During the last few years there has been an increase in online fraudulent of global scope and geometrically increasing proportions. There are now actual companies that specialize in spam and other illegal marketing techniques, like Phishing and Hacking, which take every opportunity to make a few pennies. Even though their net income per person is miniscule, it becomes significant when multiplied by hundreds of thousands or even millions. Added to this threat are the man amateur fraudulent artists around the world who troll the Internet for credit card and financial information to use for fraudulent purposes. Finally, identity thieves are reaping high rewards at the expense of both the target and the online retailer.
Advice and Tips for Merchants
1.Merchants must be wary of unusually large orders from customers.
2.Merchants should also be wary of orders shipped to a single billing address but purchased with multiple credit cards. Besides this, also be wary of multiple transactions made with similar card numbers in a sequence.
3.Merchants have to be wary of orders which ask for express, rush or overnight shipping because these are the shipping of choice for many credit card fraudsters. Merchants need to call the customer to confirm the order first.
4.For overseas orders, especially if the order exhibits any of the characteristics noted above, merchants must be wary of them. This is because credit card fraudulent may not be entirely preventable, but by establishing and following procedures to check every credit card transaction, merchant can cut down the credit card fraudulent losses.
Advice and Tips for both Credit Card customers and Merchants when purchasing items over the Internet
1.Credit card customers and merchants must not open e-mails from unknown senders. Merchants should not simply process credit card orders that originate from free e-mail addresses or from e-mail forwarding addresses. In such cases, merchants should ask the customer for an ISP or domain-based e-mail address that can be traced back before processing the order.
2.Customers must only give their credit card details to reliable websites which are from reputable companies. In addition, reputable merchant sites usually use encryption technologies to protect credit card information.
3.Merchant should not process credit card orders unless the credit card information of that customer is complete. If the shipping address and the billing address on the order are different, merchants need to call the customer to confirm the order. Merchants may even want to make it a policy to ship only to the billing address on the credit card.
4.Credit card customers must be very careful with to whom to give personal identification information, such as mother’s maiden name and social security number. Customers have to ask if the information can be kept confidential and inquire how it will be used and with whom will the information be shared.
5.Customer also must never send account information, such as account numbers or PIN in an e-mail as it may be intercepted.
Credit Card Stats
• Americans owe approximately $850 billion in revolving credit card debt.
• As of 2007, 73% of all American households had credit cards and 60% of these households carried a balance. The average balance for households that carried a balance was $7,300, up 30.4% from 2004.
• Low- and middle-income households have an average of $8,650 in credit card debt.
• The total amount of credit made available by issuers in 2007 was about $5 trillion, or $43,007 per household.
• Even as the economy worsens, Americans continue to be inundated with offers of credit. In 2008, issuers sent 4.2 billion credit card offers in the mail - nearly four times as many as the 1.1 billion sent in 1990.
Credit Card Industry Profits
The industry is dominated by a few major players. Just six companies - Bank of America, JPMorgan Chase, Citigroup, Capital One, Discover, and American Express - account for about 90% of all credit card debt.
Credit card companies collected $115 billion in revenue in 2006, about two-thirds from interest payments, one-fifth from fees paid by merchant who accept the cards, and about 15% from consumer fees. Profits were $18 billion.
Banks specializing in credit cards have been much more profitable than banks in general. According to FDIC data for 2007, the return on equity was 15.1% for credit card banks, compared to 8.2% for all banks.
Credit Card Industry Practices
In a study of the 12 largest credit card issuers, all engaged in one or more practices that would violate the recently issued Federal Reserve Rule, which goes into effect July 2010.
100 percent of cards allowed the issuer to apply payments to low-rate balances before paying down balances with high rates. This maximizes interest charges to the cardholder.
93 percent of cards allowed the issuer to raise any interest rate at any time by changing the account agreement.
87 percent of cards allowed the issuer to impose penalty interest rate increases even for the most minor infraction. The median allowable penalty interest rate was 27.99 percent per year. 92 percent are issuers impose penalty rates indefinitely.
-The median penalty rate of 27.99 percent, would add charges of between $100 and $180 annually for every $1,000 in revolving purchase debt. For the average household with a balance, this would amount to between $730 and $1,314 per year.
72 percent of cards included offers of low promotional rates which issuers could revoke after a single late payment.
92 percent of cards include a fee for exceeding the credit limit. The fee is $39 on most cards.
84 percent of cards include binding arbitration agreements which limit cardholder’s legal rights.
College Students and Credit Cards
A study conducted by Sallie Mae in 2008 revealed that 84% of undergraduates had at least one credit card, up from 76% of undergraduates in 2004. The average number of credit cards per student has grown to 4.6.
In 2008, the average balance on undergraduate credit cards was $3,173, and the average senior graduated with $4,100 in debt
Nearly one-third (30%) of all students put tuition on their credit cards in 2008, up from 24% in 2004. xii When asked why they were charging tuition to their credit cards, 31% of students surveyed said they did so because they didn’t have enough savings or financial aid to pay for their educational expenses.
Only 17% of undergraduate students in 2008 paid off all credit card balances each month, and less than 1% said that someone else is paying the bill. Only 7% admitted to paying less than the minimum each month. Meanwhile, more than three-quarters of all undergraduates are making minimum required payments while incurring finance charges, making it much harder for them to get out of debt
Eighty-four percent of undergraduates in 2008 indicated that they needed more education in financial management. In fact, 64% would have liked to receive financial education in High School, and 40% would have liked to receive financial education during their freshman year of college.
BOK Debit Card provides direct access to funds in your account providing you with functionalities such as Point-of -Sale purchase, ATM cash withdrawal, account balance enquiry etc.
Your BOK Visa Debit card is accepted in more than 300,000 merchant outlets of all kinds in India and Nepal giving you the power and convenience for purchase without the risk and hassle of carrying cash. If you need to have cash for any reason, more than 30,000 ATMs are available in all parts of Nepal and India for dispense of cash upon your request.
Please be informed that your BOK visa debit card is in deactivated mode as a precautionary safety measure and you will need to change the PIN Number given to you to by the bank to a four digit number of your choice at BOK ATM Terminal or contact BOK Card Division at 4427398 for the activation of your card prior to use between 7:00 AM to 11:00 PM. Even after the activation of card by contacting Card Division, you are required to change the PIN given by the bank on the first use of your
card at BOK ATM terminal.
Please sign on the signature panel at the back side of the card immediately upon receipt. You are further requested to change the PIN provided to you for the activation of the card before any other use.
We request you to go through this brochure to learn more about BOK Visa Debit Card and best practices on use.
Features of BOK Visa Debit Card
BOK Visa Debit card is a licensed product of Visa international and is compliant to mandate of Visa in terms of quality, service and security.
BOK Visa Debit Card is Valid in Nepal and India only.
BOK Visa Card can be used in electronic environment only i.e. merchant locations with POS terminals and ATM terminals with Visa acceptance logo will accept your card.
BOK Visa Debit Card is linked to your account and can be used up to available balance in your account for the purchase and cash withdrawal. However to mitigate fraud risk a ceilings on a single transaction and daily usage has been set.
BOK Visa Debit Card has a validity of 3 years from the issuance date however charge for the same will be taken annually. If there are no funds in you’re a/c your card will be automatically blocked.
BOK Visa Debit Card will be renewed automatically upon the expiry of card unless you instruct BOK otherwise 60 days prior to expiry of card.
Daily Withdrawal Limits
For security reasons the maximum ATM and POS withdrawal from your account is limited to NPR 2 00,000/- and 20 transactions per day.
Advantage of BOK Visa Debit Card
You will be spared from the hassles of carrying cash and risk of it being stolen or lost.
You will have the convenience of using fund in your account without coming to our branch furthermore the card can be used in India also.
You can check balance in your account and get information of withdrawal and deposits without coming to bank.
You will be able to use the fund in your account 24 hours 365 days a year.
BOK Visa Debit Card comes with the brand of Visa International and the status of owning a card with the brand.
Measure to be taken on BOK Visa Debit Card
Sign on the signature panel at the back side of the card with an inerasable black ballpoint pen.
Please go to the nearest BOK ATM Terminal and change your PIN for the activation of your card.
If there is no BOK ATM in your vicinity you can call up on telephone number 4427398 to activate your
card between 7:00 AM to 11:00 PM. The operator on the line will ask you some security questions as per your application form. You are required to answer them correctly for the activation. However you will need to change the PIN given by the bank on the first use of your card at BOK ATM terminal.
Change the PIN Number of your card given by us to a convenient number of your choice periodically.
Please avoid easy guessing numbers like your date of birth, house number etc. Do not write down the pin number neither disclose it to any other person.
Do not divulge your card number and card details to any other person neither give them your card.
Do not perform ATM transactions in the presence of a second person.
Please verify the amount on the charge slip before affixing your signature.
As far as possible do not let the cashier out of sight with your card.
Note down the details of card and Bank contact numbers separately and inform the bank immediately upon the loss/misplacement of card. BOK is available from 7:00 AM till 11:00 PM.
Do not put your card in the areas where there is a high magnetic field.
Do not let the magnetic stripe of the card get scratched / broken.
Please note that a new card will have to be issued to you in case your BOK Visa Debit Card is captured in ATM terminals in India during transaction .There is no provision of handing the captured card to you by the banks in India.
Your transaction on BOK Visa Debit card will be reflected in the bank account held with us. Please check the statements of your account periodically. Any dispute/error on the posted amount should be communicated to bank in writing within 30 days of the transaction posting date.
Acceptance of BOK Visa Debit Card
BOK Visa Debit Card is accepted in more than 300,000 merchant locations in Nepal and India in different sectors like airlines, hotels, travel agencies, restaurants, department stores, general stores, clothing stores, hospitals, schools, colleges petrol pumps etc. The locations will have a display of Visa acceptance and point of sale machine installed. You will not need to pay extra for using your card for
purchases however some locations like petrol pumps, Indian railway etc. which are allowed surcharge by Visa may take surcharge on transactions. Furthermore the merchant may not honor the card or lessen the discount percentage while doing sales with discount.
All you need to do is present your card instead of cash while making payments. The merchant will swipe your card in point of sale terminal and you will have to verify the amount and affix your signature on the card to show your acceptance of card.
There are more than 30,000 ATM terminals where you can withdraw cash in need and enquire balance of your account. You shall have to insert proper PIN number and punch the required amount.
Charges will apply on these transactions if done outside BOK network.
Fee and charges applicable in BOK Visa Debit Card
The following charge will be applicable for the usage of BOK Visa Debit Card*
Annual Fee NPR 200.00
Replacement Fee NPR 150.00
Re-issuance Fee NPR 150.00
Pin regeneration Fee NPR 100.00
ATM Cash Withdrawal on BOK ATM NIL
Balance Enquiry on BOK ATM NIL
ATM Cash Withdrawal Other ATMs NPR 150.00or 0.5% of TXNS amt.
Balance Enquiry Other ATMs NPR 50.00
ATM Cash Withdrawal SCT Network NPR 30.00
Balance Enquiry SCT Networks NPR 10.00
ATM Cash Withdrawal at HBL ATM NPR 15.00
Balance Enquiry HBL ATM NPR 5.00
*These rates are subject to change without prior notice.
Before you apply for a new card, make sure you have a solid understanding of what you're signing up for. Here are some terms to watch for on credit card applications.
Annual Percentage Rate
Often appearing on the credit card application as APR, the annual percentage rate refers to the cost of credit. In other words, the APR represents the interest you will need to pay on any outstanding balances you have on the credit card. It is expressed as a yearly rate. Some credit cards advertise a low interest rate. Others, especially those that offer reward programs, may charge a higher APR. Consider your priorities and whether or not you will carry a balance as you look at the APR.
Balance Transfer
If a credit card application offers the option of a balance transfer, it means that you can bring over an existing balance from a different card. Why would you want to do this? You may be carrying a balance on a card that has a high APR. By switching the balance to a card with a low APR, you could save a good deal of money in interest. Credit cards that offer a balance transfer usually include a certain time period during which no interest will be charged to the balance. Check to see how long the offer lasts, and pay off the balance during the allotted time. You'll save a bundle in interest fees.
Grace Period
The grace period, or free period, is the number of days that you are given to pay off a balance without getting charged interest. Grace periods usually run between 20 and 30 days. If you make a purchase, and then pay it off during the grace period, you will not owe any finance charges. If your card does not have a grace period, finance charges will start to accrue as soon as you make the purchase.
Introductory Offers
Most credit cards include additional bonuses for signing up. These often consist of an initial time period during which you will not be charged interest. The offer usually lasts between six and twelve months, and can be used toward purchases or balance transfers. Check to see what the offer applies to, and what the regular interest rate will be. Eventually, you will have to pay the normal interest rate on the card.
Variable vs. Fixed Rate
Many credit cards come with a variable interest rate. This is usually attached to the prime rate, which is what banks use to lend to their best customers. As the prime rate shifts, so does the interest on your credit card. A fixed rate, on the other hand, is one that will not shift. The credit card company still has the right, even with a fixed rate, to make adjustments, but they need to let you know before they do so.
All of these terms can help you pick out the right credit card for your situation. Take the time to read through the terms on the application. By doing so, you'll have a full understanding of your credit card. Once the plastic arrives in the mail, you'll be ready to start using it.
More Tips ...
See also Gold and Premium Credit Card
In practice gold cards are very similar to platinum cards and there is actually nothing specific meant by the fact that a card is designated a gold card. It is really just a way for each credit card company to differentiate their own products and the various credit cards that they have on offer to their customers. What one credit card company calls a gold card, may be called a platinum credit card by another company, while at the same time, such a card may be given no special designation by another company. The point to remember in all of this is that every credit card has to be looked at and judged on the terms and rates that it offers and if you are going to sign up for any credit card, then you should take the time to consider what it is you are agreeing to and whether or not the offer is attractive to you. You cannot simply rely on the fact that the company offering the card has decided to call it a gold card or a platinum card as this will not tell you if the deal is a good one or not.
Typically however, most credit card companies will reserve the names of gold card and platinum card for the more attractive of their cards. These cards will be harder for applicants to qualify for. They will generally have a higher spending limit and a better rate of interest. They might also have lower charges for using the card abroad or for cash advances. Many gold or platinum cards will offer an attractive reward scheme or cash back offer and you should look out for other offers that the credit card provider will make in order to make their gold card more attractive to customers.
Some companies will consider that their gold card or platinum card is so attractive that customers will be willing to pay a monthly or annual fee for the card. These cards generally do have good terms and are attractive but you will still have to check carefully before agreeing to pay for the card. In fact, the terms and rates that are offered by most credit card companies these days on their free credit cards will be so good that it will be difficult for credit card companies to persuade customers of the benefits of paying for a premium credit card.
Continuing a pattern that has held for more than a year, credit card issuers last quarter mailed out fewer new-card offers than they did in the quarter before. But 28 percent more offers were sent to consumers with the best credit for two lines of so-called premium cards. About 118 million pieces of mail went out advertising the MasterCard World and Visa Signature cards, premium cards that come with fees and extra services. That was up from 75 million the quarter before, according to Comperemedia, a firm that tracks direct marketing.
Since the beginning of the downturn, issuers have created several new premium cards, including the Chase Sapphire and Visa Black cards.
Americans, and a decrease in high-interest debt on credit cards, might have changed the credit card market for good, making premium cards more attractive to issuers, since they offer the guaranteed revenue of an annual fee.
When credit availability is reduced, the ramifications have been far-reaching. The move can hurt a consumer's credit score by making them appear to be strapped for cash. It also removes a financial cushion that people rely on when times get tough.
Credit counselors have ringside seats to see how abstract concepts such as "credit crunch" play out in the real lives of consumers, and often it is not a pleasant sight. They often find themselves to be the bearer of unpleasant news. Among some of the bummers? Having to tell consumers their dream house will never be affordable. Demand for credit counseling services continues to be strong, even as the economy shows some signs of improvement.
President Barack Obama, speaking a year after Lehman Lehman Brothers' $693 billion bankruptcy, warned against complacency as the financial crisis ebbs and said Wall Street firms must accept a new regime of “common-sense” regulations to avoid another market meltdown.
Obama used the backdrop of Federal Hall in New York City to renew his push for revamping market regulations. The president urged the financial community to support that goal and he emphasized the need for global coordination on financial oversight.
“There are some in the financial industry who are misreading this moment,” Obama said. “Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them.”
Lehman’s bankruptcy helped trigger a global financial crisis that led to more than $1.6 trillion in losses and writedowns by financial institutions and unprecedented government interventions in banking, insurance and auto industries.
In response to the financial crisis, the Obama administration proposed on June 17 changes to U.S. financial regulations, including oversight of the systemic risks that large financial institutions pose to the economy, new ways for the government to dismantle failed companies and a regulator to oversee financial products for consumers.
Government Involvement
Americans can be confident that “the storms of the past two years are beginning to break,” Obama said.
“While there continues to be a need for government involvement to stabilize the financial system, that necessity is waning,” he said, adding that “normalcy cannot lead to complacency.”
Obama called on Wall Street to “embrace” reforms, not fight them.
“It is neither right nor responsible after you’ve recovered with the help of your government to shirk your obligation to the goal of wider recovery, a more stable system, and a more broadly shared prosperity,” Obama said.
The Ins and Outs of Low Interest Credit Cards
Perfect for last-minute shopping, recurring monthly bills, reservations and online purchases, credit cards give consumers a graceful flexibility that is unrivaled by any other form of tender. Credit cards provide a certain reliability and convenience that makes it easy for cardholders to spend to their hearts' content and pay back the balance within a variable period of time.
Because consumers often do not have to pay back the borrowed funds for an indefinite time period, credit cards offering low interest rates become exceptionally indispensable when it comes to saving money. Read on for tips and information about low interest credit cards and how to select and apply for the card that is best for you.
Low Interest Credit Cards
Often boasting low 0% introductory interest rates and other amazingly low rates, low interest credit cards offer consumers a sensible approach to paying back their credit card debt. All major banks and issuers, like Visa and MasterCard, offer special low interest incentives with select credit cards. Interested consumers may choose between two different types of cards – low interest credit cards with a low introductory rate and those with a low fixed rate.
Some credit card users avoid interest charges by paying off their credit card balances in full and on time every month. When money becomes tight and consumers have no choice but to carry a balance, low interest rate credit cards are worth more than their weight in gold. A credit card with low interest obligations can help a cardholder save hundreds if not thousands of dollars a year.
Benefits of Low Interest Credit Cards
Perhaps one of the best types of credit cards available, low interest rate credit cards give consumers a brilliant light at the end of the tunnel of credit card debt. While these cards may only be offered to those of superior credit ratings, low interest cards can help cardholders whittle down debt without drowning in interest charges.
Other benefits of low interest rate credit cards include:
• Reasonable rates for those who carry a balance: Low interest cards provide a great, financially sound alternative for credit savvy consumers who cannot afford to pay off their credit card bills in full every month.
• Tremendous savings on interest: Thanks to their low (or possibly nonexistent) interest rates, low interest credit cards help cardholders save hundreds and even thousands of dollars.
• Great longevity: Consumers who wish to save money while they strive to pay off their credit card debt may find that the great rates don't always end with the introductory period. In many cases, the 0% interest incentive lasts for up to 15 moths and possibly longer. Furthermore, low, ongoing APRs may endure long after the introductory period has expired.
• Helpful and affordable balance transfer options: Low interest credit cards make it easy and financially feasible for cardholders to consolidate debt. Transferring other balances to a credit card with 0% interest can ultimately save consumers hundreds or even thousands of dollars when the rate lasts for a reasonable time.
With so many people getting stuck in debt, credit card companies are finding new ways to make their offers more attractive. By introducing balance transfer credit cards, they can invite more cardholders, even if these people already own credit cards from other issuers. In fact, those who apply for a balance transfer credit card often own multiple credit card accounts.
As its name suggests, these credit cards offer 0% interest on balance transfers so a cardholder can move over all unpaid charges to this card and continue paying them off without incurring the monthly interest rate. If you currently have unpaid debts, should you get a balance transfer credit card?
With the right strategy, a balance transfer card can be a great tool for eliminating your unpaid dues. But before you go ahead and sign up for a new credit card with a balance transfer offer, here are some things you should remember about them.
Transferring charges is not free. Balance transfer transactions are often charged with a flat rate fee plus a percentage of the amount you transferred. This means, you will get extra fees each time you transfer a balance. Therefore, you should find a card with the lowest transfer cost possible.
Zero percent interest is never permanent. This promo may run for a good 6 to 12 months but after that, remember that regular rates will apply. Hence, you need to know what exactly the regular rate would be after the introductory period. Choose one with a reasonable rate that lasts.
Balance transfer cards are not for bad credit. If you have a problem with your credit history, then you may not be eligible for this credit card. Balance transfer credit cards often require outstanding credit history or high credit score to ensure timely payment. Before sending your application, be sure to check your credit report first to see if you qualify.
You need to beat the clock. After transferring over your balances to your zero interest card, you should work on paying off those charges while the 0% APR applies. It is wise to set your repayment plan right from the beginning so you know exactly when you can finish paying off your debts. Give yourself some space before the introductory period ends. Ideally, you should finish paying off all your transferred charges at least a month before the regular rate returns.
Self-discipline is a must. Using a balance transfer credit card would be senseless if you will continue charging new purchases to your account. Focus on paying off your debts and limit your spending. Always be conscious about your repayment responsibilities to avoid uncontrolled debt.
Facts for Consumers
Credit and charge card fraud costs cardholders and issuers hundreds of millions of dollars each year. While theft is the most obvious form of fraud, it can occur in other ways. For example, someone may use your card number without your knowledge.
It's not always possible to prevent credit or charge card fraud from happening. But there are a few steps you can take to make it more difficult for a crook to capture your card or card numbers and minimize the possibility.
Guarding Against Fraud
Here are some tips to help protect yourself from credit and charge card fraud.
Do:
-Sign your cards as soon as they arrive.
-Carry your cards separately from your wallet, in a zippered compartment, a business card holder, or another small pouch.
-Keep a record of your account numbers, their expiration dates, and the phone number and address of each company in a secure place.
-Keep an eye on your card during the transaction, and get it back as quickly as possible.
-Void incorrect receipts.
-Destroy carbons.
-Save receipts to compare with billing statements.
-Open bills promptly and reconcile accounts monthly, just as you would your checking account.
-Report any questionable charges promptly and in writing to the card issuer.
-Notify card companies in advance of a change in address.
Don't:
-Lend your card(s) to anyone.
-Leave cards or receipts lying around.
-Sign a blank receipt. When you sign a receipt, draw a line through any blank spaces above the total.
-Write your account number on a postcard or the outside of an envelope.
-Give out your account number over the phone unless you're making the call to a company you know is reputable. If you have questions about a company, check it out with your local consumer protection office or Better Business Bureau.
Reporting Losses and Fraud
If you lose your credit or charge cards or if you realize they've been lost or stolen, immediately call the issuer(s). Many companies have toll-free numbers and 24-hour service to deal with such emergencies. By law, once you report the loss or theft, you have no further responsibility for unauthorized charges. In any event, your maximum liability under federal law is $50 per card.
If you suspect fraud, you may be asked to sign a statement under oath that you did not make the purchase(s) in question
Some credit card companies offer lower interest rates if you transfer balances from another credit card to a new account. And if you write a check to borrow cash against your credit card, that amount can often be borrowed at a rate different from the interest assessed on your regular charge activity.
Trying to figure out the calculation of your finance charge on your monthly statement can turn into a regular nightmare when two or three interest rates are in use.
Each credit card company has different terms, so get out the magnifying glass and read the fine print. Here are some details you might see:
- Penalties for late payments: Don’t miss the due date or your credit card company might assess another finance charge in addition to the regular interest you pay on unpaid balances. If you make a late payment on your mortgage, your car loan, or any other debt that appears on your credit report, that can trigger an increase in your finance charge rate by your credit card company.
- Minimum charge: Some credit cards assess a minimum finance charge even if you pay your balance on time every month.
- Extra fees for exceeding credit limit: The credit limit is your ceiling. Go up on the roof with your charges and you might get hit with additional finance charges.
- How your payment is applied: If you have different interest rates in force for different amounts owing on your credit card, the credit card company will probably apply your payments to the amounts with the lowest interest rate first, keeping the higher rate compounding longer on the other charges.
One way to avoid this lack of control over how your payments are applied is to use different credit cards for different types of credit.
- Increasing rates: Credit card companies can raise your rate if you make a late payment, exceed the credit limit, don’t pay the minimum amount, or get caught serving red wine with fish.
- Your credit report comes into play: Credit card companies can periodically check your credit report. Events that can lower your overall credit score, such as liens and garnishments, bankruptcy, excess or unpaid debt, can also trigger an increase in your credit card finance charge rate.
- Bad check: Sending a bad check in payment for your credit card bill can result in a higher interest rate for you.
-Acquiring a new credit card or loan: That’s right — the simple act of acquiring a new credit card, mortgage, or car loan can give your credit card company a reason to raise your finance charge rate. Even inquiring about new debt can raise your finance charges on your existing credit cards.
- Annual fees: Don’t forget the annual fee. Some credit cards charge you a fee just for the right to carry their card.
Don't hesitate to satisfy any doubts you may have that the correct finance charge has been assessed. You have the right to contact the credit card company and ask for the details of how the charge is assessed.
How do I get a bad credit history?
Understanding how your credit history is compiled will help you to avoid situations which may result in you earning a negative credit history. There are simple things you can do to keep your credit history clean:
-Do pay your bills on time - avoid making late payments on any debts.
-Do not miss payments or default on a debt - this includes your council tax
-Do pay credit card bills off in full at the end of the month
-Do monitor your accounts for identity theft
-Make sure you fulfil financial contract or commitments as failure to do so may be reported to credit reference agencies.
-Where possible do not change address or job too frequently as this can affect your credit history
-If you have defaulted on any debts make sure you clean up your credit history as soon as possible by honouring your repayment schedules
-Avoid bankruptcy
CREDIT CARDS FOR BAD CREDIT RATING
Are you struggling to get credit or looking to rebuild your credit history? There are a range of credit cards available, even if you've had problems getting credit due to a poor credit history, bad credit rating, non existent credit history, CCJs or bankruptcy. Some issuers have flexible assessment processes and will consider all applications fairly, regardless of previous credit history.
Capital One
Capital One's card for those who have a weak credit rating, credit problems or no credit history. Students and new migrants to the UK are also eligible. This card will help you rebuild your credit. A number of choices of modernist designs. Up to £2,500 in spending power, though depending on your credit rating you will probably start lower. As long as you keep up with repayments, your limit will be increased
Vanquis Credit Card
The Vanquis Visa Card is designed for people with no credit history in the UK or who have previously had bad debt or have bad credit rating
E Platinum-Plus
The E Platinum-Plus is not a physical credit card per se - it is a virtual credit card for use at E-Credit plus shopping club only. This shop features most big name products and brands including Ipods, Wiis, TVs, appliances and even holidays. Most product types are offered. There is an initial fee of £79.95, but no APR% on credit accrued. The card is a way to shop online without paying for goods in one go - payments are made monthly and credit is offered to make purchases. £500 cash advance also avilable
If you’re like most credit card customers, you’ve gotten notes from your bank in recent weeks.
Perhaps the card company told you that the interest rate was rising 4 percentage points. Or it cut your credit limit in half. Maybe an annual fee has appeared for a rewards program as part of an “enhancement,” or the travel points no longer yield quite what they used to.
Why is this happening? On Thursday, the first of a set of new rules went into effect resulting from the landmark credit card legislation earlier this year.
Banks must now provide written notice to customers 45 days before increasing the interest rate or changing the terms on a card. So banks raced to get out in front of that requirement, making a bunch of changes before Thursday, lest they have to give you a month and a half of warning.
Irritated by the changes? Inclined to take your business elsewhere now? This is exactly the right instinct, since plenty of people can still get a better deal from a different card. Fee-free balance transfers still exist. And banks have barely touched the most lucrative rewards programs — and wouldn’t dare fiddle too much given the revenue they generate.
The best revenge is a better card. Here’s how to find one.
IF YOU HAVE CARD DEBT: If you pay your bill in full each month and are only trying to maximize rewards, you can skip this section. If you carry a balance, please (please) stop. If you lack self-control and want to put a stranglehold on your spending, use a debit card instead. Once you have the debit card, ask your bank to turn off any overdraft protection that would allow you to spend more at the store than you have at the bank.
If you carry debt part of the year because of irregular income — or have changed your habits but are still paying your way out of the hole — there still may be ways to pay less interest. Start by calling the card company, telling it that you’re considering leaving and asking for a better deal. The worst thing that can happen is that it will say no.
If your bank turns you down, start shopping. Sites like CreditCards.com, CardHub.com and CardRatings.com can give you a sense of your options. But don’t stop there, because the sites may not list all of the best deals. Credit unions often offer lower interest rates; find one that will accept you at Creditunion.coop. Also, anyone can become a member of the Pentagon Federal Credit Union by paying $20 to join the National Military Family Association.
Why do this? PenFed lets you transfer balances to its card and pay 2.99 percent interest forever once you pay a balance transfer fee of 2.5 percent of the debt you move over, and as long you make your payments on time. (Links to this and other deals and sites I’ve mentioned are in the online version of this column). The Finance forum on FatWallet, which is a must-read for the credit card cognoscenti, maintains a list of some of the remaining credit cards that still charge nothing for balance transfers and let you pay zero percent for at least a few months.
One big caveat: You’ll need a very good credit score to have your pick of cards and to get a high enough credit limit to be able to transfer your entire balance. John Ulzheimer, who worked in the credit scoring and data industry for years before becoming president of Credit.com educational services, said the number was 740 these days. FICO, the company that created the formula that underlies the credit scores of the same name, reports that 40 percent of the population has a score over 750 and 18 percent lands between 700 and 749.You can buy two versions of the FICO score from the company’s Web site.
Alas, card companies aren’t in the habit of plastering their minimum FICO requirements on their Web sites. But you can call them and ask. “In many cases, this isn’t national security, and they’ll tell you,” Mr. Ulzheimer said. Inquire about the credit limit you can expect given your score, or at least, try to find out the range of possibilities.
Also, keep in mind that if you get a new card, the issuers of your old card may cut your credit limit, which can hurt your credit score. They’ll argue that you’re a greater risk, since you have more available credit lines all of a sudden, and that you could run up a bunch of debt quickly before declaring bankruptcy. To you, however, it might look like punishment for fleeing.
If you’ve tried a few times to apply for a card and failed, it’s probably best to stop, since the inquiries on your credit report that result from repeated credit applications can hurt your score further. Better to pay down the debt on the old card as quickly as possible. You can improve your score that way since you won’t be using as much of your available credit, and you can save the next section of this column for once you’re out of debt and your score has improved.
IF YOU WANT CASH BACK: Let’s start with my first principle of rewards cards. Whether you’re seeking cash back, travel points or frequent-flier miles, users of credit card programs typically earn one penny for every dollar they charge, assuming they always pay their bills off and never pay interest.
But you want to be above average. To double that 1 percent, sign up for the Schwab Bank Invest First Visa Card or Fidelity’s American Express Cards. The big catch here is that your rebate (which doesn’t count as taxable income) will need to go into a brokerage account at Schwab or one of several possible accounts at Fidelity. If you don’t already have an account at either place, you’ll need to get one.
The American Express Blue Cash card still helps big spenders easily break the 1 percent threshold, and the Amex Costco card gives you 3 percent back at restaurants. You have to be a Costco member to get that card.
IF YOU WANT TRAVEL REWARDS: Airline frequent-flier cards are still popular and remain the best credit card deal going for certain consumers. If you can fly when the airline has available seats at the lowest price in miles for your destination, and travel in first or business class to overseas locales, your miles may end up being worth 5 or 10 cents each, or more, given what you would have paid in cash for the seats. Not bad if you can swing it.
If you can’t, the Citi PremierPass Elite Level card earns points based on what you spend and how many miles you or others fly on flights you paid for with the card. This card can also yield well over a penny a point, though the details are complex.
My top-of-wallet card continues to be the Starwood Preferred Guest American Express card. The Starwood points are easy to use at its hotels, like the Westin and W chains, and they can easily be worth 3 cents or more. You can also trade points for miles on several airlines, and if you trade enough points at a time, you end up with 1.25 miles for every dollar spent on the card.
But what’s best for you will depend on whether you want only one card in your wallet (skip Amex then, since it isn’t accepted everywhere) and whether you prefer straight cash back, free travel or something else entirely.
What we all share, however, is a desire to pay less and earn more than the average customer. We can’t all be above average. But right now, when card companies are wondering how many changes they can make before driving us away, you’d be crazy not to try.
Not many people would knowingly pay more than $35 for a cup of coffee. But far too many people are getting saddled — with no warning — with outsized bills for minor purchases, under a euphemistically labeled “overdraft protection program” that most major banks have adopted over the last 10 years.
Before that, most banks would simply have rejected debit transactions, without a fee, when the card holder’s account was empty. Now, they approve the purchase and tack on a hefty penalty for each transaction.
Moebs Services, a research company that has conducted studies for the government as well as some banks, reported recently that banks will earn more than $38 billion this year from overdraft and bounced-check fees. Moebs also estimates that 90 percent of that amount will be paid by the poorest 10 percent of the customer base.
Federal regulators who stood idly by while this system evolved are considering new overdraft rules that could provide more transparency. If they do not move quickly and aggressively to protect consumers, Congress should step in.
Banks have historically covered bad checks for valued clients, who were invited to opt in to overdraft protection or to link their checking accounts to savings accounts or to lines of credit. But as more people began to use debit cards, the banks started to view overdraft fees as a major profit center and started to automatically enroll debit card holders into an overdraft program. Some banks instituted a tiered penalty system, charging customers steadily higher fees as the overdrafts mount.
A study by the Center for Responsible Lending, a nonpartisan research and policy group, describes what it calls the “overdraft domino effect.” One college student whose bank records were analyzed by the center made seven small purchases including coffee and school supplies that totaled $16.55 and was hit with overdraft fees that totaled $245.
Some bankers claim the system benefits debit card users, allowing them to keep spending when they are out of money. But interest rate calculations tell a different story. Credit card companies, for example, were rightly criticized when some drove up interest rates to 30 percent or more. According to a 2008 study by the F.D.I.C., overdraft fees for debit cards can carry an annualized interest rate that exceeds 3,500 percent.
The banks, which have grown addicted to overdraft fees, will almost certainly resist new regulation in this area. But there are several things that federal regulators must do to protect the public.
First, banks must be barred from automatically enrolling customers in overdraft programs. This must be a service that customers opt in to — and only after they are provided full information about the fees and the penalties they will incur. These disclosure statements must meet the same rules laid out in truth-in-lending laws, since overdraft charges are essentially short-term loans.
Banks must also be required to warn customers in real time when a debit card charge will overdraw their accounts — and what fees they will incur if they still decide to proceed with the purchase.
This will require new technology. But there is almost no chance that the banks will invest in it unless they are legally required to do so. Until that happens, buyers beware. That cup of coffee may be even more expensive than you realize.
Understanding Debit Cards
If you want the convenience of a credit card, but don't want interest payments or a large bill to pay off monthly, then a debit card may be the answer for you, too. Debit cards work like cash or a personal check. The money you "charge" is automatically deducted from your bank account.
Yet, debit cards don't have the same protections from unauthorized use as credit cards.
Debit Card or Credit Card?
What's the difference between a debit card and a credit card?
While a debit card looks like a credit card, it works more like cash or a personal check. You "pay now." With a credit card, you "pay later."
Debit means "subtract." When you use a debit card, you subtract money from your own checking or savings account. As with credit cards, you use it in stores for purchases. At check-out, the card reader electronically contacts your bank and subtracts the amount from your account. The money you have in your bank account limits how much you can spend. However, if you are not careful in watching your daily account balance, you can over withdraw your account. Some systems will allow you to use your debit card when you don't have enough money in your account to cover the purchase. This can result in hefty overdraft fees.
Using a credit card is somewhat like taking out a loan from a bank or other financial institution. You have to pay back the credit you used each month. If you pay back less than the full amount you owe each month, you pay interest on the amount you don't pay back. The credit card company sets the total amount you can charge based on your credit history, income, debts and ability to pay.
Some cards are dual-purpose credit/debit cards. Before you swipe the card through the reader, you select a "credit" or "debit" button on the reader. If you select "debit," you then enter your Personal Identification Number (PIN).
If you select "credit," you are given a credit receipt to sign. "Credit" charges will appear on your next charge account bill.
What are the advantages of a debit card?
It is often easier to get than a credit card.
You don't have to get your check approved or show identification at stores.
You don't have to carry cash, a checkbook or traveler's checks.
Debit cards are more readily accepted than checks, especially when you are traveling.
You don't pay interest charges.
Because checkout lines move faster, storeowners like debit cards. They don't worry about bounced checks or need to take checks or cash to the bank. Debit card processing fees for the merchant are generally lower than credit card fees.
What are the disadvantages of a debit card?
You need enough money in your bank account to cover each purchase.
Since you paid for the purchase at checkout and the money is out of your account, you have less protection if something goes wrong with the purchase. Your bank won't put money back into your account for items that are never delivered, don't work or were misrepresented.
You may have bank fees—such as monthly service charges, per-transaction costs or penalties—for dropping below your required minimum balance. Check with your bank to find out those extra costs.
You have less protection if your debit card is lost or misused than with a credit card.
Protecting Your Debit Card
A debit card is like a blank check, so you need to guard the card and the account number carefully against loss or misuse. A thief can clear out your bank account before you even know your card is missing.
If your debit card is lost or stolen, or if you think someone is using it fraudulently, call your bank immediately. Follow the phone call with a letter.
Thieves don't even need your card. As long as they have your name and card number, they can order goods by mail or over the telephone. They can wipe out your bank account before you know the card is missing, or even when you still have the card in your pocket. Protect your debit card by holding on to your debit card receipts and check them against your bank statement each month.
Memorize your PIN but don't keep it with your card. Don't choose one that a smart thief could figure out, like your phone number, address, birthday or part of your Social Security number. Never give your PIN to anyone.
What if your debit card is lost, stolen or misused?
You must act quickly. The most you can lose is $50 if you report to the bank or credit union that your card is lost or stolen within two days of when you discover the loss. However, your liability increases to a maximum of $500 if you report within 60 days after you receive your bank statement.
If you don't to notify your bank within 60 days after you receive your bank statement, your liability is unlimited. You could lose all the money in your account. Check your bank statements carefully and promptly for charges you didn't make.
The Minnesota attorney general, Lori Swanson, said Sunday that her office had reached a legal settlement that would require a Minnesota company to get out of the business of arbitrating credit card debts and other consumer collection disputes nationwide.
The agreement comes less than a week after Ms. Swanson sued a Minnesota firm, the National Arbitration Forum, over its handling of debt disputes between consumers and credit card companies. The lawsuit accused the firm of violating state consumer fraud, deceptive trade practices and false advertising laws by hiding financial ties to collection agencies and credit card companies.
“To consumers, the company said it was impartial, but behind the scenes, it worked alongside credit card companies to get them to put unfair arbitration clauses in the fine print of their contracts and to appoint the Forum as the arbitrator,” Ms. Swanson said.
Ms. Swanson had said the National Arbitration Forum handled more than 214,000 collection claims in 2006, 60 percent of which were filed by law firms with ties to the collection industry.
The National Arbitration Forum denied the accusations but said it decided to stop administering arbitration disputes because of mounting legal costs.
Under the settlement, the National Arbitration Forum must stop accepting any new consumer arbitration or taking part in processing or administrating any new consumer arbitration nationwide. The company must stop administering arbitration involving consumer debt including credit cards, consumer loans, health care and consumer leases, Ms. Swanson said.
The settlement allows the company to continue arbitrating Internet domain name disputes, personal injury protection claims and cargo disputes.
Industry representatives would have you believe that the Credit Card Accountability, Responsibility and Disclosure Act enacted last month spells the end of the credit card as we know it. President Obama’s proposal last week to create a Consumer Financial Protection Agency to enforce the law has increased the industry’s concerns.
But the example of cards issued by credit unions puts the lie to these claims. Credit unions largely conform to the new rules already, while profitably maintaining the basic features that users know and love.
The credit card act is under fire for limiting a number of fees commonly used in credit card contracts, like the charge for going over the credit limit and the increased interest rate that applies once a borrower has missed a payment. These changes might look like a boon for the average card user, but industry advocates claim that fees on delinquent borrowers subsidize the perks for those who pay on time. Take away the lucrative fees, the argument goes, and credit card issuers will be forced to ax free plane rides, slash generous credit limits and impose hefty annual dues for all.
Some in the industry even say that profitability would require issuers to charge interest from the moment of purchase, thus eliminating the grace period of interest-free lending that borrowers have long enjoyed.
These fears are largely unfounded. We have performed a study that compared credit cards issued by investor-owned banks to those issued by customer-owned credit unions. We found that credit unions are less likely to charge the fees and penalties that the new act hopes to eliminate — and when they do, they charge less than other issuers.
While virtually all banks and other for-profit issuers increase the interest rate if the borrower fails to make a minimum payment on time, most credit unions do not. Similarly, credit union fees for exceeding the credit limit are on average just half those of other issuers. But contrary to industry assertions, more responsible card users don’t pay the price. Credit union cards actually offer lower annual fees and longer grace periods than regular cards.
Is the lending model used by credit unions feasible for banks and other issuers? Absolutely. Banks and credit unions compete for customers in the same market. The primary distinguishing characteristic of credit unions is that they answer to a different group of owners: profits that are not reinvested are paid to the union’s shareholder-customers as a dividend, much as investor-owned banks reinvest or pay dividends to their shareholder-investors.
True, unlike typical banks, credit unions have the advantage of being exempt from corporate income taxes, thus some might argue that this gives them an edge. But this is a proportional tax on profits. In other words, if credit unions were not exempt from the tax, their model would still make profits, they would just retain less of them.
Credit union cards are a great test case for how regular cards will perform under the new law. The evidence so far suggests that the credit card act is likely to bring about moderate, and even positive, changes. Card issuers, after all, need to retain customers. Any bank that attempts to pad its bottom line by, say, levying large annual fees will likely see its customers flee to credit unions or to banks that emulate the credit union model.
To be sure, the new law will require some sacrifices. Our data indicate that rewards programs, for example, may become less generous or less common. But is this necessarily a bad thing? While you may be reluctant to sacrifice your airline miles, rewards programs are anything but free for the nation as a whole. Debt-laden and often low-income borrowers tend to pay high fees to subsidize the vacations of those who manage to pay on time.
Credit union cards demonstrate that punishing fees are not an essential ingredient of profitable lending. This should help assuage fears that the credit card act will bring disaster for credit cards. Rather, it should nudge them toward the gentler credit union model that many Americans already enjoy.
When the economy was booming, banks doled out credit to consumers like candy. People who could never afford to live their dream found pay option adjustable rate mortgages and other easy-access loans just a signature away. Credit cards put the pain of payment off to another day — never mind the fees hidden in the fine print.
But what is good for consumers may not always square with what is good for banks. And the banking industry — which says it stands to lose billions of dollars — is bracing for a fight as the administration’s plan to overhaul the way the industry is regulated heads to Capitol Hill.
Banks “are really dumbfounded by the scope of this agency,” Edward L. Yingling, the president of the American Bankers Association, said. “It’s not like the current regulators don’t have all the authority they need. You don’t have to blow up the system.”
Banking groups are concerned about the costs a new layer of regulation might impose, and the prospect of more examiners crowding into their banks.
“You are talking about an agency that is authorized to design financial products and, in fact, say that they must be offered first, over the banks’ own products,”
It may also be difficult to separate “consumers” from “investors,” leaving uncertainty about whether some financial products fall under the purview of the new agency or the Securities and Exchange Commission, which monitors many investor products. A spokesman for the Treasury said the S.E.C. would maintain its power over investor protection.
Congress moved a full step closer to making it less hazardous for millions of Americans to keep using their credit cards. The Senate voted 90 to 5 Tuesday in favor of a reform that would prohibit credit card issuers from such unfair tactics as tripling interest rates overnight or passing out cards to clueless teenagers.
The Senate bill is a slightly stronger version of the House bill, also approved by an impressive majority. The two are similar enough that the legislation could be ready for President Obama to sign by Memorial Day.
Both versions would require important improvements in a business so unfair that one Obama economic adviser described it as “a series of carjackings” even for some of the best customers.
When the law goes into effect — the Senate would give the companies nine months to get ready, the House about a year — they would be prohibited from raising rates on existing balances unless the cardholder is 60 days late in paying. All customers would have to be notified 45 days in advance of any rate increase, and young people (under 21 in the Senate bill, 18 in the House version) would need an adult’s signature or proof that they have a way of repaying any new debt before getting a new card.
Instead of the old microprint credit card contracts comprehensible only to a few bankers, the new agreements are supposed to be written in plain English and will be posted on the Internet. The Federal Reserve Board would also be required to review companies’ practices periodically for violations.
These companies have already proved themselves to be infinitely inventive, at the consumers’ expense. So Congress and the Federal Reserve will have to be vigilant to ensure that the old tricks and traps are not quickly replaced by new ones.
Unfortunately, the powerful pro-gun forces in the Senate managed to contaminate the bill with an amendment to allow licensed owners to carry loaded firearms into national parks. This is a cynical attempt by the gun lobby to take advantage of consumers when they most need Washington’s help. The House, which could vote on the Senate version as soon as Wednesday, should reject the amendment — even if it takes a little longer for the bill to go to the White House.
