online account management information, telephone customer assistance and/or resources. Some of the additional services provided to AARP Visa cardholders are listed below.

• Pre-application AARP financial advisor assistance
• Exclusive benefits available only to AARP card members
• Car rental and travel insurance coverage for Platinum and Platinum rewards members
• Card specific benefits such as no annual fee, travel upgrades or rewards point program
• Specialized AARP Travel Plus cardholder's customer assistance

VISA account services

Specific Visa card services provided by the Visa U.S.A. company itself allow for additional benefits that might not otherwise be included in the bank or sponsoring company benefits and services. These services provided by Visa include the following:

• Card user limited liability protection for U.S. issued Visa cards
• Access to Visa USA's toll free customer assistance center
• Free fraud monitoring services provided by Visa
• Identity theft hotline for persons who's credit identity has been stolen
• Card replacement and/or theft reporting

CHASE affiliate provided services

JPMorgan Chase & Co. is the bank that provides credit card account management services to AARP credit card holders. The bank itself is also able to provide credit card holder services either as an extension of the Visa and/or AARP services or independently through the banks own capacity. Credit card services provided through or extended to AARP card holders include the following listed items.

• Exclusive extras rewards for AARP Platinum Rewards card holders
• Balance transfer option from other credit cards
• Cardholder customer assistance availability
• Monthly statement and account details
• Online account access and security protection for enrolled cardholders

Summary

AARP Financial is a division of the American Association of Retired Persons that deals with financial concerns. Credit cards are a part of this AARP division's responsibilities and include a choice of three credit cards available to AARP members. These credit cards each have unique benefits and services in addition to basic services discussed in this article.

Those services are provided through either the credit card processor, the bank managing the accounts or through AARP itself. In sum, if a cardholder considers all the benefits and services available through each the of AARP credit cards and makes use of those services, quite a few service related benefits are provided with the AARP Financial Credit Card. For additional information on AARP Financial credit cards and/or the services available through these cards please consult the linked to websites within this article.

Sources:

1. http://www.aarpfinancial.com
2. http://www.usa.visa.com
3. https://www.chase.com/index.jsp?pg_name=ccpmapp/cms/special_offers/page/Exclusive_Extras

Why is it harder to get a credit card than an auto loan

It is harder to get a credit card than an auto loan when the two types of loans are subject to different lending terms, standards and regulation. Additionally, auto loans and credit card loans can vary enough to make credit card loans prone to more lending risk than auto loans. Since lending risk is correlated with loan availability, a higher lending risk for credit cards makes it harder to get a credit card than an auto loan. It is not always the case that credit cards are harder to obtain the auto loans, for example with  borrowers who have excellent credit. For the times where it is harder to get a credit card than an auto loan, the following are contributing factors.

• Collateral

Auto loans are collateralized by the vehicle they are lending money for. If the loan goes into default, the vehicle can be repossessed.. Although this does not eliminate all financial risk for the lender, it does reduce it. Unsecured credit cards do not have the same asset protection for financial institutions, and the lower the credit score of the borrower, the higher the risk associated with lending to them. Thus, under these conditions, it is more likely an auto loan borrower may have a greater chance of receiving an auto loan than a credit card for the same amount.

• Title

Another financial security feature available to auto loan lenders is withholding of title. This can also make it easier to get a car loan than a credit card. For example, if someone buys a car with dealer financing, a condition of purchase may be that the dealership retain title of the vehicle until a certain amount of payment has been made on the vehicle. By retaining title to the vehicle, the financier or dealership protects itself from legal issues pertaining to the reacquisition of the automobile should the borrower default on their payments. Title loans are another type of collateralized lending that charge high rates of interest and provide collateral to the lender thereby lowering the risk and increasing the incentive for making the loan.

• Regulation

It can be harder to get a credit cards than loans on new, or used cars because of regulation as well. Although all types of lending are subject to similar and in some cases the same federal regulations, some of the stipulations within financial regulations that apply to credit cards make it harder for credit card lenders to hedge risk with fee and agreement terms modification. For example, the Credit Card Act of 2009 initiated several rules that limited credit card companies ability to acquire profit through billing cycle methodology, charging of fees and raising of interest rates.

• Financing

Vehicle financing is also quite diverse as automobiles are often directly linked to the application for financing whereas credit card purchases are not.  In other words, the auto loan is just for an automobile whereas a credit card is not. This makes negotiating lending terms and agreement easier because there is less uncertainty about the nature of the purchase.  Since auto loans can be financed via a dealer network, the policy regarding lending may also be different than with a financial institution as the dealership is acting as a broker. Moreover, brokers acting as independent agents may more easily approve loans via dealership policy.

Sources:

1. http://bit.ly/aQ2h9y (Federal Trade Commission)
2. http://bit.ly/6NYgoQ (FTC Credit Card Lending)
3. http://bit.ly/YosTc (White House)
4. http://bit.ly/dnkH9A (Federal Deposit Insurance Corporation)
5. http://bit.ly/cry9oe (FDIC: Auto Lending)

Pros and cons of the BJs Visa Credit Card

A BJ's Visa card adds 2 percent to the savings already garnered through having a membership at BJ's and any use of manufacturers coupons, and store coupons. In other words, provided a BJ's credit card balance is paid off before the end of each billing cycle, the potential for cheap groceries rises. The overall savings can be well over 10 percent if all the potential benefits of shopping at BJ’s are considered.

Pros:

• Increases potential savings

To illustrate a potential money saving transaction using a BJ’s credit card the following example is used. To purchase 3lbs of coffee $15.00, 1 gallon of milk $4.00, grapefruits $5.00 and various brand name items $30.00 with no savings would cost $54.00 before tax. After applying manufacturer and store coupons the savings is 15 percent for a new total of $45.90. After using the BJ’s credit card the additional savings is  .91 BJ's bucks for a total of $43.99 before tax if one transfers the value of BJ's bucks to the purchase.

• Temporarily lowers existing credit expense on balance transfers

For people with existing credit card balances looking to consolidate and benefit from a BJ’s credit card, a zero percent Annual Percentage Rate applies for the first six billing cycles following credit balance transfer. If a responsible shopper can pay that balance off within the six billing cycle allowance, the remaining cost of that credit card debt can be potentially reduced to little or nothing of the original cost.

• Good for frequent BJ’s shoppers

With no annual fee and bonus points on BJ's specials and promotions, the BJ’s Visa card may be just the credit card for families and budget conscious consumers who regularly purchase items in bulk or through the BJs wholesale club, BJ's online, or at BJ's gas stations. For example, if  a BJ’s shopper spends an average of $295 at BJ’s every two weeks, that’s $7,670 or 76.7 BJ’s Bucks per year. Although it doesn’t seem like much, this type of saving habit can be multiplied when used across a higher percentage of household purchases.

Cons:

• High interest rate

The BJ’s Visa credit card is still a credit card and inherently carries risks associated with credit card use. These risk include accumulation of high interest credit balance, overspending, and potential for a lower credit score. The interest rate on BJ’s Visa card is quite high,  13.99-24.99 percent on purchases not paid before interest is assessed. The penalty APR for late payments, spending over the credit limit and bad payments is a 30.24 percent APR so paying off balances in a timely manner is important with the BJ’s credit card.

• Can cause credit issues

If the possibility of not being a responsible credit card user exists, it may be better to not use a BJ’s Visa credit card as the savings are relatively small in comparison to the savings acquired through the use of coupons. Moreover, since coupons can save 10 percent or more on an already discounted item, the use of a credit card is really more of an added bonus on future purchases than the majority of one’s savings. Potential credit issues include, high interest rate balances, overspending, and credit score damage.

• 30 BJ's bucks must be earned

In order to redeem BJ's bucks, 30 BJ's bucks have been earned. This is the equivalent to $1,500 in spending at a rate of .02 BJ's bucks per dollar spent. For shoppers who don't plan on spending this much on BJ's gas, or other retail items, the card's benefits may be lost. The potential for accumulating enough BJ's bucks may also lead to overspending on un-needed items in order to benefit from the BJ's card and bonus BJ's buck program.  Also, if a BJ's membership expires, a non-member surcharge can negate the advantages of spending with the BJ's credit card.

Source: http://tinyurl.com/34gdro8 (Barclaycard U.S.)

The Top 10 Credit Cards in America

If by 'top credit card' one is referring to 1) low fixed interested rates 2) no hidden fees 3) member benefits and 4) banking services, then there are several credit cards that stand out as being among the best in America. 

That said, banking policies can change and credit card plans compete over time so the following credit cards aren't set in stone as the be all and end all of credit cards. Rather, these credit cards, at the time of this review, meet performance and quality benchmarks that measure quality, usability, service, cost and incentive in 5 categories of 2 cards each and specifically look for the following characteristics.

• Balance transfer rates and periods
• Introductory Annual percentage rate
• Low Annual percentage rate
• No annual fee, and member friendly terms of agreement
• Percentage cash back, airline miles or shopping rewards
• Member services, and additional benefits

Airline miles credit cards:

There are many airline miles credit cards to choose from. The two cards below take into account annual fees, cost per mile and bonus miles. These cards may be beneficial to individuals who frequently plan and purchase travel itiniaries.

Capital One No Hassle Miles Rewards: No annual fee, 2 miles per dollar over $1000.00
Miles by Discover Card: No annual fee, up to 12,000 first year bonus miles, 2X miles options

Low interest rate credit cards 

The following two cards take into account interest rates for purchases only, as purchases often comprise a large amount of credit card use. These rates do not necessarily apply to transfer of credit and cash advances. For those persons who don't plan on paying back all their credit purchases immediately, these cards might be worth considering.

• Simmons First Visa Platinum: 7.25% Fixed APR on purchases, and no annual fee.
• IberiaBank Visa Classic Card: 8.75% and up, no annual fee, long grace period

Cash rewards credit cards:

For those individuals seeking to lower their cash costs, pay off credit balances fast and who don't travel a lot, a cash rewards credit card may be just the thing. Combining cash rewards credit cards with discount store and credit card affiliate stores reduce essential purchase costs and can assist with individual budget goals.

• Chase Freedom Visa: 1-20% cash back, no annual fee, $50 cash back bonus program

• Discover More Card: Up to 1 % -20% for exclusive online purchases, no annual fee

Credit union credit cards

Credit Union credit cards are only available to select members. This limits these card's availability. However, for those persons lucky enough to have access to these types of credit cards the following two offer great interest rates with no annual fee at long established credit unions with assets in excess of $1 billion dollars. These cards may be useful for debtors seeking below average cost of credit.

• Apple Federal Credit Union- Visa Platinum: Prime rate + 0%, no annual fee
• Navy Federal Credit Union-Visa Platinum Master Card: 7.9%, no annual fee

Gas cost savings credit cards

Gas savings are important and with the regular use of automobile gas used by many households, a consistent flow of savings can be achieved through responsible use of a gas rewards credit card. The two cards below offer beneficial incentives for travelers and can lower monthly gas costs.

• Discover Open Road (SM) Card: No annual fee, 1%-5% cash back, Fraud protection

• Capital One No Hassle Cash Rewards: 2% gas and grocery reward, no annual fee

Summary

Identifying the best credit cards in America is dependent on a number of factors such as 1) limited time offers, 2) debtor objectives 3) credit ratings and 4) creditor terms. As with many credit providers, maximum credit benefits often require strong credit ratings, however, for some debtors, the best credit card offers may only be available to those with the highest credit rating. Consequently the above cards may be the best only for specific people.

Additionally, different credit card users can benefit from different cards depending on their credit rating, spending habits, budgeting skills, expectations etc. That said, cards which offer financially optimal rewards for the lowest cost with the fewest terms and best customer service(s) can be considered among the best. The ideal credit card offers can change upon offer expiration making the above card's benefits variable with time and competing offers.

Sources:

1. http://www.creditcards.com
2. http://www.askmrcreditcard.com/
3. http://www.lowcards.com/
4. http://www.creditcardguide.com
5. http://freemoneyfinance.com

Guide to Buyer-Protection Credit Cards

Buyer protection credit terms were recently adjusted by the Credit Card Act of 2009. This act affords consumers additional protection from credit card companies. Specifically these changes pertain to credit card interest rate and fee limitations, disclosure requirements, and age restrictions on credit marketing among other terms. This article will serve as a guide to buyer protection credit terms in regard to legal premises, buyer protection terms, and consumer advocacy.

Image source: Petr Kratochvil

The legal foundation of buyer protection terms

Buyer protection credit terms are legal agreements offered by creditors before and during the providing of credit to consumers. By agreeing to the terms of credit and credit protection, both the buyer and the creditor are acknowledging rules are in place regarding the handling of credit and circumstances surrounding that credit. There are many types of credit terms as credit varies. For example, there are credit cards, mortgages, car loans, leases, lines of credit, home equity loans etc. Since each of these loan products are different, credit terms must be tailored to comply with the nature of each specific loan.

Ultimately buyer protection credit terms are determined by Federal and State regulation and not exclusively by the terms of agreement that come with the credit application. In some cases, terms of agreement may be invalid due to non-compliance with statutory law. Title 15, Chapter 14 of the U.S code outline the Federal requirements regarding credit protection. This covers issues such as 1) disputing debt, 2) debt collection practices, 3) liability of creditors and debtors and more.

The U.S. code is occasionally updated to incorporate Federal laws such as the Fair Credit Billing Act, Consumer Credit Protection Act, Fair Debt Collections Practices Act, Credit Repair Organizations Act and more. According to Title 15 of the U.S. Code, U.S. States must have consumer protections in place that are not inconsistent with Federal regulations, or go above and beyond them in regard to protecting the consumer.

Buyer protection: The credit agreement and rights

Before accepting credit consider consulting The Federal Reserve Board's 'Consumer Handbook to Credit Protection Laws.' This handbook outlines some of the key aspects of credit that should be disclosed by the creditor to the buyer such as how and what interest rates and fees are charged, conditions of the leases, manner of credit terms disclosure, obligations of both debtor and creditor etc. The providing of specific information to consumers from creditors is required to help protect the consumer from misunderstandings that can lead to financial damage. For example a credit card agreement may have the following aspects as required by law.

• Liability protection for unauthorized use of credit
• Payment of credit
• Interest and fees
• Identity theft procedures
• Limitations on credit use
• Enforcement of financial penalty
• Disclosure of creditor lending terms

Larger credit loans such as mortgages may be far more complex as the number of laws governing the credit increases due to the nature of the loan. For example, a mortgage involves multiple parties such as Title company, Realtor(s), Bank, municipal record keepers, insurers, inspectors etc. all of whom have their own terms of lending, contracting, charging and rules they must follow to be legally compliant.

Mortgage agreements can be multiple pages long, written in legalese and difficult to read during a home closing meeting. Due to this, the assistance of an attorney may be helpful when reviewing or contesting the credit terms. Additional credit regulations pertain to credit records for which further protections are afforded to the consumer.

• Credit repair organization requirements
• Consumer credit information provisions
• Dispute procedures and rights
• Credit reporting regulations

Buyer credit terms protection advocacy

Government and private organizations exist to assist consumers in having their buyer protection credit terms properly honored. Additionally, changes to credit laws take place to modernize credit protection. For example, annual free credit reports were not always a consumer privilege.

Buyers may now report and dispute errors found on credit reports and take steps to have errors removed. Consumer advocacy organizations can be contacted in cases where credit fraud, credit repair fraud, credit identity theft, unresolved dispute claims and other credit problems occur. Three of these organizations are listed below.

• State Departments of Consumer Affairs
• Federal Trade Commission: Bureau of Consumer Protection
• The Identity Theft Assistance Center
• American Alliance on Consumer Interests
• Consumer Federation of America

Buyer protection credit terms are often small print agreements written in financial or legal language and at times may be difficult to comprehend. These terms often include information on the cost of lending, liability protections, buyer and lender rights, use of credit, billing procedure etc.

Legislative regulation exists to protect the consumer from credit fraud, abuse, impropriety and other aspects of borrowing and lending. These protections are consist of a number of Federal and State Acts which credit lenders such as banks are required to follow if applicable. Violations of these terms may occur at times, in which case consumer awareness and enforcement of protection laws may be necessary.

The Ins and Outs of Credit Services

Credit services are a commonly utilized by both individuals and businesses around the World. Credit commonly takes the form of electronic money that is recorded in virtual accounts in the form of a loan with interest. This interest is usually 'compounded' at or near the quoted Annual Percentage Rate (APR) on a regular basis. When interest is 'compounded' it is recalculated based on balances during each billing period rather than once a year. This allows the credit card company to charge interest 12 times a year instead of just once.

To benefit from credit services it is important to read the terms of agreement before acquiring the service. The terms of agreement include information on how interest is calculated, whether the interest rate is variable or fixed, annual fees, finance charges, late penalties and so forth. Credit services may increase interest rates in the event of late payment and special rules regarding introductory offers may only be printed in the terms of agreement. Some credit services may offer a grace period and information distinguishing various kinds of credit use.

Several unique advantages can be acquired through proper use of credit services, however understanding the need for and usage of the credit can be quite important to the effective use of the credit. For example, credit services can be used to improve credit scores, manage cash flow and have an alternate form of payment to cash, checks, money orders etc. Use of credit can also assist in transaction security as signatures are often required in making payment by credit except in the instances of smaller payments. A few of key aspects of credit are described hereafter.

• Credit Card Balance Transfers

Credit card balance transfers are often a part of a new or promotional credit card agreement. In a credit card balance transfer a credit card holder pays debt on another credit card with a second card. The transfer may be approved and performed by the second credit service provider. Balance transfers can be used to pay off more than credit card debt and can be made with special checks sent out to credit clients. These checks often have promotional interest rates associated with them to encourage balance transfers from an existing creditor to the creditor offering the transfer.

• Credit Card Services

Credit services may include but are not limited to record-keeping, online credit card processing, billing, special introductory offers, travel insurance coverage, automated teller machine access, and telephone support. Credit card services may be expanded over time to include lower interest rates and/or increased credit limits.

• Fixed-Rate and Low-Rate Credit Cards

Fixed rate credit cards have interest rates that do not change over time and/or the time agreed upon in the credit application. These credit cards can be cost effective if a low fixed rate can be secured. Fixed rate credit cards provide more consistent and predictable credit card expensing. Low-rate credit cards are usually reserved for applicants with good to excellent credit ratings. These cards offer competitive special features such as 1 minute approval, 0% introductory offers, low-rate balance transfers, rewards programs, no annual fees and annual percentage rates between 8%-15%.

• Credit card merchants, Merchant credit cards, and Merchant account services

The businesses that make credit card and credit service offers are credit merchants. Credit card merchants are in the business of offering and selling credit to both customers and businesses alike and facilitate credit services. Additionally, credit card merchants are often banks and/or businesses that also engage in financial services. When a business receives payments from customers who use credit cards, the credit information must be processed using electronic transactions or modem transferred account reconciliations.

The credit card company i.e. merchant account service provider, then credits the merchant with the applicable fees and offers equipment or software technical support. It is also useful to note, a fine distinction exists between merchant credit cards and merchant credit card accounts. The former is an actual card with a credit balance whereas the latter is an account through which a merchant can accept credit card payments. Merchant credit cards are used solely for business transactions.

To summarize, credit services can become quite involved, especially at the business end of the transaction(s) because businesses compete with prices and offer credit card payment options while also having to deal with the credit card merchant at the other end of the transaction. The range of credit services include balance transfers, credit cards with varying benefits and interest rates, business credit cards, merchant credit services, credit card facilitators and account services. Credit agreements outline the details of the credit services in addition to any fees, surcharges, late penalties, benefit rules etc. Such being the case, reading and understanding the credit service terms of service can be beneficial especially with large lines of credit.

Learning From Bad Credit

Bad credit can be caused by irresponsible financial practices or via no fault of one's own. The Fair Isaac Corporation reports the average consumer carries 13 credit responsibilities generally consisting of credit cards and installment loans. Moreover, in 2009 the U.S. Federal Trade Commission (FTC) reports 278,078 potentially credit damaging, identity theft complaints were made according to the FTC's identity theft clearinghouse and consumer sentinel.

This doesn't include the 721,418 fraud complaints from the same year. Such identity theft can lead to bad credit in addition to faulty credit reporting and individual factors such as late payment of bills.

Poor credit in an economic system sometimes forces individuals to learn from the resulting situations. However, a bad credit situation isn't always the fault of the individual. If the bad credit is due to individual reasons, it doesn't have to be a terrible thing. Having bad credit can leave one with new options and as the saying goes, "when one door closes, another may open."

Knowing what that new door is indicative of learning from bad credit. More specifically, creditors are more likely to be reluctant to lend to persons with bad credit in effect asking one to improve the credit score before any new money is loaned. How an individual learns from the bad credit may lead to different outcomes. This article will illustrate ways an individual may choose to learn from the bad credit.

Report identity theft and faulty credit reporting

The first step in learning from bad credit is knowing what caused the bad credit. Unfortunately, this may involve some research for no fault of the individual if one's identity, credit cards or other financial information has been stolen and in the case of poor credit reporting on behalf of financial institutions. To find out if the bad credit is one's own fault the following steps may be helpful:

• Check bank statements for erroneous or suspicious charges
• Call the bank or credit card company to report lost or stolen cards
• Request an immediate investigation and reversal of false charges
• Order a free credit report(s) from http://www.annualcreditreport.com
• Request a marketing freeze by calling 1-888-opt-out to minimize financial risk

Allow experience to show the way

In the case of an individual bad credit score, one can either learn to not be so dependent on credit companies, learn to build credit scores or choose renunciation the credit institution altogether. In either one of these cases, one is learning from the experience of bad credit, and making a decision for oneself about how to move forward with life. A first step one may take in learning from bad credit is to acknowledge and identify what is going on. The following are signs of bad credit:

• Low credit score
• Late payments on bills
• High interest rate
• Financial stress

After the bad credit is identified, one may then begin the process of thinking about it, reacting emotionally to the situation, or simply not caring. Which ever method one chooses the bad credit presents some unique opportunities:

• A chance to recognize one's financial situation
• A financial reality, in which one must either act or live without credit
• An excuse to not spend money
• The beginning of a new credit life, and the end of an old chapter in one's life
• A way to learn about protecting one's credit identity and profile

Immediate solutions and building new credit

It is not the end of the world when bad credit strikes. There are several ways to deal with the situation. In the case of identity theft, one can file a identity theft report. The Federal Trade Commission is a Federal organization that may be of assistance in this matter. If the credit problem is due to faulty financial reporting by a financial institution, one may need to produce paper work proving the fault and request the credit reporting agency correct the credit report. To rebuild bad credit caused by personal reasons, a step by step process may be followed. A few tips with which to deal with the bad credit are below:

• Ask the credit company or lenders for debt re-negotiation
• Contact a reputable credit counseling service
• Stop spending as much or re-budget
• Consult people one feels comfortable talking about such matters with.
• Consider legal options

The above methods may provide some immediate assistance to the situation but are not necessarily a long-term fix or cheap. Credit counselors, credit card companies and others may try to help one achieve a second chance, but what one does with that chance is up to the individual. One can learn a number of things from bad credit such as how to deal with credit card companies, what remedies are available and what steps must be taken to report financial reporting problems and theft issues.

After dealing with the immediate problem, one may then learn how to build new credit through obtaining secured credit cards, paying bills on time, identifying the ways credit scores rise etc. The whole process could take weeks to years depending on the severity and how complicated the situation is.

In summary, bad credit is not usually a pleasant experience that may or may not be caused by individual fault. In identifying, acknowledging and reacting to bad credit one may learn either directly or indirectly, how to deal with the bad credit, build new credit and take new approaches in the future. In these ways, bad credit is a learning experience, and in some cases a somewhat involuntary learning experience.

Sources:

1. http://www.myfico.com (Fair Isaac Corporation)
2. http://www.ftc.gov (Federal Trade Commission)