Credit Card Lowdown

‘Contactless’ credit cards

If you are one of those who like to use their credit cards regularly, you’ve probably felt the irritation that most of us feel when we have to swipe the cards and sign receipts for purchases. Of course, it is only a minor hassle but a hassle nevertheless. So what do the credit card issuing companies do to ease our problems? They devise means that will allow us to use our card without this slight snag. Did I hear you say wow? Well, this is how it works. Very soon, JPMorgan Chase and American Express will begin issuing millions of new credit cards that are embedded with computer chips. This means you will no longer have to swipe your card and sign receipts.

This new technology allows consumers to just wave their credit card over the reader and the transaction will be complete. And guess what’s the best thing about the new credit card? The issuing companies claim that the sensors on the cards will prevent thieves from retrieving confidential information about you from the card. So, if your card is stolen, the thief may be able to use the card but will not be able to get any other information about you or your financial status.

The new credit cards have been tested in major cities and will be available sooner than you think. And consumers are not the only ones who will benefit from this new technology. Merchants who install the new card readers will not have to worry about lengthy queues at the checkout counters. Neither will they need to get the customer’s signature. All they now need to do is issue a receipt.

But, as with all good things, there is a slight problem associated with using the card. Researchers have found that in the cities where this new technology has been tested, consumers were found to be spending more than usual. The frequency of use had also increased when compared with traditional credit cards. Well, I’d say that all you need is a little self-restraint to solve that problem.

Read more about contactless credit cards at FindCreditCards.org.

Use credit cards to pay taxes? No way!

Here’s one bit of news that will prove that U.S. taxpayers are smarter than most people give them credit for. A recent survey found that most Americans are not too comfortable with the idea of paying their income tax with credit cards. News.monstersandcritics.com reports:

The survey by global market research firm Ipsos Insight, found 68 percent of American adults are aware that the Internal Revenue Service accepts credit cards, but only 1 percent plan to use a credit card to pay federal income taxes for 2005.

Read more: Few pay income taxes with credit cards

The Lowdown On Store Credit Cards

You are a shopaholic if you go to the mall whenever you feel the urge like millions of other Americans. Not surprising as credit cards have been perpetuating spending and most of us end up buying things we don’t need or more importantly afford.

Seeing how addictive and compulsive you are with your shopping, your favorite stores now issue "store credit cards" to encourage your shopping habit. Store credit cards are the easiest to open and are much faster than a bank credit card. The lure is all the accumulated points and the freebies that stores offer to entice the customer.

Drawbacks: By opening store credit cards you are in fact playing with fire as every time you begin a new store card your credit score comes down 20 points. Plus the added debt you are piling on yourself and this is true each time you get a new store credit card.

So what are the stores aiming to achieve by extending these credit cards chock full of perks? They are simply ensuring you go back there for all your shopping and nowadays after several years of loyal shopping, stores also give rewards. The rewards are the baits to get you back into the store and usually you’ll like something and end up making more purchases and that is the marketing strategy here.

The interest rates are high especially when there are 0% credit cards in the market. The rewards and discounts still don’t justify the high interest these store credit cards charge.

Use them wisely: The trick is to watch and go to these stores during sales and only when you really need to buy something specific. The binge shopper should stay clear of these store credit cards and even if you go in make sure you never go overboard with your shopping.

Read: “Store credit cards: flashy perks, high rates”, for a comparative look at famous stores and their credit card lures and their interest rates vs. rewards equation.

Mini-sized-Contactless Credit Card Arrives!

A new era in credit card technology has arrived and the whole concept of convenience through credit card use is being pushed to a new high. Credit card giant Visa and MasterCard have incorporated the latest Radio-frequency technology to achieve this.

Visa has come out with a couple of firsts in the credit card business – a mini-sized card, which is also a contactless card. The size of the card is half the size of the usual card and is just big enough to attach to a key ring.

However, the "contactless" feature of this mini card is the main draw for most customers and merchants. To put it plainly what this means is that you no longer need to swipe the card to pay. Visa declared that its Visa Contactless brand had surpassed 20,000 merchant acceptance locations in the US, making it "one of the most rapidly adopted payment innovations in Visa history".

Why? Growing concerns about security with the PIN based transactions specially with debit card pins being compromised by thieves who gained access into bank accounts have been the motive for Visa to implement RFID onto its credit cards. 

Security feature: Visa's contactless Radio-frequency chip has Triple Data Encryption Standard; to ensure that the user’s account number and unique numeric code are generated for each transaction is not compromised.

User-friendly: By simply waving your card near the radio frequency reader you can make payments without a pin or swiping. You don’t even need to sign on the merchant copy when you pay – no contact anywhere. So at a store the staff can assist you in your shopping more as you save a lot of time with contactless payment.

Marketing ploy: Visa plans to offer more payment choices on the contactless card to increase awareness and tempt people into trying this new technology. If the marketing strategy works in a couple of years we might be cutting up our traditional credit cards for a contactless one.

How’s the retirement fund coming along?

I know this may sound like a mockery of sorts, but have you begun saving up for your retirement? If you are like most other Americans with modest means, then you probably are already finding it difficult to stretch your pay to cover immediate costs. So there is no way you can even begin to think of saving up for the future. And the few people who do earn enough to save up a little either lack the discipline to save up or fall into the hands of unscrupulous companies that charge you huge fees. Usually you earn much lesser in these low-interest money-market accounts than even the fees you pay!

You are probably thinking that there should be some way for a person with modest means to invest and save up a decent sum of money. Of course, there are many options available to you, but remember to keep your eyes open and avoid unscrupulous companies. The first rule of the game is that you should never take any investment advice from a person who may not be an investing expert. This is a serious matter and needs proper handling.

Secondly, you may have found someone who may sound like he is giving you sound investment advice but is actually only trying to get you to invest in his company’s products. Are his intentions good? No way! He must inform you about all the products available in the market so you can make an informed decision.

And lastly, remember: No risk, no gain. You don’t have to go gambling but if you are overly conservative when it comes to retirement investing, you are probably losing too much – there is a chance that your investments won't grow enough.

Competition heats up in data protection market

Access to credit information is proving to be a tug-of-war between businesses and consumers. The recent announcement that Experian, Equifax, and Trans Union -- big players in the credit market -- were introducing their own multi-agency credit score was a new front in this ongoing struggle.

So, what exactly is the problem here? It’s obvious that consumers like you and me, would want easy access to credit information, accurate reports. We also want to be in control so that we can freeze or protect our credit against identity theft. The financial services industry does want all this and they also want to make credit instantly obtainable, thereby making it a profitable venture.

The result is there for all to see –inaccurate credit reports, identity theft, and hefty fees for "credit monitoring" after your identity has been made available to thieves. And now we have a new player in the game – TrustedID – a new credit-monitoring company that claims to protect your identity. According to its founders, TrustedID is specifically designed to help prevent identity theft. All I can say about this new addition is let’s wait and watch. We’ll surely know in a bit if this is just one more run-of-the-mill service provider or whether it really means business.

Are there minimum limits on credit cards?

Have you ever been in a situation where you buy a bag of crisps and a soft drink and try to pay with your credit card but are rebuffed by the clerk at the convenience store? S/he tells you that there is a minimum purchase to use a credit card and that your purchase is way below this amount. Are they allowed to do this? Wcpo.com reports:

But MSNBC says Visa and Mastercard do not allow stores to set minimum payments. Visa and Mastercard want as much business as possible.

Read more: CREDIT CARD MINIMUMS

Visa asks retailers to beware of scamsters

The recent computer glitch that caused many Visa cardholders’ details to fall into wrong hands may well force the card company to change its motto from "Accepted Everywhere" to ‘Accessible Everywhere’. Jokes apart, Visa has now issued a memo warning retailers of a problem with the software used to help ring up purchases. Wkyc.com reports:

Under card industry guidelines, personal information cannot be stored on checkout computers, because it could make you vulnerable to scam artists.

Read more: Major credit card company issues warning

Do you know what’s on your credit card contract?

I agree that it isn’t much fun trying to make sense of the fine print on credit card contracts. But ignore them at your own peril because there are clauses in that contract which can drown you in debt if you are not careful with your card. Of course, if you don’t feel like reading those boring paragraphs, don’t worry, you are not an oddity. According to a recent survey, only 44 percent of us actually read every word of our credit card contracts.

But if you do read the fine print, then well, you can take pride in the fact that you have managed to keep on top of your finances. And if you already have one or a couple of credit cards, here are a few tips that will help you make the most of your card. Firstly, stay alert to changing trends. You must keep yourself updated to higher rates or changes in rewards programs. Courierpostonline.com reports:

Some issuers are raising the minimum monthly payment required. Others are switching fixed rates to variable rates that rise with short-term interest rates.

Read more: Credit card notices need careful read

Things a credit card user should know

Despite making credit card payments on time, your interest rate may be automatically be raised due to late payments on another credit card, car, phone or house payment, or even if the bank decides your debt is too high. This is known as the universal default clause which is increasingly becoming a standard clause in credit card agreements.

A credit score also known as a FICO score can be widely shared. It influences the amount you can borrow, the amount you pay for life insurance, whether you can rent a home and the interest rate to be paid on a credit card. Find out about your credit score and how it is tracked.

It is entirely upto the credit card company to decide the amount a cardholder is charged for a late payment even if it is only by an hour.

A majority of Americans pay no more than the minimum amount required which can be as low as 2 percent of their balance each month. Doing this can take years to clear your debt apart from ending up paying far more than the actual expenses incurred. Credit card info.com reports:

Even if you make your credit card payments on time, the credit card bank can raise your interest rate automatically if you're late on payments elsewhere -- such as on another credit card or on a phone, car, or house payment -- or simply because the bank feels you have taken on too much debt.

Credit Card Authorizations

On making a credit card payment, the merchant contacts the transaction processor which in turn contacts your card issuer to confirm the available credit is sufficient to cover the expense. All this occurs in seconds.

Once the transaction is approved by the card issuer, an authorization is created in your account. The implication of this is that although the merchant hasn't been paid the money yet, your available credit is reduced by the authorized amount. It takes about one to five days for the charge to be completed when the card issuer receives the transaction slip signed by you, and the funds are transferred to the merchant's account. In case the slip is not received for a certain period of time, the authorization expires and the amount on hold will be available again.

Confusion may crop up in cases where the total transaction amount is not pre-determined. A good example is hiring a car where you are free to extend the rental period or the number of miles. Here the rental agency will request authorization for an amount they estimate will be sufficient to cover the entire bill. Credit card info.com reports:

When you present your credit card as payment (either physically or by submitting the number by snail-mail), the merchant will typically contact their transaction processor, which will then contact the issuer of your card to confirm that there is sufficient available credit to cover the purchase (or cash advance.) This can be done in a matter of seconds as you standing at a store check-out counter.

Methods of Protection

There are certain precautions you can take to protect yourself from credit card fraud. As soon as you get a new card, sign on it immediately. When using your card at an ATM you should enter your PIN in a way that nobody will be able to memorize the numbers. Never leave your receipt behind at the ATM. Make sure you always shred your credit card statements, receipts and carbon copies before disposing of them.

The only time it's safe to give your credit card number over the telephone is when you have initiated the call. Cordless phones are particularly risky as there are radio scanners which are easily available that can eavesdrop on your conversations from a great distance.

If a credit card offer asks for money up front or doesn't disclose the identity of the card issuer, ignore it.

Always ensure that you get your card back right after making a purchase apart from tearing up any cancelled sales slips.

Maintain a list of your credit cards, their numbers and toll free numbers for each in the event of a loss or theft.

Examine your monthly statement carefully to make sure all the charges are genuine. Any error or unauthorized charges must be reported immediately to the issuer. Credit card info.com reports:

These tips are important and universal: Sign your card -- as soon as you receive it! (Obviously, this is only as effective as the clerk who's checking it.)

Things Your Credit Card Company Won't Tell You

No matter how religiously you make all your credit card payments and for how long, sooner or later you fall into the universal default trap. One slip and your privileges vanish and rates shoot up.

According to card companies, it's risk management. To consumer groups, it's about profit alone. The best way to avoid the problem is to pay all bills on time and in case of a disputed bill, get it sorted out before it reaches collection status.

Nowadays college-going kids are able to get credit cards as easily as a beer, asw they make good risks for creditors. Now card issuers are on the verge of tapping high school students. What parents can do to avoid their children from getting credit cards is to be extra vigilant about their personal information finding its way to databases. It's also a good idea to educate them on the evils of credit cards and monitor spending.

Rewards have become a major tactic for credit card companies to outdo competition. But benefit programs like frequent fliers frequently have a catch like massive interest rates and high annual fees. Work out how much you stand to gain from these programs and see if it makes sense to make use of them. Credit card info.com reports:

"We're just waiting for you to screw up." Many things can bump your credit card interest rate into the red zone, but nothing faster than what's called "universal default." You can make all your credit card payments religiously and for a long time, but fall behind on your electric bill and, suddenly, you're a deadbeat - who will be charged accordingly. Rates can change on short notice, from low and reasonable to 25 percent or more.

About Co-Signing

A co-signer is required when an individual applying for a credit card or loan does not meet the lender's criteria. The co-signer will have their personal credit checked and need to sign an agreement to pay back the debt if the primary applicant fails to do so. Usually both the primary applicant and the cosigner are jointly liable for the debt.

The implication here is that default by the primary applicant with one or two missed payments, will result in the creditor attempting to collect from either of the two or both until the full amount is repaid. The cosigner may even have to pay off the entire amount and can also be sued, have assets seized and wages garnished.

Being asked to become a co-signer requires a great deal of thought. The risk is huge, so is the benefit worth it? Becoming a co-signer may sometimes be beneficial but only when you can count on the primary applicant to be responsible enough to handle the obligation. Credit card info.com reports:

When an individual credit applicant does not meet a lender's requirements, they may be able to obtain a loan or other account by having a co-signer. The co-signer's personal credit will also be checked, and s/he will be required to sign a contract agreeing to pay the debt if the primary applicant does not. Typically, the contract will specify that the primary applicant and the cosigner are "jointly and severally liable" for the debt.

Dealing With Card Offers

Credit cards are famous to the point of notoriety about teaser rates to lure new customers. There are certain methods which work to their advantage at the consumer's cost.

Introductory offers of lower rates are only for a limited, sometimes very brief periods of time. You need to ask the card company the actual rate you will be charged once the offer period is over.

At times new purchases alone are valid for teaser rates. As a means of improving credit, that's what you need to avoid.

For transfer balances, teaser rates offer temporary relief from higher interest rates. But once the offer period ends, the regular rates may be higher than the one on your current credit card.

Many card users may be switchiung from one new card to the other to make the most of introductory rates for transferring balances. It may work for sometime, but sooner or later the debt is bound to catch up. Credit card info.com reports:

Credit card offers frequently use teaser rates to acquire new customers. These are introductory rates that last a few months before the regular interest rate kicks in. Some of the attributes of teaser programs include:

Foreclosure need not be the answer

If you have used up all the equity on your home, you are probably feeling extremely lost and dejected. You have probably even thought of walking away from the whole thing and letting things take their own course. In other words, you probably think foreclosure is the only option available. Take heart. It need not be so. One of the first things you need to do is banish the thought of foreclosure from your mind.

Apart from the emotional aspect, it will also be a big financial loss to you. How? Well even if you allowed foreclosure, you would still owe your loan amount or the balance on it, in addition to the fees. So if you allow the bank to sell your house and the price it gets is not as good as you thought it should be, you are left with a huge deficit. Shns.com reports:

Whatever you decide to do, be sure you understand the long-term consequences of your actions, including the effect of your choice on your family situation. There is more than money at stake here.

Read more: Alternatives to walking away from a mortgage

Hidden fees & how to avoid them

I am not one of those who tend to overspend and yet many times I notice that the amount payable on my bills seems to increase despite my extreme carefulness. This got me thinking and digging in detail into these bills. And was I surprised with what I learnt? Well, here’s the knowledge I gleaned.

Everything that we use in our daily lives has hidden fees attached. This includes our credit card bills to even the text messages that we keep sending each other. According to consumer reports, U.S. consumers pay nearly $216 billion in financial fees every year. That means you are paying nearly $800 in miscellaneous fees! And while they exist everywhere from cell phones to the Internet, guess who the biggest culprits are? Yes, you got it right, CREDIT CARDS. Did you know that we are paying nearly $31 billion every year in credit card fees? So, how does all this money collect? Simple, late payment involves fees up to nearly $40, if you are close to your credit limit, then the late fee can just push you over the precipice.

Then there are these enticing credit cards with low interest rates. Just cannot wait to get your hands on them? Wait till the rate gets hiked up to as much as 24 percent if you are late by so much as a nanosecond. Yes, I am exaggerating there, but you get the picture right?

Here’s my favorite one. Fine, you decide you’re done with your credit card and are not going to use it. So you lock it away and forget about it. What happens? You get slapped with another fee. At most card companies, you will have to pay around $15 if you haven’t swiped their card in six months! Here’s one trick to avoid this payment. Use your card for small purchases every now and then.

Big acquisition in creditcardsville

Capital One Financial Corp., the biggest independent issuer of Visa and MasterCard credit cards, plans to buy North Fork Bancorp for $14.6 billion. This is Capital One’s second takeover of a bank in a year. Philly.com reports:

The deal comes amid consolidation in the credit-card industry. In the last year, a number of independent card issuers - including Providian Financial Corp., Metris Cos., and MBNA Corp. - have been acquired by major banks. MBNA, of Wilmington, was bought by Bank of America Corp. on Jan. 1.

Read more: Credit-card issuer Capital One plans to buy North Fork

Credit card companies mum on details of breach

While a large number of people are now aware that a computer attack compromised their credit and debit card numbers recently, quite a few of them have been finding it extremely difficult to know more details behind the breach and also how to defend against identity theft. According to consumer advocates, the lack of information comes as a move by Visa and MasterCard to control bad publicity. Nbc5i.com reports:

One North Texas woman's debit card information was stolen in a recent attack against a merchant's database. Her bank told NBC 5 News that Visa refused to provide details such as the identity of the merchant or when the breach occurred.

Read more: Credit Card Companies Decline Details On Breach

Financial Jargon

Annual fee refers to the flat yearly charge of membership. There are many companies with no annual fee charged on cards. Those with annual charges too are usually prepared to waive the fee aside for your business.

Finance charge is the amount you are charged for the facility of credit. In addition to interest charges there could be other charges like cash advance fee, when availing the cash advance facility.

Grace period can be a duration of about 25 days during which you can pay your bill without incurring finance charges. Most if not all credit cards offer grace period only for the full balance paid every month. Carrying a balance forward cancels the privilege. Grace period doesn’t apply to cash advances either.

Annual percentage rate is the yearly percentage rate of the finance charge. The rising interest rates affect other interest rates like prime rate or treasury bill rate which are called variable rate plans. Sometimes other interest rates are not affected in the case of fixed rate plans. Credit card info.com reports:

Before we get into shopping for a card, let's go over some important terms you'll encounter in credit-card brochures or discussions with potential lenders: Annual fee - A flat, yearly charge similar to a membership fee

Scary little credit card secrets

Grace periods for some cards are reduced from the original promise of 30 days to 20 days or none at all. Interest is then charged from the day a purchase is made until payment of the bill. Awareness of grace period is crucial.

Interest is charged on cash advances from the moment the cash is dispensed and the rates can climb to 30 percent. Using credit card at an ATM is a lot more expensive than debit card.

Late payment fee is an average of $28.58, for even a day late. Find out about yours for a nasty surprise.

There are two billing cycles, first there will be an interest charge on your purchases and then for the month before. The most favorable balance method is the adjusted balance where interest is charged after payments and credits during the billing cycle.

A single late payment can raise your interest rate from 12 to 20 percent if not more.

Companies have a policy of changing interest rates with notice only 15 days in advance. Even fixed rates can change interest at any time.

Minimum payments are lowered constantly and the increasing interest charges on your card balance is never paid off completely by minimum payments alone. Credit card companies make the most profit if you make the lowest possible payment ensuring your debt remains. Credit card info.com reports:

Grace periods: Some cards have reduced grace periods from the original 30 days to 20 days or no grace period at all. With no grace period, you are charged interest on the purchase from the day you make it until the bill is paid. Knowing your grace period can save you money.

Derogatory items in credit reports

In credit repair, the long term effects are what you should be concerned with. Like a diet, the body fluctuates naturally on a daily basis and following a diet will deliver results in the long run.

In rebuilding credit, simply removing derogatory items is not enough to rebuild credit. Use secured cards, pay credit lines on time and live on a budget.

There may be many reasons for your score going down despite your credit repair efforts. The trade line you remove may have been very old while the credit scoring model considers credit history of at least 60 months on all active trade lines.

Another possibility is that you removed an account with an open status and zero balance. This could have put you over all credit card limits ratio far higher over 25% used. Credit scoring rates favorably when less than 25% of total balance is used. Raising available credit balance to over 50% can cancel out the benefits of removing old lines.

You may have removed installment loans like car and mortgages from your credit report. The preference is for a balanced report with installment and revolving credit cards as well. Credit card info.com reports:

You have to remember with credit repair, it's the long term effects we're shooting for, not the next day results. It's just like going on a diet - even if you are strictly following your diet, the body naturally fluctuates on a daily basis and from one day to another you may see a gain. But in the long run, if you are following the diet (which includes not just diet, but exercise), you will get results.

MasterCard, Visa, American Express and Diners Club

Where the USD is concerned, if MasterCard is accepted at an establishment, Visa will be accepted as well. If your spending is confined to the US, one card is more than enough.

The same can’t be said for Europe. Some countries have a merged network for Visa and MasterCard with all merchants accepting both. France is prominent among these countries. But in the case of cash advance networks, they have not been merged. In countries like France almost any bank allows cash advance for Visa but only a few banks allow it for MasterCard. Italy and other countries however, the networks have not been merged making it necessary to have both cards.

American Express, Diners Club, etc are accepted in less places compared to MasterCard and Visa but there are places which accept American Express and Diners Club but not MasterCard or Visa. Europe has fewer places accepting Diners Club alone or American Express alone.

European countries vary in acceptance of credit cards. France has more places than even the US accepting them. Italy, England, Germany and Greece have fewer places except for tourist-oriented shops. Credit card info.com reports:

In the U.S., almost any establishment that takes MasterCard takes Visa, and vice versa. If you're going to be doing all your spending in the U.S., you may not want (or need) both cards.

ATM card

An Automatic Teller Machine card works like a debit card, with the difference being, you use it in a cash machine by punching in your code number. Debit cards are similar to credit cards for making purchases except that the charges are deducted immediately from your checking account. An ATM card looks different from a credit card without any Visa or MC logo and can only be used for making cash withdrawals from ATMs.

The advantage of an ATM card is reduced risk in case of loss as uit cannot be used by any body to withdraw money from your account as they won’t have your Personal Identification Number (PIN). Banks also usually have a limit for the amount of cash that can be withdrawn with an ATM card in a single day. With a Visa or MasterCard, on the other hand, a thief can wipe your account clean with just one purchase. Credit card info.com reports:

An ATM (automatic teller machine) card is a form of debit card but you use it in a cash machine by punching in your code number. Clear as mud? Try this: a "debit card" looks very much like a credit card and is treated like a credit card by most merchants but the charge is immediately deducted from your checking account. An ATM card looks nothing like a credit card, has no Visa or MC logos on it, and is only good for making cash withdrawals from your checking account at cash machines. Better?

Avoiding Credit Card Secret Traps

Every credit card user should be aware of secret traps that credit card companies employ to suck money out of you. With fancy fees and interest rates they can land you into deep financial trouble.

One of these traps is the two cycle billing where you are billed twice, once for the current billing cycle on purchases as well as on the balance from the last billing period.

While most cards offer a grace period of a certain number of days before interest charges are levied, there are cards who don’t offer any. This means from the day you make a purchase, you will have to pay interest.

Cash advances almost always have no grace period, requiring you to pay interest as soon as you avail of the service. The interest rates too are substantially more than on regular purchases.

Your interest rate can be changed according to the whim and fancy of the credit card company as long as it follows 15 days after giving you a notification. Credit card info.com reports:

Credit card secret traps are the hidden side of plastic that keeps you in debt that is difficult to pay off. The main objective of credit card companies is for you to carry the largest balance you can possibly repay.

Visa 2005 US volume rises to $1.23 trillion

Here’s some good news from Visa USA. Visa, which is the largest U.S. credit card association, recently issued a statement, which said that its cardholders had spent $1.23 trillion last year. This is 17.5 percent more than the previous year. The big growth sector in 2005 was online transactions.

Visa also informed that it had 510.9 million cards outstanding in the United States at year-end, up 12 percent. And what do all these figures mean to individual consumers like you and me. Well that we are reveling in the use of our credit cards. Check this for size: U.S. consumer credit card sales volume are said to have risen 8.6 percent to $563.5 billion, while check card volume rose 18.7 percent to $410.5 billion. Today.reuters.com reports:

Visa last November said that to improve governance practices, it would make a majority of its board of directors independent. Analysts interpreted that move as a possible precursor to Visa eventually going public.

Read more: Visa 2005 US volume up 17.5 pct to $1.23 trillion

Do you still have a roof over your head?

The spiraling rate, at which foreclosures are rising, is only an indication of the bad economic and social scenario that is set to hit the country. Risky borrowing practices are ensuring that homeowners across the U.S are steadily losing the roofs on their heads, and the pace is expected to accelerate. Realestate.msn.com reports:

In the last few years, many buyers took out interest-only, variable-rate loans, and in some cases put no money down to afford a house, said Frank Nothaft, chief economist with government-chartered mortgage giant Freddie Mac. He estimates one out of every three loans issued in 2005 was an adjustable rate mortgage. Now that we’ve seen 14 consecutive interest-rate increases since June 30, 2004, many of these loan rates are bumping up, increasing the size of mortgage payments.

Read more: More Americans are losing their homes

Card companies face increasing security breaches

Suspect transactions seem to have become the rule rather than exception as increasing numbers pop up throughout the United States and other countries. According to officials investigating the case, a large number of these transactions may be related to a security breach that happened at a merchant facility in California last year. The fallout from this event is only now becoming known. Visa USA was one of the first companies that gave an indication that everything was not all right. Recently released figures from the company indicate just 17% of 231 large retailers comply with industry wide data-security rules. Data-security experts believe that this is the proverbial tip of the iceberg. They believe that more such reports will be forthcoming in the next few months.

Sadly, most of the card companies have been trying to take adequate precautions to avoid just such a problem. Visa, MasterCard International, American Express Co., Discover Financial Services LLC, and other card companies harmonized their individual data-security rules into a common set of rules known as the Payment Card Industry data-security standard. This was done a year back. The rules mandate measures such as data encryption, firewalls, and regular anti-virus scans and apply to all organizations, including merchants, that handle card data. However, more than 80% of the large merchants are not yet in compliance.

Taxes and credit cards don’t go well together

Recently, I informed you of how businessmen can now charge their taxes to their credit cards. This facility has already been availed to individual taxpayers who have made good use of it. What we haven’t yet discussed is the downside of doing this. Of course, there is a really big downside here and that is the heavy loss of money that you can incur if you do it. To put it simply, charging taxes to your credit card can be an expensive mode of payment, especially when the IRS offers an installment plan. Yes you heard me right there. The IRS offers enough benefits to negate any positive impact that you could have got from using your credit cards to pay taxes.

And now many debt settlement firms have begun asking their clients to resist the many incentives offered by companies to encourage them to pay taxes with their credit cards. You will be (or have already been) bombarded with rewards including offers of points, miles and many others just so you can charge the taxes to their cards. Some card companies even offer cash-back rewards.

Now here is the murky underside which none of these companies want to discuss: If you opt for this mode of payment, the service providers that process your transaction will charge a fee of 2.49 percent of the amount owed. So, if you owe $1000 in taxes, you will pay an extra $25 to the service provider. Then there are the interest rates and potential penalties in case you default on payment. So, what exactly is the benefit of using your credit card here when the IRS offers you the much better option of paying in installments?

If you still think that charging taxes to your credit card is a good option, then before you exercise this option, read the fine print that accompanies any special offer and develop a plan that will help you pay it off as soon as possible.

Some Fine Print Misses

When you apply for a new credit card chances are that you are not thinking about changing the credit card provider in the near future. But, if you are unhappy after using it and want to wind up the card and opt for a lower interest one - you are in for a surprise…

You are slapped with a big closure fee. Closure fees can go up to $50, depending on your issuer and you realize that you have unwittingly become contractually bound to pay the amount as early as the first time you used the card. That’s in the fine print, you missed.

Another fine print miss is the conversion fee. Each time you use your card abroad you will be charged up to an incredible 7 percent on the amount transacted. So watch out! 

Now, Let’s say you are an adventurer of sorts and decide on a long break at some exotic locale and plan to avoid the conversion fee by not using your credit card at all. You are playing safe you think but you may be clocking enough time to get the credit card company to charge you an inactivity fee. Oh yes, you are not charge-free by playing safe either.

This next point is the most incredulous... We all know about deadline for payment and liabilities for late payment and assume we got it covered. So, if you are one of those who pay on the last day and think you’ve made it without any late fee, you could be wrong. Late fee is charged even if you are a couple of minutes late! Most credit card companies allocate a particular time after which you could be charged late fee.    

On all these points, however, issuers may agree to lower the amount, leaving you elated about befriending these wily companies. But, hold on for a month and when your credit card statement arrives for the previous month you will be surprised with a higher interest as a punitive measure.

Secured credit cards demystified

Most consumer advocates claim that secured credit cards are one of the most effective ways to establish and build credit. Don’t buy into this argument, since getting a secured credit card is an extremely difficult proposition especially if you have had bad credit, delinquencies or don’t have a credit history at all. Cardratings.com reports:

Just because it can be an easy way to get credit, doesn’t mean the process of applying itself is easy. It is possible to be declined for a secured credit card. Depending on how tough the application terms are, applicants may be required to provide such things as proof of U.S. citizenship, income, a Social Security number, a home phone number, and a home address.

Read more: The Nuances of Secured Credit Cards

Read the fine print in your credit card contract… It could make a huge difference

Did you know that when you sign up for a credit card, you might be giving up your right to sue the credit card company? According to a 2005 Consumer Action survey, nearly half the banks that issue credit cards require you to give up this right and instead resolve a complaint through arbitration.

So, if you have a dispute, then remember that suing your credit card issuer may be out of bounds for you. You possibly have to go through an arbitration, which is a private process and takes place outside a courtroom. What you can expect is an independent arbitrator or a panel that will hear your case. And you may not have the right to appeal an arbitration decision. In case this method of finding a solution to your problem doesn’t bode well with you, then you may have to look for options. Since the number of issuers who require arbitration to settle disputes are less than 50 percent of the total, you could always switch to another credit card issuer. Usatoday.com reports:

Multiple lawsuits are now winding their way through the court system, challenging the validity of arbitration clauses in credit card and other consumer-product contracts.

Read more: Here's a map for dissecting credit card fine print

Ohio feels the pain of foreclosures

Foreclosure is never an easy thing. It wrings your emotions and your purse and leaves you high and dry. People in Ohio have been going through a roller coaster of emotions linked to foreclosures thanks to a combination of elements. Ohio.com reports:

The precursor of a sheriff's sale is foreclosure. Unfortunately for a growing number of Ohioans, the state has had the nation's worst foreclosure rate since late 2004.

Read more: Losing our homes

‘Interest’ing credit card tales of horror

Credit card jargon always seems very difficult to digest and most of us prefer to throw the contracts away or keep them for a time when we are in a better humor to read them. If you belong to either of these categories of people, then here’s a bit of a warning: This attitude may prove counterproductive.

Agreed credit cards are a boon in today’s world and that we need and use them almost daily, there are certain things that you need to know about credit cards. The knowledge that these contracts provide on the nature of your credit cards and the rules governing them, can empower you and help you know how much you’re going to pay and also, the consequences of not paying on time.

Here’s a lowdown on how to decipher credit card lingo. One of the first things you need to look out for are the interest rates. These rates are not only different; they can also jump at the drop of a hat. If you didn’t already know it, here’s another bit of news: Different interest rates apply to purchases, cash advances and balance transfers. Add to these the penalty rates that you have to pay if you are late in paying your bills and you have the ingredients for your fine balancing act. Oh, and if I forgot to mention, if you exceed your credit limit or your credit score drops, then too penalty kicks in. What fun!

And now visualize this scenario: You send a check well in advance to the credit card company, but due to insufficient funds or any other reason, your check bounces. What happens? Your interest rate soars through the roof! In some cases, this penalty rate has been known to reach an unbelievable 30% on mainstream cards.

A last bit of information on interest rates. If you thought you could pay off the highest-rate balance first, think again. According to the cardholders’ agreement issued by most credit card companies, your payments will first go toward the lowest-rate balance and will then later on be used for the higher-rate one. If you are the type of customer who carries a balance, then this is one way of keeping you in debt longer.

Businesses can use credit cards for taxes

I am not one of those who subscribe to the idea of having multiple credit cards and flashing them wherever I go. My belief is that credit cards and their use doesn’t spell good news unless you are a careful and thrifty spender. But every once in a while, credit card companies, and sometimes the government spring certain surprises that make me want to change my opinion that credit cards are dangerous.

So, now that I’ve psyched you enough, let’s get on with the news. If you are a businessperson, then get your credit card out and ready for the IRS. The IRS or Internal Revenue Service has now begun accepting credit card payments for certain business taxes. Another piece of good news is that the convenience fee paid or incurred by a business making a tax payment with a credit card can be deducted as a business expense.

In case you are interested in making secure federal tax payments with your American Express, Discover, MasterCard and Visa cards, all you need to do is visit their official site at officialpayments.com

Beware of people who want to help you ‘repair’ your credit?

Is your credit score so bad that you may not qualify for a mortgage? Have no worry, for credit repair companies will ‘repair’ your scores for a fee. This controversial service has managed to transform a common white lie in the real-estate industry into a full-fledged business, and in the process, has worsened the situation for many people who are already deep in debt. Tmcnet.com reports:

In Ohio, a growing number of people are turning to them and feeling ripped off. Complaints to the attorney general about credit-repair companies have been on the rise, records show, including one filed recently against Creditlauncher.com by an industry watchdog.

Read more: Credit fix dismissed as house of cards: Critics pan trend toward attaching name to plastic with good credit history

Credit card companies use Websites to draw customers

According to a recent report, Discover, American Express and Chase are the top-three credit card companies in terms of the online experience that they provide for customers. The study, conducted by Keynote Systems, examined the online experience as people interacted with leading credit card Web sites. Destinationcrm.com reports:

Discover has the top site in terms of the online customer experience, based on its leadership position in credit card satisfaction, an indication of consumer satisfaction with its interest rates and fees as compared to other leading cards.

Read more: Customers Give Credit to Card Companies' Web Sites

Banks should support customers to avoid defaulting on payments

A recent survey asks banks to support customers before they default on their credit card payments. The Consumer Action's 2005 Credit Card Survey is based on the nonprofit organization's assessment of 146 credit cards from 47 banks between April 1 and June 21. The survey shows that nearly 50 percent of the banks surveyed have universal default policies.

A falling credit score is stated to be one of the main causes of a universal default rate hike. Other factors include late payment of mortgage, car loan, or other credit obligations, clients exceeding the credit limit or having too much debt. If you have too much credit, get a new credit card or even inquire about a car loan or mortgage, you could expect a default rate hike. Destinationcrm.com reports:

"When people call the credit card company and say, 'I'm having trouble meeting my minimum payment,' [it] is the wrong thing to do in today's world, because the credit card company will very often come back at them with a much higher interest rate or a lower credit limit, " says Linda Sherry, director of national priorities for Consumer Action (CA), and the survey's coordinator.

Read more: Credit Card Woes Continue For Consumers

Virtual Cards and On-line Security

Are you a cautious person by nature? If you are, you'll find shopping on-line a wee bit scary, and your fears are justified as Internet security worries are on the rise. But, your credit card company has come up with alternatives to help you shop on-line safely.

Virtual credit cards: Some credit card companies such as Discover Card, Citi and MBNA offer a secure on-line account number service - a virtual credit card with a virtual account number. These cards are one-time use card that you can apply to on your credit card company website. They are a set of sixteen randomly selected numbers that can be used for a single purchase or many purchases on the same web site.

Security: You don’t have to divulge your normal credit card details or address and therefore can prevent on-line theft. As sorting out an on-line fraud is an ordeal and the onus is your's to prove, virtual cards are great. Fraudsters, however have no use for this 16-number code, as it’s perishable after one use. All the customer information is hidden.

How does it work: You simply go to the credit card website and apply on-line within four days you are given the 16 digit number via e-mail. You have to pay up the account opening fee and a minimum opening balance as low as $5 and you are set to go e shopping.

Options: Most credit card companies let you re-load the card for $10 reloading fee. There is also a validity of up to one year. Another interesting feature is that it's a great gift idea for a loved one. They can use this one-time card to shop for something they want and you have control on the amount gifted.

Some drawbacks: You will find that if you don’t like what you bought it will be difficult to track back your purchase as the number does not exist anymore. If your ordered item arrives after your card expires – that can be a problem.

Virtual cards are getting popular by the day proving their security value every time.

Lowdown on Credit Card Use Abroad

You bought a bagpipe in your clan colors on your Scotland holiday and paid by credit card. Was that a wise move?  If the bagpipe you bought were a good one - you probably are right to use your credit card. But, cheap ones that have just home décor value would have been better purchased cash down.

I'd suggest all big purchases use your plastic it’s easier and the extra charge is probably worth all the trouble of carrying large amounts of cash in hand. However, for the rest of your purchases carry foreign currency. Credit Card companies are now charging for these transactions and you may have unknowingly forked out an extra 3%.

Foreign transaction charge, when it began, ranged around 1% of your bill and you did not actually see it, as it used to be included in the final amount charged to you. But, several financially meticulous travelers saw through this and raised questions. A slew of court cases began when travelers realized that their credit card company had charged these foreign transactions without prior disclosure.

Why are we being charged? Credit card companies charge us nowadays because the foreign merchants and their banks decided to do the currency exchange for you themselves and your credit card company and bank were given the already exchanged rate. So, this led to our home companies losing out on this money. To augment this loss, now credit card companies are out in the open with their foreign transaction charge of 3 per cent or so. Hey! Your highland bus trip bill just added a 3% to its original price.

Credit cards still gives you the best exchange rate when compared with ATM withdrawal or travelers’ checks or other ways all put together as they get great wholesale exchange deals. But, don't hesitate to march up to your credit card company and find out all the details of foreign charges before your next trip abroad.   

This is the American nightmare!

Just about everyone will agree that today we are earning much more than what our parents did. We are told that we can expect to live a much better life than they did. Wanna know the real truth? Of course since you are grappling you’re your bills and don’t know where the money’s all gone, you do have an idea. But here are some figures you can crunch. Today, the costs of necessities are rising at an incredible rate and the average household income has actually dropped by nearly $2,000!

Sounds incredible? Well so, where does that leave the hard working American who is working himself to death just to realize a simple dream? With more and more bills! The hope, that someday you could hang up your shoes and watch the sun set gratified in the knowledge that you have enough money in the bank to tide you through, is all but vanishing.

Today, even before you can begin your career, you are saddled with college debts. Then there are the mortgage loans and auto loans. If you want to get married and have children, remember that in a little over a decade, you may be taking another big loan to pay for your child’s education. Sounds awful, but there seems to be no way out of this morass.

And here is the saddest part. Unable to meet even basic requirements, growing numbers of people in the middle class segment have taken to using their credit cards as ‘safety nets’ for all the necessities that they cannot afford to buy due to lack of money. And this takes them into a debt trap from which the only escape could be to file for bankruptcy. A real dismal scene this.

The need for payment processors

People today use a great deal of plastic money as opposed to a decade ago. This makes it imperative for businesses to ensure that they are capable of processing payment methods other than cash – this allows any company to expand its customer base by over 400%! Dailyindia.com reports:

Money mails and checks are just too inconvenient for online transactions, so payment processing of credit cards and similar options would be a necessity for Internet trading. Almost all merchant accounts offering payment processing services offer secured networks that would ensure the security of each compensative settlement.

Read more: Why Do You Need a Payment Processor?