Credit Card Lowdown

“Borrowing to Pay Me” and 19 other moronic things people do with credit cards

National research and consumer advocacy group Demos states that consumer credit card debt in the United States has risen from $238 billion in 1989 to $800 billion in 2005. It takes a special kind of skill to rack up that kind of debt: extreme irresponsibility. Read on for a collection of the most stupid things you can do with your credit cards. Take these steps, and you can amass your own share of credit card debt!

1. Take out cash advances: Borrowing cash from the credit card company has the potential to send you into a downward spiral of debt. Fees and high interest rates, which are not subject to a grace period, can make for a particularly dismal credit card statement.

2. Use ATM machines for cash advances: Borrowing cash with credit cards is bad enough; what’s worse is using ATMs to do so. The financial institutions that own the ATMs charge exorbitant fees of their own.

3. Give credit cards to children: If you want to teach your child responsible credit card use, make them apply for their own. The incentive to do well is much better when it's their money and credit rating at stake. 

4. Give credit cards to friends/relatives: Don't provide a tempting situation. Even if your Aunt Miffy is trustworthy, you never know how circumstances can change a person.

5. Allow others access to pin/verification numbers: When you pay for services or products using your card, unscrupulous individuals can surreptitiously take note of your details and use them to make purchases of their own. Pair that with a receipt carelessly left at the counter, and they have access to your name, the card’s expiration date and more.

6. Max out your limits: Your maximum balance is not a challenge or goal. When you're at or near the limit, it's time to put your spending on ice. Don't just apply for another card to max out.

7. Go above 30 percent of your limit: Using 30 percent or more of your spending limit will adversely affect your credit score.

8. Use multiple cards: With “unbelievable” offers popping up every day, it’s no wonder that most of us have more than one credit card. Bu it’s difficult to keep track of payments when you’re dealing with multiple accounts. Simplify: close or discontinue use of less important accounts like store cards and those with high interest rates.

9. Pay only the minimum balance: Paying the minimum balance does not mean that you’re managing your credit well. Your interest on the remaining balance is compounded every month. Pay only the minimum and you will be left holding the bill for much, much more than you spent in the first place.

10. Pay off small balances first: Accounts with larger balances will accrue the most interest, which will end up hurting your debt more. It’s sensible to focus your efforts on paying off cards with high balances first.

11. Use one card to pay off a balances on another: Don't jump from the frying pan to the fire. The second card may carry a lower interest, but it’s still borrowed money, and you’re still in debt.

12. Procrastinate when it comes to paying bills: Even if you’re an hour late, many companies will slap you with a fee of $20 or more. On top of that, one late payment can shoot your interest rate sky high.

13. Use them for everyday purchases: There’s nothing more idiotic than using your credit cards for every tiny purchase: a bag of chips, a bar of chocolate, a newspaper and Coke from the stand on the street. These small purchases add up to real money. Do you really want to pay interest on that newspaper for months after it's been read and tossed?

14. Use them for frivolous expenses: People who do not have the money to take extravagant holidays or buy expensive toys should just refrain from doing so. If you have no real plan for repayment, you're setting yourself up for disaster.

15. Don’t report their lost or stolen cards: All it takes is one phone call to prevent your lost or stolen credit card from being misused. Wait too long, and you could end up stuck with the bill.

16. Don’t crosscheck statements and receipts: Responsible users of credit cards take care to ensure that they are not billed erroneously. Keep a file of receipts and check them against your monthly statement. Report any anomalies immediately to avoid paying for services you haven’t enjoyed.

17. Use cards without any idea of the interest rate: Sure, you know  your initial rate for the card, but has it been changed? A late or missed payment on your account or any other bill can serve as a trigger for your interest to rise, thanks to the Universal Default Clause.

18. Cancel a strategic card: Closing older accounts can adversely affect your credit score by making your credit history look younger than it really is. Keep your oldest account open, even if you don't plan to use it. Instead, close store accounts and newer, high interest cards.

19. Use a personal card for business expenses: What a nightmare! Keep your payments and business records simple: charge your business expenses on a separate card.

20. Last and most obvious, but not the least: use a credit card when you don’t have the money to pay back the amount spent. Have a payment plan in mind before you make the charge.

How Well Do You Know Your Credit Card?

-- Pushpa Sathish, Staff Writer

We know that most people have a considerable amount in credit card debt, but do we know why? No, it’s not because of irresponsible and high usage; it’s because most people have no idea of the interest rate on their credit cards, according to a Citibank study of nearly 1000 people in Australia. Some samples from the survey:

• Nearly 50 percent of the respondents did not know the interest rate on their cards.
• Around 30 percent were not aware of the number of interest-free days they were allowed after using the credit card to buy something.
• Almost 25 percent of those surveyed were not sure if the interest rate on their purchases applied to cash advances too.
• And more than 50 percent were of the opinion that women gave in to their impulses more than men did, and ended up using their credit cards for purchases; they did however, put these buys in a positive light by calling them “practical.”

This survey only goes to show that people, even if they wish to use their credit cards wisely, are hampered by their ignorance regarding the interest rate on the cards.

Credit to the Mobile Phone!

-- Pushpa Sathish, Staff Writer

Japanese citizens are being provided with an added incentive to spend using their credit cards – the more they use their cards, the more mobile points they accumulate. These points can be used in lieu of money to pay for music downloaded using your phone or for any other mobile-related costs. To avail these services, you’d have to tie yourself to the services offered by both Credit Saison and Softbank Corp. Japan’s largest credit card issuer and smallest wireless operator. Washington Post reports:

Japanese mobile phone operators have been speeding efforts to add financial services to help retain customers and expand into e-commerce as subscriber growth has slowed and competition has fueled price cuts.

Bank of America woos MBNA cardholders

--By Priya Jestin, Staff Writer

Bank of America seems to like to do things the BIG way. It was evident that when the bank acquired MBNA Corp for $35 billion, it had a much bigger plan. Now, the bank has finally come out with a great plan, which, if it succeeds, will help the bank get a huge customer base in Kansas. Bank of America plan is to convert MBNA affinity credit card holders to banking customers.

The bank has signed agreements with 12 organizations including the American Quarter Horse Association, and the National Wildlife Federation to market its bank deposit services to their members. This means, the deposit products will be marketed to 10 million people.

This move could definitely bring a lot of business to the bank IF it is successful. As of now, it is too early to tell how many people will accept the deal. Executives at Intrust Bank, an old hand at this game, say that it's not a given that a bank will be able to successfully convert credit card holders into bank customers. I guess we’ll just have to wait and see how it goes.

Higher Rates For Credit Card Late Fees

-- By Priya Jestin, Staff Writer

Now, here comes one more bit of bad news: Late fees for credit card payments have jumped, a new study by congressional investigators has found. The report, which was released recently by the Government Accountability Office, Congress’ investigative arm, describes the fees, interest rates and disclosure practices of 28 popular credit cards. Msnbc.msn.com reports:

“Millions of Americans depend on credit cards to pay their bills and buy essentials like groceries or gas. Unfair or confusing credit card practices take advantage of working families,” said Sen. Carl Levin of Michigan, the senior Democrat on the Senate’s investigative subcommittee, who had asked the GAO to conduct the study. “This report shines a needed spotlight on excessive credit card fees, unfair interest rates and inadequate disclosure practices that ought to be stopped.”

Read more: Study: Credit card late fees are higher

Counterpane Internet Security Protects Financial Loss

Financial loss on Internet transactions is being considered as the most feared technology threat. In order to put a bane on the same, Counterpane Internet Security, Inc. , The Managed Security Company and the authority on enterprise security introduced Service Level Agreements (SLAs) that solidify Counterpane's commitment to protecting customer data. New SLAs Promise Swift Activation and Improved Compliance with 100% Guaranteed Access to Activity Data.

Designed to protect customers' personal information (assets) Counterpane's SLAs ensure the success of compliance initiatives by guaranteeing access to service levels. According to Counterpane Internet Security, The new SLAs are designed to help customers protect their critical information assets by preventing financial loss due to cyber attacks. It would solidify Counterpane's image in the market. Although the system is unmatched by any other MSSP, and its new SLAs combined with existing SLAs is projected to offer customers an unparalleled service in protection but experts believe the chances of cyber crime cannot be written off completely.

The scope of security need is ever-increasing and hence for new customers needing security due to an emergency, Counterpane has streamlined its ability to build, deploy, and bring a customer to operational status in only a few days. SLAs are also becoming popular for being backed by simple, unambiguous penalty language. Also, unlike other vendors Counterpane is offering guaranteed levels of service, including the new swift activation of service, within five days, and a guarantee of 100 % availability for Counterpane's North American Security Operations Centers (SOCs). The first SLA guarantees that new monitoring customers will be able to activate service within five days.

Edgar, Dunn & Company Study Optimistic on Mobile Payments

Growth in the mobile segment has led to many businesses enhance their communication base and achieve soaring business. While that is a good thing in developing a market and it latent potential to grow further but one challenge comes across to haunt mobile operators. That is the payments; it has caught attention of industry leaders in a big way. But going by a survey, there is nothing to worry. A first of its kind survey was conducted by Mobile Payments World (CTIA booth #4152) and Edgar, Dunn & Company  to assess the collective vision for mobile payments from global thought leaders in payments and financial services. The study came with an outcome on how and when mobile payments will achieve critical mass, with data illuminating the key market challenges and opportunities. It has captured a sense of optimism prevails amongst the payments professionals about the future for mobile payments.

The 2006 Mobile Payments Study  was announced at the CTIA Wireless 2006 NFC Technology Summit titled - New Mobile Consumer Services with Near Field Communications. Significantly, more than eight out of 10 survey respondents believe that mobile payments will reach a critical mass of consumers and become as important as other types of payments, such as credit and debit cards. Though it is accepted among the group that industry will take its time to mature and develop, which could be factor that make the whole scenario of the study a little iffy. The perceived barriers and challenges between traditional payment providers such as financial institutions and credit card schemes and newcomers into the payments value chain is another area of concern. Findings also included anticipated adoption curves for both online and physical world mobile payments

Chase Gives You Freedom To Choose With New Card

Chase Bank recently launched its new Chase Freedom credit card. The new card gives holders the freedom to change how they would like to receive their rewards, whether as cash or as points that can be used to purchase special offers, without penalties. Brandweek.com reports:

The card also features a Radio Frequency Identification (RFID) chip which allows card users to make purchases by waving the card at a checkout reader instead of swiping the card and then signing a slip or entering a password. Checkout systems that can handle this function are now in use at more than 30,000 stores in the U.S., according to the company.

Read more: New Card From Chase Offers Rewards Without Penalties

Saving With Credit Cards

Now here is a type of credit card that you can use without feeling guilty – at least that is the claim. Used rightly, these reward cards can help you fatten your savings, retirement and college accounts. But if you use them wrong, you may wind up further in the hole. So what exactly are these cards? These are reward cards offered by a number of financial institutions. These cards promise to help you boost your net worth by contributing to your savings accounts, your retirement plans, your college funds or even your mortgage.

And they are being marketed as the perfect antidote to the country’s miserable personal savings rate – which if you didn’t know, has been dropping below zero every now and then). Two of the most recent entries into this field are Bank of America's Keep the Change debit card program and American Express One's Savings Accelerator. However, this antidote isn’t without problems. Msn.com reports:

Each of these cards, however, has traps for the unwary that could undo most or all of the benefits they promise. You should read the fine print of each offer, note how rewards are accrued and refrain from carrying balances; otherwise, any benefit you get from the savings reward program will be more than wiped out by interest costs.

Read more: Credit cards that help you save

Plastic To Rule The Skies

The next time you board a flight to some place, it will be a good idea to carry your debit or credit card along with you. You may need your card if you want to buy food, alcoholic beverages and headsets. At present, AirTran, ATA and Spirit accept only credit cards for on-board purchases, and other carriers are expected to follow suit. Mercurynews.com reports:

Most American aircraft are now equipped for credit-card charges, and we wouldn't be surprised if the airline announced a switch to accepting only credit and debit cards for in-flight purchases.

Read more: Bring Plastic For On-board Purchases

Grocery Credit Cards Anyone?

Is this the face of things to come for the credit industry? It would definitely seem so. What am I talking about? The new card introduced by Bi-Lo that gives customers a credit line of up to $200 for groceries. Myrtlebeachonline.com reports:

The Mauldin, S.C.,-based grocer says the program is far cheaper than the cost of bouncing checks or using credit cards. A bounced check can cost $30 to $70, but BonusPay card users are charged $3 or $5 when they use the credit line and pay a $4.99 user fee monthly. The charges are later deducted from checking accounts when shoppers get their paychecks.

Read more: Bi-Lo offers grocery credit card for those short on cash

Hey…We Know Our Money!

Holidays are a time for overspending; for just forgetting how much money runs out your pockets. And when you come back from that lovely vacation with that beautiful tan, you are brought back to earth with a thud – thanks to your credit card bills. While popular media would love to have us believe that this is what the youngsters of today are up to, reality is something else altogether.

I know this sounds incredulous – okay, so some of us do overspend, but we do have more brains than our parents and seniors give us credit for. And we do know when enough is enough. So, while there is the occasional story of maxed-out credit cards, what you will most probably see now are 20 and 30-somethings who know what they are about and know where their finances are headed. And some of them have learnt their lesson the hard way – by battling enormous credit card debt.

No Deal on Transfer of Credit Card Balances

Were you planning to take advantage of the popular low-rate balance-transfer deals. Well, it just got a bit expensive as banks raise fees and restrictions on these deals thanks to the rise in interest rates. Usatoday.com reports:

Until recently, most balance-transfer fees amounted to 3% of the sum transferred to the card, up to a $75 maximum, says Robert McKinley, CEO of CardWeb.com. But more issuers are doing away with the ceiling on these fees. So if you transfer $10,000 in debt to a card with a 3% fee with no maximum, you could now pay $300 — four times the $75 maximum fee you'd have paid a year or so ago.

Read more: Transferring credit card balances loses its deal appeal

Universities Averse to Credit Card Payments

While credit card companies are busy wooing students, forcing them to pay their tuition with plastic, it would be a good idea if you checked with your University before deciding on this mode of payment. In what could be described as a trend, Purdue University recently decided that it wasn’t going to allow that payment option any time soon. Purdueexponent.com reports:

According to its credit card payment Web site, the University of Missouri-Columbia has endured $2 million in additional annual fees. The university, which is home to about 28,000 students, changed its payment policy in December 2005. The larger institution now requires students to pay the 2.75 percent transaction service charge, which is added by a third-party vendor.

Read more: Purdue denies credit card payments

Got a Credit Card Offer? What Does The Fine Print Say?

You were probably one of the recipients of the more than 6 billion credit-card offers that were mailed to Americans last year. With so much competition for your attention, credit-card companies are coming up with new come-ons to entice you toward their piece of plastic. A word of advice – don't get distracted by those goodies. Dailybreeze.com reports:

Credit-card offers typically have other gotchas embedded in small print elsewhere on the mailing. Our Chase pitch, for example, opened with a promise that the recipient is "pre-approved." But when we squinted to read the explanation in a section titled "Terms and Conditions," we discovered that approval is based on a review of the recipient's credit report and application.

Read more: Check the fine print on credit card offers

And now... photo credit cards!

Are you the type who likes to show off your family photos or your car, dog... anything? Well, you are going to get a lot of chance to do that every time you whip out a credit card. An increasing number of credit providers are today, offering photo credit cards, in which a favorite image is emblazoned on the face of the plastic. USAtoday.com reports:

The idea isn't entirely new. Companies have been putting customers' faces on credit cards as far back as the 1970s, says Diogo Teixeira, president of the American Credit Card Collectors Society.

Read more: Smile! You're on Dad's credit card

And now... photo credit cards!

Are you the type who likes to show off your family photos or your car, dog... anything? Well, you are going to get a lot of chance to do that every time you whip out a credit card. An increasing number of credit providers are today, offering photo credit cards, in which a favorite image is emblazoned on the face of the plastic. USAtoday.com reports:

The idea isn't entirely new. Companies have been putting customers' faces on credit cards as far back as the 1970s, says Diogo Teixeira, president of the American Credit Card Collectors Society.

Read more: Smile! You're on Dad's credit card

Know the finer points of your credit-card miles

When you are shopping for a credit card that earns miles, you need to consider quite a few aspects before you zoom in on the card most suitable to you. For example, if you prefer to fly nonstop, you'll want to choose cards affiliated with the biggest carrier in your area, such as American in Miami or Northwest in Detroit, but you may get more bang for your buck with cards from connecting carriers. Sun-sentinel.com reports:

US Airways offers both Visa and MasterCard, and if you have a family of three and travel more than once a year, you may want both. The World MasterCard offers 15,000 bonus miles when you sign up, and the annual fee of $79 is waived the first year. The Signature Visa offers a 25,000-mile sign-up bonus and costs $90 per year.

Read more: Best fares: Going over the finer points of credit-card miles

Checked your credit card statement? Your interest rates may have just doubled

Ida Warshay is a 40-year-old woman whose credit history isn’t much to write about. She did pay her credit card bills and wasn’t too late in her payments either. So, she was violently shocked when she discovered that J.P. Morgan Chase & Co., the nation's second-largest credit card issuer, was charging her an annual rate of 29.99 percent instead of 15.49 percent.

And she doesn’t remember getting a phone call or a letter informing her of the raise. The next time you pull out your credit card, remember Ida. Also remember that your card company can raise your rates to almost 30% and you can do next to nothing about it. Of course, many years ago, quite a few states had placed some caps or limits on credit card rates. But various court decisions in the 1990s led to a change in the business. Freep.com reports:

"Many consumers assume that paying late is the only way this can happen to them," said Linda Sherry, a spokeswoman for Consumer Action, a national nonprofit group that monitors credit card troubles. But a study by San Francisco-based Consumer Action last summer concluded that anyone -- not just people with financial difficulties -- could be hit with a much higher rate.

Read more: Beware of credit card interest rate that can double

Card firms unhappy with credit-savvy customers

You would think that the credit card industry is in great shape. I mean there are more people using their credit cards for miscellaneous purchases than ever before. And the industry has managed to rope in young college-goers as well. So, what could be the reason for the worry among industry circles?

There is a very interesting phenomenon going on right now that is troubling credit card companies. Although Americans are deeper in debt than ever, they are paying off bigger portions of their monthly credit-card bills. And timely payment of bills is one thing card issuers don’t like. That’s because card issuers profit from interest on unpaid balances. In the past, when interest rates crept up, fewer cardholders could afford to pay down balances. Azcentral.com reports:

Although consumers are using plastic for more of their daily purchases, they are giving card issuers fits by juggling their debts more shrewdly. When cardholders are hit with high interest rates, they transfer balances to cards at lower rates. And in recent years, more consumers wiped out credit-card debts by borrowing against their homes.

Read more: Card balances shrink, as do creditors' profits

Pet-friendly credit card from BofA

It seems like the credit card industry has run out of gimmicks to draw in new customers. How else do you explain Bank of America’s new offering? Well if you have pets, then you are probably gonna love this new card that will allow you to display photos of your pets on the card. These PetRewards Visa cards carry no annual fees; gather reward points for pet-related expenses and donations to participating animal shelters.

This is the latest move by the Charlotte-based bank to expand its affinity-card program. This program has been on in full force since BofA acquired Delaware-based credit-card giant MBNA Corp in June. But I somehow find it difficult to believe that somebody would go in for a credit card just so they can stick on pictures of their pets on them. At the end of the day, these cards are still credit cards which carry with them the inherent problems associated with such cards. Bizjournals.com reports:

Cardholders get two reward points for every dollar spent at participating veterinary clinics, pet retailers, farm and feed stores and pet-specialty stores. They also receive one point for every dollar spent for other purchases.

Read more: BofA to launch customized credit card

Cybercriminals on the prowl...Are you safe?

Your identity is under attack. Millions of Americans and people across the world are now falling prey to cyber criminals who are using the Internet to get away with virtual murder. Recently the US law enforcement officials had something to cheer about, briefly. Ukrainian police had managed to arrest a person who was supposed to be the kingpin of a dangerous group of cyber criminals. Dimitry Ivanovich Golubov who is supposed to be a part-time student at Mechnikov University in Odessa, however managed to get away even as the U.S. Attorney's office for the Central District of California charged Golubov with a number of cyber crimes, including credit-card fraud in January 2006.

Golubov was supposed to be the Godfather of an international ring of computer hackers and Internet fraudsters. These cyber criminals have been trafficking in millions of stolen credit card numbers and financial information. And how did these criminals conduct their operations? According to information gleaned from the authorities, they supposedly meet in underground forums on the Internet, which have names like theftservices.com, which leave nothing to imagination. They trade tips and data and sometimes, even coordinate scams that have global effects. Imagine a group of people sitting in a East European country and playing havoc with the websites of bigwigs like JPMorgan Chase, Walmart. According to a FBI Computer Crime Survey, annual losses to all types of computer crime including credit card fraud, stood at $67 billion a year!

And what happened to this Golubov guy, how did he manage to escape the authorities' clutches? The problem was that Golubov hadn't been caught by the US officials and in Ukraine, some politicians managed to vouch for his honesty and get him released! It is really scary if a person can be allowed to go free after committing a crime with international ramifications. It may have helped if we had some kind of international policing to catch cyber criminals across the world and bring them to justice immediately

Less is more theory of credit card security

Want to prevent identity theft? Learn one of the guiding principles of doing so –Less is more. If there isn’t too much of your personal information floating around, you enjoy a lot more security. Sfgate.com reports:

Many Californians may have noticed that the credit-card numbers have -- by law -- already been truncated or eliminated on the receipts they get at an ATM machine or gas station. Bowen's SB1699 would extend that law to the merchants' copies of receipts.

Read more: Credit-card security

Is your card company trying to make you switch from credit to debit?

I’m sure many people feel a bit like novices when it comes to paying with credit cards. I mean, you’ve probably used credit cards for a long time and yet when you try to swipe your card, you sometimes end up doing something stupid like forgetting to press the ‘credit’ button. Seattletimes.nwsource.com reports:

A big reason customers have to scan their cards everywhere from department stores to fast-food restaurants is because retailers want us to pay with debit rather than credit. Stores are charged less by credit-card companies for debit transactions.

Read more: Taking a swipe at card readers

Your credit card is monitoring you

You probably don’t know that when you travel abroad, your credit card company monitors you through your use of their credit card. Credit card companies usually check on you if their computers detect an abnormal pattern of use. Msnbc.msn.com reports:

As credit card fraud has become more global and more sophisticated, so have efforts to ferret out illegitimate charges. Credit card companies have invested heavily in sophisticated anti-fraud computer software, which uses a complex algorithm to analyze the pattern of transactions, weighing such variables as dollar amount, time of day, day of the week, merchant category and the country in which the charges are made.

Read more: Your credit card is watching you

Pastor charged with identity and credit card thefts

I really don’t know how to react to this bit of news. So instead of giving my comments as I usually do on most other matters, here I will let the reader decide what to make of this bit of news. Recently, the pastor of a prominent East Orange church and his wife were arrested. The charges against them included identity theft and using false information to open up credit card accounts.

The Rev. Dwight Gill of New Hope Baptist Church was arrested at his home on Friday. He was charged with two counts of fraudulent credit cards, one count of identity theft and theft of services. Gill however has refused to comment on the charges against him. Some of the church members seem to be aware of the charges against their priest but they too have declined to comment on the situation. Nj.com reports:

Gill's wife, Bonnie, turned herself in to East Orange police later Friday morning and faces the same charges. Gill and his wife posted bail late Friday night and were released, police said.

Read more: East Orange pastor charged with identity and credit card thefts

Debit cards become more lucrative than credit cards

In the past couple of years, America has seen a subtle shift in consumer preferences. People are now opting to use debit cards as the electronic alternative to paying with cash or checks. The best thing about these cards is that they can be used anywhere a credit card is accepted. And unlike credit card users, customers can keep better track of their spending habits as every purchase and ATM withdrawal is posted on the monthly statement. Another added advantage is that debit card users need not pay any finance charges and will not have to worry about mounting debts as in the case of credit card users.

Now it is natural for you to think that if it was so beneficial, why are more people not being encouraged to use debit cards over credit cards. Well, realizing that making people use debit cards is more worthwhile, an increasing number of banks are now offering reward programs similar to those available to many credit card customers. Northjersey.com reports:

Through the end of this month, PNC Bank is giving away 10,000 "bonus points" to those who sign up for a debit card reward program. Those 10,000 points could be redeemed for a $25 gift certificate at Linens 'n Things, TGI Friday's or Avis Rent-A-Car, among other companies.

Read more: Rewards rolled out as more customers sign on to debit cards

‘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.

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

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

‘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.

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

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.

‘Touch-and-go' cards simplify payment process

Touch-and-go cards seem to have become the rage all over the country as now Citizens Bank plans to add this payment option to all its debit cards by June. This system allows customers to complete any transactions by tapping their card against an electronic reader and they don’t need to swipe it and sign a receipt. Boston.com reports:

The idea is also spreading to more unconventional places: MasterCard, which backs the Citizens cards and calls its technology PayPass, recently unveiled plans to conduct a trial of the payment system with the New York City public transit system. Visa is testing the idea of allowing people to make payments by cellphone for payments and might configure touch-and-go cards to work with vending machines so customers don't have to fish for change.

Read more: Citizens plans 'touch-and-go' cards

Canceling charges are difficult with automated payments

If you are one of those who make use of automatic payments to pay their bills, then here’s a bit of news for you. It can be extremely tiresome to cancel such arrangements.

According to certain debt counselors, lawyers and Better Business Bureaus around the country, the number of complaints from consumers is increasing considerably. Most of them complain about their inability to stop the recurring bills charged to their bank accounts and credit cards. One of the biggest problems is the confusing rule that is set down to change the mode of payment. And to make matters worse, these rules differ depending on whether your payments are linked to a bank account or credit card! Azcentral.com reports:

Banks say they aren't able to cancel recurring credit-card charges when a consumer has signed a long-term contract with a merchant, such as an extended gym membership. Meanwhile, credit-card companies Visa USA and MasterCard International say they've upgraded their systems to help banks and consumers more efficiently stop automatic payments.

Read more: Automated payments make canceling charges difficult

Gen P sets the pace for plastic

Consider this scenario: You are out shopping and once you buy everything you want, you reach the check out counter. What do you reach for, cash or your debit/credit card? Chances are you reach out for that card especially if you belong in the 20-30 age group!

Money has taken on a completely new meaning for the young generation of today. Or should we call them the plastic generation. People today are flashing their plastic for most purchases, even the mundane ones. And they prefer not to pay in cash. In recognition of their penchant for plastic over hard cash, Visa USA recently coined an apt name for people belonging to this age group: Generation Plastic or Gen P. As the younger lot grows up and begins to learn the advantages of using cards over hard cash, they are forcing merchants to learn new ways of doing business. One of the most prominent changes is that more merchants, shopkeepers, discotheques and other services are now open to the idea of accepting cards over cash.

But this does not mean that everyone accepts this trend as a good thing. Many people are worried about this growing fascination among youngsters for things plastic. And rightly so. Parting with cash is often more difficult than paying with a card. When we pay for purchases with a card, we don’t see the money actually leaving your hands. So, in a way, we are insulated from the feeling of having spent beyond our limits. Another problem is of diminishing savings. While a credit card may incur heavy debts on you, using a debit card is no better. According to The Nilson Report, a newsletter that follows spending trends, in over 23 billion transactions, debit cards were used as modes of payment.

Reward cards

What type of credit card do you hold – regular or reward card. Chances are you already have a reward card with your regular credit card or are planning to get one soon. So what is it about these cash-back cards that have people gunning for them? It’s simple human nature. Not many people can say no to rewards that are offered for doing what you like to do most – shop. It’s just too tempting. So let’s have a look at this segment of the credit card market, which is growing at an enormous rate – at last count, over 32 million people across the country were using reward cards!

The credit card industry is not known for its generosity. On the contrary, high interest rates, and changing terms and conditions are more de rigueur in this industry. So the very fact that these companies are today offering cash or rewards to people who shop with their cards may sound a bit absurd. But not when you realize that they are now banking on something businesses have done from time immemorial – customer loyalty.

When any credit card company offers a cash-back or reward scheme for using its credit card, customers are known to usually use this particular card more than the regular ones. So now you have companies like Discover giving away almost $500 million in 2005 alone. Discover was the company that introduced the cash-back scheme nearly two decades ago. Soon other credit card companies like American Express, Citibank, Visa, and many others were offering reward cards and business was booming.

So how good are these cards for customers? Do they come with some hidden charges or are they simply what they claim to be? Questions any persons should ask him/herself before going in for a reward card.

If you were to go by customer surveys, this industry is yet to peak. People are in general very happy with these cards. Only one thing, you need to find out which card suits you and your wallet best. You only need to remember one thing: your choice of card depends on what kind of shopper you are – you buy books, grocery, or clothes. So it is important to know more about every card before you choose the one that is right for you.

First Data may sell off card-processing unit

The card-processing unit of First Data, one of the major processors of credit card accounts for banks, is now on its last legs. By the end of the month, First Data is expected to announce if it will sell its card-processing unit, which has been in the red for quite some time now.

The company plans to retain its Western Union money-transfer business and its merchant-processing unit, which handles credit card transactions for retailers. Both these operations are presently making profits.

While First Data may not be the first casualty in the race for technical and market supremacy, it is still a mighty fall for a former leader in the business. One of the reasons First Data lost steam was its determination to stick to the old technology. When it first began operations in 1992 as a spin off from American Express, it was way ahead of any rivals.

And consolidation sounded the death knell for the company. Nytimes.com reports:

First Data stuck with the same technology all those years, while Total System, or TSYS, overhauled its processing programs. Total System rolled out a new system, TS2, with great fanfare in 1994.

Read more: Parent Weighs Abandoning Credit Card Processing Unit

Should credit cardholders fear Bank of America?

The year has begun with a bang for Bank of America, which will soon become the largest issuer of credit cards in the country once it completes its acquisition of MBNA Corp. However consumer advocates fear that Bank of America may use its sheer size and dominance to take advantage of its cardholders. Delawareonline.com reports:

"Consumers should expect to pay more on their credit card bills because of this acquisition," said Rashmi Rangan, executive director of the Delaware Community Reinvestment Action Council, a consumer advocacy group focused on banking.

Read more: Consumer advocates fear MBNA buyout will cut competition, up fees

Geographical Restrictions of a Credit Card

Having a credit card is a real comfort. Especially for those of you, who travel a lot, owning a credit card is a great relief from carrying too much of cash. When you are looking for a versatile and widely accepted card, the best is to go for cards which have no geographical restriction. If you are looking for such a card then go for a Visa or a Master card. These cards are generally accepted every where. Most of the cards are with no geographical restrictions. The ones with geographical restrictions are the retail and the gas credit card. Credit-cards-info.com Reports:

Some other relatively big credit cards such as the Discover Card are still not as widely accepted as the major three so there it also has some has definite geographical restrictions.

Read More: Geographical restrictions of owning a credit card

Credit Card History

In the 1800’s the earliest recorded history of credit cards was found. The seller wanted a way through which he can keep track of customer purchases given on credit. Instead of making note of their personal details every time, they were given tokens with numbers on it. The storekeeper had to just make note of the token number, every time a buyer purchases anything from the store. For a long time, nothing new happened on the credit card front. In 1951, the Franklin National Bank thought of doing some thing different by issuing credit cards to their customers. It worked on revolving credit account. The customer could borrow money, repay and then borrow it without getting a loan approval again and again. Seeing this, a lot of other banks started following and started offering revolving lines of credit to customers. Next was the launch of credit cards to make purchases at local merchants followed by moving out of the locality. That’s when the credit cards Visa and Master card was created. Credit-cards-info.com Reports:

Needless to say, that the new credit card system was a great success and took firm hold. Today credit cards are a necessity for being able to function. Without a credit history people will have a hard time getting loans from banks, making hotel reservations, renting cars or buying airline tickets. Credit cards have come a long way from being a local commodity to a global entity.

Read More: History of Credit Cards

What is a 0% Credit Card?

As the name suggest, 0% APR credit cards are the ones where 0% interest rate is charged on the outstanding balance. The cards charging low or 0% are the best over a longer period of time. You need to do a comparison and study of various cards and should go for the ones that give low fixed interest rates. Low fixed APR credit cards, levy a fixed low interest rate on the outstanding balance and the rate does not change with financial indices. The companies can change the rate but this needs to be notified 15 days in advance. Mostly all companies give 0% for a limited period. After which they charge a high rate of interest. Take all this into consideration before applying. Not every one qualifies for 0% APR Credit card. You need to have a good credit rating. You need other supporting proofs like proof of residence, employment, identity card, any utility bill etc. Creditlovers.com Reports:   

Most of the 0% APR credit cards also offer 0% balance transfer facility that you should avail and transfer your high interest balances to your 0% APR credit card and save money in interest.

Read More: 0% Percent Credit Cards

Capital Credit Card

Capital Credit card means huge savings as it can give you the lowest interest rates. There are various kinds of capital cards available like cards for frequent travelers, business purchases etc. You need to look around and if you might find a card customized to your requirements. If by chance you do not qualify for the lower interest rate, once you buy their first card and make regular payments, you will get a lower rate in time to come.  It is worth looking for the best capital credit card as you can have huge savings. If you have a card with low interest rate, it will be easy for you to make your repayments and this will develop your credit and at the same type build your savings. Creditlovers.com Reports:

If you have a low interest rate on your credit card you will save big bucks and build your credit score even higher. This is because by having a lowe interest rate your payments will be lower and it will be easier for you to make all of your payments on time and pay your balances sooner.

Read More: Apply for a Capital Credit Card

Choose the Right Credit Card

Before taking any credit card, we should find out whether that particular card suits our requirement or not. You should make the credit card work for you instead of you running behind piles of debt. Which card suits you best depends on your spending and repayment capacity. If you are using a credit card for day to day expenses like petrol etc and are paying off debts regularly without fail, you should go for zero annual fee and interest free period. Also check whether you want to go for cash back or reward points based card. If you occasionally carry a balance forward, go for a card with low standard rate. If you rarely pay the full outstanding in each month, you should go for introductory purchase rate or ultra low standard rate. If the debt has piled up, go for cards with the option of low interest rates and low balance transfer rates. It is tough to get a credit card if you have no previous history or too many arrears and defaults. You can get a card in such a situation but the interest rate will be decided only after assessing your circumstances. Bytestart.co.uk Reports:

As an example, a person transferring a £2,000 balance from a credit card with a standard APR of 14.9% to a credit card offering 0% for 9 months would reduce their outstanding balance by £630 providing they repaid £70 per month and did not add to their balance. During the nine months they'd also save £202.55 in interest charges, proving that transferring your balance to a 0% credit card really does pay.

Read More: How to chose the right credit card?

Are You A Credit Card Junkie?

Credit cards are of great help, if used properly. They are a helping tool for borrowing short term money or to buy things online. But at the same time, if you don’t use the credit cards properly you can spoil your life and may end up becoming a slave to plastic money. There are four ways to know if you have become a credit card junkie? If you are not making full payments monthly instead clearing off the minimum payments only, you will find yourself very soon under a huge debt as interest will be charged till you clear your whole debt. If you are taking cash advances to clear other loans or expenses, you are in trouble as the interest charged on cash advances is very high and is charged from the day you withdraw the amount. Also if you have 3-4 credit cards, don’t use all the cards up to their credit limit.  Some times, some shops give you lower price for not accepting the credit cards; don’t avoid them as you need to balance the expenditure on your credit cards and the amount you can pay.

Credit cards if used properly can be a terrific way to manage your finances. Some may relish the idea of being able to transfer outstanding balances to 0% cards to provide time to sort out their finances.

Read More: Four Signs You're A Credit Card Junkie

What Credit Card Companies Should Tell You?

Credit card Companies try to convert you into a member by pre approved credit card offers. But be careful, there are lots of things which they should inform you but they don’t. Things like, if you are a good customer, the bank might be willing to reduce your interest rate along with dropping the annual fees. After seeing your past track, they are ready to make such changes for you. Do check when the introductory low interest rate expires and try to pay in full before the changes in the interest rate. Go in detail when you have been offered a very high credit limit. Check your grace period as in such cases the interest is charged from the day of purchase of an item. Also check the transaction fees applicable for cash advances. Keep in mind the more time you take to clear your balance, the more money you will be charged as interest rate. Ask for money saving tips from customer support staff as all this is not advertised. Be careful of extra fees paid for surpassing your credit limit. Also read the brochure in detail and compare various offers before opting for any card. Askmen.com reports:

If you don't pay your bill by the specified due date, the bank will backdate your interest charges. This means it'll charge you interest from the day a charge is posted to your account, not from the day payment was due. Some banks even charge interest from the date of purchase. If you can, pay the amount balance in full. If not, make an effort to maximize your payment by the due date.

Read More: Sneaky Credit Card Scams: Part II

Limit your Credit Card Count

You tend to keep on taking credit cards as each credit card company comes with a promise of lower rates, lower fees and added benefits. On an average most Americans carry between 5 – 10 credit cards, sometimes even reaching a level of 50. This can have a bad impact on your credit score. There is no thumb rule of deciding how many cards you should have. But the number depends on your spending and repayment capacity. Higher the number credit cards, higher will be the risk of negative impact on your credit score. You can have cards like Visa, Master Card, American Express or Discover as these cards are accepted by most of the merchants. If you pay very month without fail, go for cards with added benefits than low interest rate. Always keep your debt ratio below 50%. Ideally keep your balance low and pay off the money regularly. With too many cards in hand, you tend to forget the payment date and end up paying late payment fees. Bankrate.com Reports:

Steve Rhode, president of Myvesta, a nonprofit consumer-education organization, agrees, saying that each time you open a store credit card, 20 points are taken off of your credit score because he says, "Historically, store credit cards are issued to anyone with a pulse. They issue credit cards to people who otherwise can't get credit."

Read More: How Many Credit Cards Should You Have?

Increase in Credit Card Payments Due to Wireless technology

All the advantages of mobile point of sale are because of the vast cellular coverage. Wireless credit cards are the in thing now. You can even avoid the investment on hardware and can carry the plastic with your gadgets like PDA, cell phones etc. In the case of a wireless transaction, a credit or a debit payment can be made via desktop POS through the carrier networks. Small businesses can get the best of benefits from wireless.  The top reasons to go wireless are that It’s faster and cheaper. Your communication cost will reduce from $60 in case of a dedicated POS machine to around $ 15 with wireless service. It is portable and safer too as it allows you to obtain real time authorization and also reduces the amount of cash to be handled by an employee. You also get a lower discount rate from the card companies for going wireless.  It streamlines time keeping and payroll. It also improves customer service by being in touch with them. It can boost marketing and can help your website to take off. Bankrate.com Reports:

"Small, medium and large businesses, depending on the wireless solution, can all benefit," says Joyce Leiser, director of emerging markets for U.S. Wireless Data. "Whether it's a fixed location or mobile, there is no need to wait for a phone line

Read More: Wireless technology means credit card payments can soar

Features of Credit Cards

You may have passed a booth offering a free T-shirt or duffel bag for signing up for a credit card.  Most credit cards have some lucrative offer associated with them such as free miles, rewards, or cash back. But what is often overlooked is that such cards have higher interest rates.

College students can be very vulnerable and can end up signing for many different credit cards. Eventually this might lead to huge debts if one is not careful. So, it is essential to make sure that the students carefully read and  know the pros and cons for individual cards. It is also important that students be cognizant of the fact that student cards normally carry higher interest rates. As stated previously, this often leads to high debt accumulation.  One way of reducing credit card rates is by consolidating credit card debt. This often has to be done through a home equity loan or home equity line of credit. MSNBC.com Reports:

One way to lower your credit-card rates is to consolidate your credit card debt into one big home equity loan or home equity line of credit. This can be a very cost-effective way to go.

Read More: Jean Chatzky’s top 10 credit card tips