Why Not a Prepaid Credit Card?
April 9, 2009 by Rick · 4 Comments
Why Not a Prepaid Credit Card?
By Kate Tee
Why not a pre-paid credit card? It’s a well tried and tested concept after all and quite straight forward. We’re all used to prepaid phone cards, prepaid gift tokens and prepaid gas and electricity meters. The prepaid credit card simply takes the same logic a further step forward, with the added novelty of it being a “credit card without debt”! For those who have struggled to keep spending on their “plastic” within reasonable bounds, prepayment could represent a heaven-sent opportunity to finally knock their domestic budget into shape.
In fact, it’s probably something of a misnomer to call it a prepaid credit card, since no credit is involved and, therefore, there’s never any interest to pay. Whenever you use it (in exactly the same way you would use any of your other plastic), you’ll only be spending money that you’ve already loaded onto your prepaid card. So, there’s never any danger of getting into any debt on a prepaid card.
You load money onto the card in much the same way as any other prepaid facility – namely, by cash, by bank transfer or by using another credit card. Since your prepaid credit card is also a MasterCard or Visa, you can use it anywhere that MasterCard or Visa is accepted, at home or abroad. Using it abroad, of course, would give you a very handy and rather more convenient alternative to carrying travellers’ cheques – with the added reassurance that it’s not going to let you overspend on your holiday money! Furthermore, if the card is lost or stolen, you can simply contact the issuing company, and they’ll send a replacement.
The prepaid card offers the same protection against fraud as regular credit cards. So if you use it to shop online or over the telephone and the card’s been used fraudulently, you can recover the loss. A card also offers greater safety than cash when it comes to carrying it around, so it could be an appropriate alternative for use by children or the more vulnerable (the jury’s probably still out on this one though, and many issuers still limit the use of prepaid cards to those over the age of 18).
As you can imagine, the issuing companies love the idea of a prepaid card, since your use of them is practically risk-free. There’s no need to check your credit status or history, so prepaid credit cards are issued more or less on demand.
So, is there a catch? Not so much a catch, as the relatively high cost at the moment of using a prepaid credit card. Because they’re a relatively novel idea, competition in the market has probably not yet brought the costs as low as they might become. In the meantime, therefore, you should make your choice of card-provider on at least some of the following considerations:
* Will you be charged for simply opening a prepaid credit card account?
* Is there a monthly service charge, and, if so, what exactly do you get for it?
* Is there a charge each time you want to load credit onto the card?
* Will the places that accept your cash to top-up the card also charge for that service?
* Is there a charge for using the card or withdrawing cash on it, including internet purchases?
* Will you be charged for having the card sent to you by express delivery?
* Is there a charge for closing your account?
* Will you be charged for replacing the card, in the event that it is lost or stolen?
* Do you have to pay a fee each time the card is renewed (i.e. upon each expiry date)?
Compare credit cards at http://www.confused.com/credit-cards
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The Zero Percent Credit Card Game
April 8, 2009 by Rick · 4 Comments
I have played the Zero Percent Credit Card Interest Game for years. First let me say that I believe there are two reasons for debt, One reason is to make money and the other reason is to buy a house. Any other reason for borrowing money is living beyond your means. Sometimes we have no other choice but to borrow money to live on but that is another story.
The Zero Percent Credit Card Game
Before we start the game there are a couple of things we need to do first. We need to get our spending under control. I use Zero percent credit card loans to pay down my investment or home loans.
The next thing we need to do is set up auto pay on our charge card. That way if we miss a payment then we will not be jumped up into the high interest rate and we will not be charged a penalty. If we get bumped into the regular interest rate and pay just one late penalty the work we have done to save money with the Zero Percent Credit Card Interest Game has been wasted.
Do we have more than one Zero Percent offer? This is important because as the first offer expires you will want to be able to transfer your balance to another Zero card. Otherwise we will be hit with a high interest rate loan.
How long is the offer good for. Sometimes you will get an offer that is good for over twelve months. Some of them are for five to nine months. Longer is definitely better. If it is less than six months I might use it for a backup offer but not to start a ZPCC Game.
How much are the up front fees?
This is important because a 3% fee on the whole amount (let’s say we borrow $12,000) is $360 but if the card has a maximum charge of $50 that is a huge difference. If there is a 3% charge on the whole amount of the loan I will probably not use the card. It is too expensive to start the game.
Does the card have a Zero Balance now?
This is important because if you are carrying a balance on the card before you take out the Zero loan you will be paying interest on the previous balance for the whole time you have the zero loan out. All of your payments will go to pay off the zero loan. The interest on your previous balance will be added to your balance and you will pay interest on that also.
How I played the game.
I had a home loan at seven percent. I was always getting zero percent offers. I wrote a Zero Credit Card check and payed down my house loan. All of my other debt was commercial debt. The max fee on my card at that time was $50. I now had to continue my normal house payment and I had to make the payment on my Zero Percent Card. My goal was to pay the $12,000 off in a year and a half.
I got busy working the ZPCC Game
I put all of my energy into paying off the $12,000 as soon as possible. I had an extra $400 or $500 a month I knew I could put to the loan. I sold stuff on eBay, I cashed in my change bottle, I had over $200 in change sitting in my bedroom. I sold a couple of guns that I had not used in ten years. Anything I could get rid of I did. This was great turning my junk to cash. I had a garage sale and came up with $800. Onto the $12,000 it went.
It is amazing where we have stashed a little of this or that. If you turn as much of your unused stuff into cash and pay down your debt it is a great feeling.
Rules for the Zero Percent Credit Card Game
- Make sure you already have some extra income you can put toward the payment monthly.
- You should be getting a couple of offers regularly so you can transfer the remaining balance when your first offer ends.
- The balance on your Zero Interest Cards must be zero before you start
- Set up Autopay before you start.
- I would not do it on a loan that was under 6%. The risk of having your Zero Percent loan jump to 15% to 28% is not worth the 5% savings.
- If your loan is already 6% or less use the same strategy to generate cash and put the money directly on the loan.
- Don’t start your first game too big. If you know you can come up with a couple of thousand dollars in the next six months start with that. Don’t do $12,000 if you do not think you can pay that amount off in the next twelve months.
- Make it a game and keep track. Have fun with it and pay off the big debt in your life.
Good Luck and have fun with it.
Why Your Payment History Carries Weight in the FICO Score Formula
April 8, 2009 by Rick · Leave a Comment
Why Your Payment History Carries Weight in the FICO Score Formula
By William Lathrop
There are several different pieces of information that help to calculate your FICO score. All of it is found on your credit report. Several factors like how long is your credit history and how much do you owe carry large weights. So do the types of credit you use and how often you apply for new credit. The one piece or pieces of information that make up the largest portion of the FICO score formula is your payment history. Why it that?
First, you must know that 35% of your FICO score is made up by your payment history. And this is a record of all your accounts on your credit report and your payments to these accounts. Any late payments are seen as a negative item and are analyzed based on their severity, how recent and how often.
The reason why your payment history carries such a large weight is due to the relationship of default to late payments. There is a direct relation to someone who consistently pays late and a person who will default on a loan. Since the main function of a credit score is to give creditors a quick way to assess your risk, this fact makes your payment history carry the largest weight.
Also, the late payments taken into account by the FICO score formula are the last seven years on your credit report. Besides bankruptcies, this is one of the longest and lasting effects on your score. As time passes the benefit of the FICO score is that it gives more value to the recent transactions over the old ones. That is not to say they do not matter.
That being said; paying your bills on time is one of the best things you can do for your FICO score. You should try to never miss a payment. The only way to get one of the best score that will qualify you for the lowest interest rates is to be diligent with your payments. Develop a budget or a plan that you stick to every month to ensure you have everything paid and it is paid on time.
To read more about the FICO score calculation visit William’s website. There is more in-depth information about the FICO score formula
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Late Payment Credit Card Cure, How to Never have another Late Credit Card Payment
April 8, 2009 by Rick · 3 Comments
This is a very simple way to never have a late payment on your credit card. I have several cards and I play the zero percent interest game with them. I am borrowing money at zero percent and making payments. If I am late by just one day the credit card company will double penalize me. They charge me a late payment penalty and then they convert my balance to a high interest rate. Often this rate is higher than normal.
How to Never have a Late Payment
I have set up auto pay on all of my credit cards. My cards are all set up to automatically pay the minimum directly from my checking account. If you accidentally miss a card payment this will keep you from having to pay a late fee. This can save you a lot of money if you are playing the Zero Interest Game.
To set up Autopay you will have to call the Credit Card company and get a form sent to you. You will have to send in a deposit slip from the account you want to have automatically withdrawn from along with filling out the form. They will no longer allow you to register for autopay this over the phone. In my experience you will have to use snail mail both ways to get this done. I believe this is just a stalling tactic because the Credit Card company knows they will not be able to ding you for late payments again.
If you have ever been hit with penalty and interest on a $15,000 zero percent credit card loan because you were a day late you will realize that setting up auto pay is a great insurance policy to keep from getting bumped up to a high interest rate on your loan.
How does the Bank Make Money on Zero Percent Offers?
April 8, 2009 by Rick · 6 Comments
They make money in a couple of ways.
Their prime way of making money on the Zero Percent offers is Penalties on Late Payments. Also if you are late on One payment you will automatically be bumped into one of their higher rate categories on your remaining balance.
Initially they will charge you the transaction fee. This has gotten much larger since I first started using zero cards in the early 1990s. It used to cost me a maximum of $25 even on a $15,000 zero percent transaction. Now many of the offers charge 3% on the total amount of the offer. This can be significant interest because it occurs as a front end load and often the Zero offers are good for only six to ten months.
First if you miss a payment or are late the penalties and the increase in your rate will be huge. They have no tolerance to be nice if you are a day late with your payment especially on your zero percent account.
If you add more charges to this card the interest will start immediately (No Grace Period) and you will pay interest on your purchases until the card is paid off. They will not add future charges to your zero percent balance.
If you do not pay off the total before the term of the zero percent offer expires you will be charged a higher rate on the remaining balance than normal.
Have Too Many Credit Inquiries? Inquiry Removal Can Make a Difference
April 7, 2009 by Rick · 2 Comments
Have Too Many Credit Inquiries? Inquiry Removal Can Make a Difference
By Chris Robertson
When trying to obtain a loan from a bank or another type of lender, the number of inquiries shown on your credit report can make a tremendous difference in your interest rates or even whether or not you can get approved. But you might not realize just how much inquiries can alter the way lenders perceive your credit. And with inquiry removal and credit repair services being so easily accessible today, there’s no reason to allow too many inquiries, particularly those not authorized by you, to damage your credit potential.
Each time you apply for a loan, the creditor will check your credit history. This results in a credit inquiry on your file. Even if you respond to a credit offer in the mail or apply for a credit card or loan online, your credit will be checked, thus, creating another inquiry. When you apply for multiple loans within a short period of time, there will be multiple inquiries showing on your credit report all at once. These inquiries can lower your credit score drastically if you’re not careful about with whom and how often you apply for credit.
How Lenders View Credit Inquiries
When lenders pull up your credit report, they are basically examining four areas of your credit: the amount you owe currently to other lenders, how you’ve paid lenders in the past, the number of judgments, charge-offs, liens or other negative items, and how many recent inquiries have been made to your credit. Inquiries can show as hard or soft inquiries. Hard inquiries are those made by creditors with whom you’ve applied for a new loan. Soft inquiries come from companies offering credit card deals with whom you did not apply, potential employers, utility companies, landlords, or those with whom you already have a loan.
It’s the hard inquiries that harm your credit score and may cause a lender to be wary of approving your loan. Lenders view too many credit inquiries as an attempt by the borrower to obtain more credit than he/she can handle. It indicates that a borrower is “credit hungry” and may possibly be in financial trouble. If a lender suspects that you are in dire financial trouble, the lender may shy away from lending to you.
Lenders consider too many inquiries as an indication that your debt-to-income ratio is much higher than you portrayed on your application. New inquiries could mean that you have just recently opened up new lines of credit or loans that do not yet appear on your credit report.
Waiting Period and Inquiry Removal
The normal time frame for an inquiry to stay on your credit report is two years. Lenders, however, may ignore inquiries that are six months old or better. You can wait two years for inquiries to drop off your report, or you can take measures to remove certain types of inquiries from your credit report. Credit inquiries that are legitimate will remain, but those that were not authorized by you can be removed by taking a series of steps. Thankfully, you don’t have to take this route on your own. There are inquiry removal and credit repair companies available online to help you do this.
A professional inquiry removal company can help you clean up unauthorized inquiries and may also help you reduce the number of soft inquiries. Removing unauthorized inquiries can boost your credit score by several points or more for each inquiry you remove.
Whether you need inquiry removal or credit repair for your business or personal credit, be sure to check with an online inquiry removal company to accomplish this with the least amount of difficulty.
Chris Robertson is an author of Majon International, one of the worlds MOST popular internet marketing companies on the web.
Learn more about Inquiry Removal, Too Many Inquiries.
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Credit Score Range – Get the Facts
April 6, 2009 by Rick · 3 Comments
Credit Score Range – Get the Facts
By Tom Allen
There appears to be a fair bit of bafflement in relation to the question of what is a good credit score range. The basics are actually fairly simple. To have any sort of chance of getting a loan or credit card with reasonable terms and conditions, you really need to have a score of about 650. This is not ideal but it’s a start. What you really should be aiming for is something above 700. This is not as difficult as you might think.
There clearly is a enormous deluge of information on the Internet about credit scores and how to achieve a good one. By taking a quick look at some of the sites it’s very easy to realize how it can appear to be so mystifying. The good thing is that there’s absolutely no need for it to be like this at all. Acquiring an excellent credit score does not need to be that hard.
Getting a copy of your credit report and checking for errors is a vitally significant thing to strive to look at. The services that assess credit score are huge and deal with a serious amount of data. They regularly make mistakes. Checking for errors is an area where some people get it wrong and don’t bother going to the effort. Ignoring this central issue is surely an error you’ll want to avoid.
Evidently, there is a fair bit more in the task than just this one specific item. The really great thing is that there is really only a few other entirely critical elements that you must have an awareness of.
To find out about those other elements now please go to credit advice now. For the best tips http://www.cleanupcreditreport.net/
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How to Fix a Bad Credit Score
How to Fix a Bad Credit Score
By Alan Willis
There can sometimes be quite a lot of misunderstanding concerning the issue of how to fix a bad credit score. There really is a vast deluge of info out there on the Web regarding credit scores. With just a glance at the Internet it’s very easy to appreciate how it can get really confusing. Getting an excellent credit score doesn’t need to be a headache. There is enough good knowledge on hand pertaining to credit scores that will help you. The other great thing is that there’s really only a few entirely vital issues that you really must be familiar with. In this article I will quickly sum up some of the most important factors that you will need to contend with.
Recognizing that there is a problem is an exceptionally major feature to try to consider. This is really the very first step that you need to take.
Getting copies of your credit report is a significant area that you will have to give some thought to when you are investigating the subject of how to fix a bad credit score. There are 3 main credit bureaus. You need to get these to check that they are accurate and to assess the full extent of the situation properly.
Stopping your spending in its tracks is a vitally important element to attempt to keep in mind. Keep it right down to the absolute necessities for the moment.
Paying bills right on time is vital. This is actually the quickest way to raise your credit score in the short term.
As I articulated during the intro to this article, this has only been a quick analysis of all of the the most important aspects with regards to the matter of how to fix a bad credit score. There are really just a handful of other really crucial elements that you will have to understand properly.
To quickly find out about those other elements now please go to credit score advice now. For the best tips http://info.answertrain.com/fixyourcreditreport.html
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Remove Late Payment From Your Credit Report
April 4, 2009 by Rick · 4 Comments
Remove Late Payment From Your Credit Report
By Matt Douglas
Late payments are not created equal; a 30 or 60 day late pay will not damage your score much, and can often be removed. However a 90 day or 120 day will cause significant damage to your score.
This mark can be deleted by the lender as a way to keep your business and keep you happy. We suggest you contact the lender and ask them to delete it.
A phone call and a letter including the reason is the most effective method. Also be respectful and nice to them because they do not have to remove it.
A 90 or 120 day mark is much harder to erase. If you account is still open, we suggest you contact the lender.
Make sure your account is up to date before you ask them to remove the mark. Lenders will often make this decision based upon your payment history and the frequency of delinquency.
If they will not remove it then we suggest you file a dispute directly with the bureaus. This is done through a letter; you can create it or hire a service to do on your behalf.
The negative item will be on your report for a maximum of seven years. Your account will go to a collection agency after 180 days of delinquency.
A lender can remove it because they report monthly to the bureaus and can choose what to report. Thus if they do not report your late payment the next month then it will not be on your credit report.
You will find it very difficult to have the lender erase this mark if your account is not up to date. Additionally there is information that claims negative marks must stay for seven years.
This is not true; any item can be removed at any point in time, the maximum amount of time an item can remain is seven years. There are a few exceptions such as a bankruptcy. However the Fair Credit Reporting Act clearly says that the maximum amount of time is seven years. There is no minimum amount of time and can thus be removed at any time.
In sum if you can not negotiate removal with the lender you should dispute it. This is done through a letter written yourself or by hiring a service.
For a free credit repair letter used to dispute the bureaus visit us or you can get a free online credit repair consultation by calling 1-866-246-7311.
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If I Close My Credit Card Account Will it Raise My Credit Score?
April 3, 2009 by Rick · 3 Comments
If I Close My Credit Card Account Will it Raise My Credit Score?
By Helen Hecker
If you’re thinking about closing a credit card account that you aren’t using or have more than one, you may have wondered if it’s a good idea to do it. Some people think it will raise their credit score.
Here is why you don’t want to do it. When lenders are making a decision as to whether to lend you more money they will look at how much credit is available to you now – they call this the utilization ratio.
If you have 5 cards now and they each have a limit of $10,000 or so each and you owe about $6000, your rate would be 12%, which is good, from their viewpoint. If you were to close 4 of the credit card accounts then your utilization ratio would jump to 60% or so. This would be bad. Now you haven’t even used the cards but it looks like you have which means you might look like you’ve overextended yourself.
You want to keep this ratio at 50% or below. So take a look at your credit cards and if you really don’t want any of them don’t close the accounts. Take the cards you don’t want and cut them up. This way you keep the accounts open and are not using them to rack up more debt.
If you only have one card it would not be a good idea either, since you may need that credit card account for emergencies. Especially if you don’t have an emergency fund. Experts right now are advising to use your credit cards as necessary and make the minimum payment and conserve your cash for emergencies.
Your credit score or FICO score, report and history should not suffer if you continue to keep your credit cards. The lenders also look at how long you’ve had your cards and the longer you’ve had them the better it will be in terms of your credit score and history.
Credit cards, as much as they can be a problem, can often come in handy in emergencies and should be given some leeway for saving one from extreme hardship.
So closing a credit card account won’t raise your score but could lower it. Only do so if you have no other option. If you absolutely have to cancel one of your cards, then cancel the newest one first, of course, that has the shortest history to lessen the effect on your credit report.
For more tips, secrets, how to get a free credit report online instantly, fix your own credit and get help with credit counseling and credit disputes -get advice, avoid scams and get free help from a caring credit expert – go to http://www.FreeCreditReportInstantOnline.com
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