You must have heard people say – ‘I got a good credit card deal’. So if you happen to be looking for a credit card at that moment, do you just go with what your friend has told you as a good credit card deal?
Let’s check what one can term as a good credit card deal. A credit card deal is good if it works for you. So, if the credit card fits into your lifestyle in a way that rakes in maximum benefits for you, that is a good credit card deal. The most important thing to realize here is the word ‘your’ as in ‘your lifestyle’. So logically speaking there is nothing like a good credit card deal. What it is - is good credit card deal for ‘you’ i.e. the individual who is going to use that credit card. This is because the lifestyle and the needs differ from person to person (and that is precisely the reason why every credit card supplier offers so many different kinds of credit cards). It might be true in some cases (where the lifestyle of two individuals/friends is similar) that the credit card deal which is good for one be good for the other too, however, this is just in a few cases.
You can always check with your friend who has recently got a credit card deal, since that might cut down the time needed for researching/hunting-for a good credit card deal. However, it’s really a matter of evaluating your own needs. If you travel a lot and to far off places by air, a card that offers you good rewards/rebates/benefits on travel would comprise a good credit card deal. Sometimes the airlines themselves have their own credit card issuing/supplying company from where you can get a good credit card deal. For people shopping at a particular retail store or a shop, a good credit card deal would be a card that offers discounts, rebates and rewards on shopping. Again, the retail stores themselves might have credit cards on offer that could be beneficial to you. Then there are credit card deals that are linked to gasoline stores or big grocery chains. If you don’t have any specific needs, you might use a general purpose credit card that gives reward points on every purchase you make on your credit card. These points can then be redeemed for cash/rewards. Hence, this card could become a good credit card deal for you.
Good, for credit card deals, is really a relative term and there is no credit card deal which is equally good for all.
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“We accept credit cards” is a statement that you must have come across multiple times at various shops, grocery stores and other merchant outlets. This statement is generally accompanied by a few stickers (Visa/Master card etc). Credit cards have transformed the businesses and our lives to a great extent. A few years back there were just a handful of shops that would accept credit cards but today you will find that most of the shops accept credit cards. In fact, some shops (like those belonging to a big retail chain) not only accept credit cards but also supply credit cards. These credit cards entitle you for rebates when you use them at any of the stores of that retail chain.
With credit cards around, a lot of people have stopped carrying any cash with them or just carry a very small amount of cash with them. That means that any shop that doesn’t accept credit cards is potentially losing customers. In fact, this is one reason why almost every merchant accepts credit cards.
With the evolution of internet, credit card industry too took a new turn and up came ecommerce and e-shops. So, those stickers of “We accept credit cards”, moved on to the doors of internet shops. Thus came the era where almost every online-shop would accept credit cards (directly or indirectly). In fact, this was the premise on which the complete online-business industry was based. This is convenience at its best.
Fraud is associated with almost every financial instrument. So there came fraudsters too, who too said that “We accept credit cards”. These fraudsters use a lot of techniques to commit credit card related fraud. Some of them disguise themselves as online merchants who accept credit cards as mode of payment (the actual motive being extraction of critical credit card details). Others are people who work at merchant shops that accept credit cards. These fraudsters either clone the credit cards or just note critical information from them (and use that for online-shopping). Some other fraudsters lure innocent people into revealing credit card details in chat rooms. And then there are tech-savvy fraudsters who use computer programs/softwares/devices (called spyware) to spy on the people who use their credit cards for online payments. The spyware capture their credit card information and get it transmitted to the spy using internet.
So a lot of merchants and service providers do accept credit cards but keep in mind that the fraudsters too welcome/accept credit cards. This is something you surely need to be careful about.
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Secured credit cards are another very popular breed of credit cards. Secured credit cards, as their name suggests, are secured. Well, they are secured for the credit card supplier, really. Secured credit cards require you to open an account with the credit card supplier and maintain some cash balance in that account. This cash balance acts as a security for the supplier of secured credit card. Your credit limit is dependent on the amount you hold in the account that you have started with the supplier of secured credit card. This is generally between 50 to 100% of your account balance. So in that sense, secured credit cards are not really credit cards (since they don’t offer you any credit really). For this reason, the secured credit cards are sometimes also referred as debit cards.
Why is the concept of secured credit cards so important?
As we know, credit card debt is a raging problem which is caused by improper usage of credit cards. Such people end up spoiling their credit rating to an extent where they cannot get another unsecured credit card (that is what we call the commonly used credit cards). Even after they have paid off their dues and cleared their debt, their credit rating still haunts them. For such people, secured credit cards are a boon. Secured credit cards present them with an opportunity to not only get a credit card in the first place but also to improve their credit rating by using the secured credit card in a disciplined way (paying their dues in time, controlled spending, utilizing a maximum of 70% credit limit etc etc). As they continue with these good habits, their credit rating gradually improves over a period of time. Hence secured credit cards provide them with the means of rectifying their mistakes (credit rating).
It’s not just the people with bad credit rating who go for secured credit cards. Some people go for secured credit cards because they don’t want to bother themselves with the bills etc for credit cards. They don’t like to even fill-up application forms for unsecured credit cards.
Then there are some who just don’t like to borrow money (even if it means borrowing from a credit card supplier by using their credit card). However, such people are very rare to find.
Some people just go for secured credit cards because they have heard a lot of horrifying stories on credit card debt – maybe someone from their family or one of their friends was devastated by credit card debt and they don’t want to repeat the mistake. So they decide to go for a secured credit card.
Whatever be the reason for going for it, the secured credit cards are surely popular too.
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Put simply, a credit card is just a small piece of plastic that easily fits in your wallet. Well, it’s not ‘just a piece of plastic’; it’s a very powerful piece of plastic which can be regarded as a compressed form of cash. We can define credit cards as a credit system that allows the consumer to borrow money on the fly from a bank or a financial institution and use it to make payments to the merchants.
In order to obtain a credit card, the consumer needs to fill-in an application form that is actually like an agreement between the credit card supplier and the credit card consumer. The credit card supplier approves the application form and provides the consumer with a small piece of plastic (i.e. the credit card). This plastic (or credit card) contains electronically encoded security information in the form of a magnetic strip (which is generally located at the back of the credit card). This information is used for authorising payments whenever the consumer uses the credit card. The consumer can use the credit card for shopping at merchant outlets or on the internet etc. Of course, this is subject to merchant’s capability to accept credit card payments. Accepting the credit cards is, however, not enough. The merchant should be able to accept payments made through the credit card provided by that credit card organization (of which you hold the credit card) i.e. VISA, MasterCard etc. You can also use credit card to withdraw cash from ATMs (automatic cash machines) – also known as cash machines or Day/Night machines.
There are eight main credit card organisations and most of them operate in a lot of countries world wide. These are American Express, Citi, Diners Club, Discover, JCB, MasterCard and VISA. Master card and VISA are probably the most popular ones. Then there are credit card suppliers or issuers who have tie-ups with these organisations and issue credit cards on their behalf e.g. you have various banks that issue VISA cards (like HSBC VISA card)
To make a payment using a credit card, the credit card has to be either swiped into special credit card processing machine (when shopping in person at shops) or the details of the credit card have to be entered on the merchant’s website (when shopping online). The credit card supplier sends across the bill for these transactions to the consumer who is then required to pay either the full amount or a partial (minimum) amount. If you pay in full, the credit card supplier doesn’t charge any interest on the amount you owe, otherwise the pre-agreed interest rate is charged. If you don’t pay even the minimum, you might land up with a late fee too. Moreover, the credit card supplier generally puts a limit on the maximum amount you can spend per month using your credit card.
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Approval
Getting approved for a credit card can be tricky without a positive credit history working in your favor. It’s a Catch-22 , to obtain a credit card, you need a good credit score. But to have a good credit history, you must create good credit! This no-win cycle can keep people with a non-existent, limited or negative credit history from getting approved for a credit card. But it doesn’t have to if you understand the type of credit cards available and how to build a good credit history. When it comes to credit card finder, the type of card you make an application for will depend upon your current position.
If you are a student, you may, naturally, sign up for a student card. But if you are a non-student with a non-existent or blemished credit history, a card that is secured or got with a co-signer could be your best option. Secured credit cards With a secured card, you secure the card by depositing cash up front in a deposit account or CD. The amount of funds you place on deposit will probably match your line of credit. Your card issuer maintains a lien on the deposit account, which you stand to lose if you fail to make timely credit card payments. online credit card applications
While many people have heard of secured credit cards, unsecured or regular credit cards are far more common. With an “unsecured” card, the issuing bank has no right to take precise assets of yours if you don’t pay your bill. Instead, the bank would have to sue you or make you into bankruptcy to collect. A secured credit card or Visa looks just like a regular one, and the law makes sure that it has all the same consumer protections. However, a secured card generally carries a higher interest rate. But a secured card could be a good deal because it can give you the ease of having a credit card while you’re employed on building or reconstructing your credit.
Mastercards with a Co-Signer With co-signed credit cards, the co-signer guarantees and is responsible for the debt. This means that the co-signing person is responsible for paying the whole amount of the debt if the card holder doesn’t pay. In truth, when co-signed debt goes into default, 3 out of 4 times co-signers are normally asked to reimburse what’s owed, according to the federal Trade Commission. Furthermore, the issuing bank can try to settle the debt without first making an attempt to collect from the card holder. The bank can also use the same collection strategies against the co-signing individual, including suing and garnishing salary. If the debt is not paid, it can leave a negative mark on the credit history of the co-signer, as well as the card holder. Regardless of the risks, a co-signed credit card can be handy tool for helping a chum or relative build their credit score so they can one day obtain a card on their own. Building a powerful credit history Secured, co-signed and pre-paid credit cards offer usable choices. But you need to start building a strong credit score, so you can get a regular credit card on your own in the future. First, you must know how credit card issuers identify credit worthiness. The approval standards varies from among issuing banks, but typically relates to what’s often called the three C’s of credit : capacity, character and collateral. Capacity refers to your ability to pay primarily based on your earnings and existing debt. Collateral makes reference to any assets you have that will secure payment,eg bank accounts or home possession. Character refers to factors like your payment history, length of job, etc .
To get a smart idea about how your application will fare with credit card firms, check your credit score with one of the major credit reporting agencies : Experian ( www.experian.com ), Equifax ( www.equifax.com ) and TransUnion ( www.tuc.com ). These agencies access your payment information without delay from the corporations you have credit with, as well as from state agencies such as the legal court system. Credit reporting agencies use the info in your credit history to ascertain your credit record or credit score. Credit worthiness scores, a. K. A FICA or Beacon scores depending on the CRA, generally range from 350 to eight hundred and fifty. Most banks will approve you for credit if your score is at least 620. If your rating is 720 or higher, banks will offer you their lowest IR. Generally, y our credit score is decided by your payment history for the last 2 years. T echnically, CRAs work out your score employing a closely-guarded formula. TransUnion, for instance, determines credit worthiness scores using a variety of factors, including : how you pay your accounts, how much you owe and how frequently you have asked for credit.
Copyright © 2008 Credit Cards: from Choosing Best Credit Card to Application
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