Choosing Types Of Credit Cards

Credit cards used to be simple.  There was one rate, one feature and really only a handful of issuing companies.  Those days are long gone and now you need to know about the different types to determine which is right for your lifestyle.

Standard credit cards are the most common and are available in most financial institutions.  They are unsecured, which means you do not have to put down a security deposit.  There are several different interest rates handled by these cards.  There’s the balance transfer rate, which allows you to transfer a balance from another card to a lower rate on the credit card.  There is the regular interest rate for purchases, which usually starts at zero percent for a set amount of time.  And the cash advance rate, which is used when you use the card at an ATM to get cash.

There are credit cards with rewards programs. Finding a good credit card guide can help  Typically these have a slightly higher interest rate than standard credit cards but only by about a percentage point or two.  These cards allow you to earn incentives by using the card.  Some credit cards will offer a certain percentage of your purchases and give you cash back for it.  Some cards use reward points, usually at one point per dollar spent, and these points can then be redeemed for other prizes.  Other cards earn rewards that can specifically be redeemed for discounts on airline tickets or hotel reservations.

Bad credit or credit repair cards are a good solution for those who cannot qualify for a standard credit card.  Most often the interest rate is a few percentage points higher than any other card.  These come in two types: secured credit cards and prepaid credit cards.  Secured credit cards require collateral in order to be used.  Typically this means putting a security deposit on the card as proof that you can pay the money back, this is usually an amount equal or greater to the credit limit.  Prepaid credit cards are technically not credit cards but they are accepted and used like them.  The biggest advantage of them is the lack of finance charges and the lack of any debt.  With these cards you determine your own credit line by paying for any purchases beforehand.

Credit Card Balance Transfer Tips

Credit cards balance transfers is when you take your balance from one credit card and move it to another one. Most people do this in order to get a lower interest rate and therefore to pay less. Most often times once the transfer is complete, the old account is closed and the person decides to use the new card from now on, however some people transfers balances and then continue to use both cards.

Credit Card Balance Transfer Tips

If after examining all of the information about both credit card accounts and realizing that the new offer does carry a lower interest rate then there are certain things you must be aware of before doing the transfer. Read on for some balance tips.

Even if you decide to transfer a balance from an old to a new card make sure that you make the minimum monthly payment on the old card. Do not assume that the balance transfer will take care of the payment because it likely will not. This is a credit risk you are better off not making.

The transfer might take a few weeks to be processed and in the meantime you will have to deal with a late fee that you did not count on. You will then notice that the interest rate has changed but not for the better and your credit report will be affected adversely. Bear in mind that balance transfers are not always accepted so your dealings with your old company may not be over. Whether you stay or go you want to always be on good terms with whatever company you are a customer of.

Even if the new credit card issuer assures you that the transfer has gone through, verify it with your old company. If you would prefer not to call the old company then wait until your monthly statement arrives in the mail. Once you see the zero balance showing then you can breathe easy and know that all is well. That will also signal the end to making monthly payments to your old credit card issuer.

When you apply for a credit cards balance transfers, regardless of which company you deal with, make sure you fill out the application properly. Do not forget to fill in any of the blanks and never lie as this is fraud and can get you in deeper troubles than simply just having your request denied! Always read the application over carefully before you send it in to scan for any errors.

Improving Your Credit FICO Score

Back in the glory days of no accountability and no credit check loans , your FICO score was not nearly as important as it is now. We spoke with a woman if Florida who was able to secure a mortgage on stated income for a first and second montage. She earns 50 K per year the mortgage was made for 250K . That was two years ago, my how times have changed ! Lenders now actually check credit scores and place a premium on lower scores when making loans, if they make them at all. While a credit score of 700 might have been good once, a person with a FICO score of 720 could receive a loan for 1.5% lower. That’s a big big difference for 20 points. Understanding how your FICO score is issued will help you raise it a few points and help your borrowing power

Obviously your credit score is vital to your personal finances. Not only is this score used in determining whether to issue you a credit card, it is a deciding factor in getting loans, mortgages, car loans, and a host of other things. If your financial plan involves buying a house, you should know your FICO score and if its low be working on improving your credit score.

A FICO score is broken into five areas. Your payment history, total amount owed, length of credit, new credit and the type of credit in use. While this is good to know, how does it help in improving your credit score? By knowing how to keep these things in balance. That will give you the highest score possible.

The most important factor in your credit history is making payments on time. This accounts for 35% of the decision in your credit score, so it is vital. Anything over 30 days late is reported on your credit, and the more of those late payments there are the further your credit score will dip. Second most important is not borrowing too much credit. If you currently have a large amount of debt, usually that equals over half of your total income every year, it is unlikely that a creditor will want to issue new credit. It’s also a bad idea to have a lot of credit cards and keep them maxed out, try and pay as much off as you can. Then you will be a better position to compare credit card rates

Not quite as important as the other two, your length of credit history is still important. New creditors want to see long standing accounts that have been well maintained. A lender is less likely to want to issue you credit is it appears there’s a history of getting accounts and closing them a year or so later. It may be worth it to have a few more open accounts than you need to have that long history. These are all simple things you can do that will provide a noticeable increase in your credit score.