Category: Credit Cards

By David

If you have tried shopping around for a car anytime within the past few years, you have likely heard of 0% finance deals being offered. But what does 0% finance mean? Below, we will take a look at exactly how one would finance a car and some of the benefits and pitfalls of 0% financing.

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What is financing?

Before we can answer the question “what does 0% finance mean?” we first need to look at what exactly financing is. When you go to purchase a car you have a couple options available to you as they buyer. If you have a large sum of money available, you will probably want to buy the car up front. This is the easiest way to buy a new car, but few people have the money just lying around to purchase a car this way. The other option that is open is to “finance” or lease your car. This basically means that you will pay for your car a little bit at a time over the course of time, and you will typically pay a bit of interest on the purchase for the convenience of being able to get the car now rather than wait till you have all the money. However if you managed to get 0% financing, this means you will not have to pay any interest despite taking advantage of the opportunity to pay over time.

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Advantages of 0% financing

Obviously, the advantage to going with a 0% financing deal is that you are able to pay over-time interest free, meaning you could save hundreds or even thousands of dollars on your purchase. The other advantage, or possibly a disadvantage depending on your financial situation, is that 0% financing offers typically have a shorter term for repayment meaning you will pay more each month, but you will be done paying much sooner.

Disadvantages of 0% financing

While the advantages of 0% financing are fairly obvious, to completely answer the question “what does 0% finance mean?” we have to look at some of the possible disadvantages as well. We have already noted that the terms for this type of financing are typically shorter meaning a higher monthly payment, but there are a few more pitfalls to point out. Despite how well advertised these programs are, they are typically only available to those with very good credit (650 or above depending on the dealership). This means that these programs are not going to be available to everyone. In addition, going with a 0% financing plan may save you a few thousand in interest, but a cash rebate offer used as a down payment on a typical leasing plan may actually save you more money than 0% financing would. To figure out which is going to be best for you, you will want to sleep on it at least one night before signing anything, and be sure to do the math.

With the information above, you now know what 0% financing is and how best you can use it to get the car you have always wanted.

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By David

You may have heard that there is a new option available for those looking to pay their credit cards. If so, you have heard correctly. No longer must you suffer through the tedious process of paying your credit cards with checks sent through the ponderously slow mailing system. Instead, you can make online credit card payments.

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Through your banks website

The first way for you to go about making online credit card payments is to go through your banks website. In order to do this you must first login to your banks website and go to the bill pay section. Next you’ll need to set up a “pay to” account for your credit card.

This is a fairly simple process. You’ll select your credit card company from a list of companies that accept payments from your bank and then enter your card information including name, number, expiration date, and CCV (a 3 or 4 digit security code on the back of your card next to the signature line). Once this information is entered you will want to save it, thus creating your “pay to” account for the credit card. Once set up you just select the account, enter the amount you would like to pay and send the payment.

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Another option available through your bank is the automatic payment system. This is a simple matter of setting up the “pay to” account as above and selecting the “recurring” option when you submit your payment. This will schedule an automatic payment for that amount each month. This option is great if you have a fairly consistent amount to pay each month and helps avoid accidental late fees.

Through your cards website

The other method for making an online credit card payment is through your credit card company’s website. This method is only a little different from using your banks site. You will want to logon, and select the “make a payment” button located somewhere on your main page. Once on the payments page, enter your payment information (either for a check or a debit card) and the amount you wish to pay and then send your payment. This type of payment usually goes through right away, unlike the through the bank method which can take a few days.

If you paid with your debit card, you can save this information for future online credit card payments and even use it to set up automatic payments. This type of automatic payment is a little different as you do not set the amount being paid, but rather your debit card will simply be charged the minimum balance due each month. This is a great option for avoiding any accidental late fees, and you can always go in manually and pay more on your card later if you so choose.

So, you are now aware of the different types of online credit card payment methods and how to set them up. Make sure you use these great tools to make sure your credit card is paid off on time each month.

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By David

If you have ever tried getting a credit card but do not have any prior credit history, you probably already know how difficult it can be to get approved for one. Time and again, you’ll apply for a card that looks good only to be turned down because of the absence of any credit history. It seems like the question of how one goes about building that history remains unanswered. However, getting a credit card for no credit does not have to be difficult. If you know what type of cards to pursue, then you can find a card company that will work with you to get you a credit card.

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Prepaid Credit Cards

While a prepaid credit card is not going to help you build up your credit history, it can get you started on learning how credit cards can be used, and the possible pitfalls to avoid with other types of cards. This type of card is a good choice if you really just need a card for online shopping or as an alternative to a debit card as it functions like a debit card but offers extra security (including a spending limit that you set by how much you put on the card).

Bank Credit Cards

The major credit card providers actually do not issue cards directly, but typically do so through financial institutions like banks. If you are looking to get your first credit card, and are opening a new account with a bank, see if they have any credit cards you could apply for. There is still a chance of being turned down, but most banks will do everything they can to get a credit card for their customers, including accepting a co-signer on the account. This can be a great option for get a credit card for no credit, especially for students who can have their more credit worthy family members co-sign with them.

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High-Interest Credit Cards

This type of card is actually intended for those that lenders deem “high-risk” candidates for a credit card. Often, this kind of card is going to be the only type available to those with a bad credit history or no credit history at all. With most boasting a 22% or higher APR (annual percentage rate) they are not the greatest option for get a credit card for no credit, but still offer the benefits of a legitimate credit card, including the ability to build a positive credit history. Because of the high interest rates often associated on cards like this, you will want to use it for items you buy on a regular basis and pay it off immediately, taking advantage of the no-interest “grace period.”

Though it might be difficult to get your first credit card, it is possible to do so. While having the knowledge above is not a guarantee, it will significantly increase your odds of getting a credit card for an individual with no credit.

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By David

As credit card companies have grown more skilled at coming up with incentives to make us want their card rather than another, a newer idea has emerged that might have you a little confused. We are talking about the idea of an introductory 0% APR. So how does 0% APR work?

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Introductory Offers

To answer the question “how does 0% APR work?” we must first take a look at what an introductory offer is and how it functions. Basically an introductory offer is any additional perk or feature on your credit card that expires after a certain amount of time owning the card. So if you see any features listed on your card with a time limit attached to them, you can be sure that those are introductory offers.

APR (Annual Percentage Rate)

In answering the question “how does 0% APR work?” it is helpful to first know what APR is and how it works. Your credit cards APR is the amount of interest that is going to be charged on your cards balance over the course of an entire year. Despite this being an annual metric, interest is actually applied to your cards balance on a daily basis after it has been on there more than 30 days. This first 30 days is called your grace period and is the best opportunity to avoid interest when using credit cards. Once interest starts being applied, it is added to your balance and then in turn earns interest of its own. So if you had a credit card with $100,000 balance and an APR of 15% on day 31 or maintaining that balance you would be charged $40 in interest.

This would then be added to your balance bringing it up to $100,040. On day 32 you’d be charged $40.02, $40 for the original $100,000 balance and $0.02 for the previous day’s interest, and it keeps going from there. This is called compound interest and is one of the reasons it can be tough to get out of credit card debt if you borrow responsibly.

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0% APR

Now that we understand introductory offers and how APR works, we can answer the question “how does 0% APR work?” 0% APR basically means that for as long as the introductory offer lasts (typically anywhere from the first few months to an entire year) the balance on your card can be maintained past the grace period interest free. It will still go through the interest calculations, but as you know 0 or 0.00 as it would be represented in the equation multiplied by anything is always 0. So regardless of how large the balance, there won’t be any interest during the introductory period. While this is a nice perk, it is typically employed to offset the fact that the APR will eventually be higher than is average for a card of the same type, making these offers poor choices in the long run.

Now you know how 0% APR works and how to avoid the pitfalls that such offers are meant to hide.

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By David

Have you ever found yourself wondering what the annual interest rate of your credit card meant for your credit card spending, or perhaps how card companies calculate interest and why they do it that way? If you are looking for answers to these types of questions, you have come to the right place. Below we will explore the idea of the annual interest rate and how it affects your credit card bills.

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The Annual Interest Rate

The annual interest rate credit card is the same as its APR or annual percentage rate. This rate determines how much interest you will be charged over the course of an entire year. Not surprisingly, the higher this rate is, the more interest you are charged and the more you ultimately end up paying for your purchases.

The Grace Period

One very beneficial feature of a credit card, and interestingly enough, one that can help you to avoid the annual interest rate of your credit card is the grace period. This is typically a 30-day long period that you get after you have made a purchase where you are not charged interest. This allows you to buy things on your card in order to build credit, earn rewards, or just balance an uneven income and then pay them off before your 30 days are up.

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Interest Calculation Methods

Despite the fact that the annual interest rate credit card does include the word annual (or yearly), interest is in fact added on your purchases every day you maintain a balance on your credit card after the grace period. Because of this you end up paying more over the course of the year than your interest rate would lead you to expect. Thankfully since it is an annual rate being applied daily, it is necessary for card companies to divide this percentage by 365 (the days in the year) to find the daily percentage rate. You can do the same thing. Suppose your credit card has an APR of 15% you can divide this by 365 to determine your daily rate.

The equation would look like this: 15/365=0.0410958904109589 or 0.04% if you prefer to round it. So if you spend $100 on your card, on the 31^st day of maintaining that balance you would be charged $0.04 in interest. The benefit for the card companies is that this interest is then added to your principle and gains interest as well, so on the 32^nd day you’d be charged 0.04% interest on $100.04. This is called compound interest and it tends to add up quickly. Because of this it’s important to pay off your credit cards as quickly as you can in order to save as much money as possible.

Now that you have seen what the annual interest rate of your credit card is and how card companies calculate this interest, you can make informed decisions about when and how to best use your credit cards.

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By David

As anyone who has ever tried to get a credit card knows, the application process can be a daunting task, especially when you do several applications one right after the other. However this process can be made somewhat easier if you have certain information ready and available as you are preparing your application. To help you know what information you will need we’ll walk you through the typically credit card application form.

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General information

The first section you will find on your credit card form is for general information about the person filling out the application. For this section you will want to have on hand your full name, your current address and up to three previous addresses, your date of birth, and your social security number. Different applications may ask for different things, but the things listed above are common to almost all applications. You probably know most of this information right off the top of your head, but you may want to have your current and previous addresses written down and ready, especially if you have moved recently.

Employment and income information

In this section of your credit card application form, lenders will ask about your current employment status and title, both to get a fix on your ability to pay back what you borrow and to establish a demographic of who is applying for the card for future marketing. In addition they will want to know more specific information about your income as well as that of others who reside in your home. It is good to have this information on hand as it is often times difficult to remember, as tracking down the other members of your household trying to figure out how much they earn can be a pain. If you share your residence with others but do not share your income, you may wish to only list your income on the application.

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Additional questions and balance transfers

For this section on your credit card form you will be asked a few questions relating to your intended use of the card and be offered the chance to set up any immediate balance transfers if you are approved for the card. The questions are typically pretty simple and require little if any information to be kept on hand, however if you do desire to transfer a balance from one or even several of your old credit cards you will want to have their information on hand such as the name on the card, number on the card, expiration date, and possibly the CCV (a 3 or 4 digit security code on the back of the card next to the signature line).

Once you have gathered the necessary information, just look for a few credit card offers that you would like to apply for and breeze through the associated credit card application forms. If you have completed them correctly, you may just find that you have got a couple more credit cards on their way.

Click here to compare credit card offers (including 0% APR credit cards) and apply online. All of the Web’s best credit card application forms in one place. Free comparison tools.

By David

Many have, as they sat at the dinner table writing checks, wondered if there was a better way to pay their bills. Maybe you have contemplated making your credit card payment online. Making an online payments is a straightforward process, and it is often more convenient that other payment methods.

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Through your bank

Most banks these days have a website that will allow you to access your accounts, set up transfers, and make credit card payments online. This method requires a little bit of set up, but once you have got everything going it, will only take a fraction of the time it once did to do your credit card payments. Assuming you are already logged in, you will want to go to your bank’s bill pay section. Once there you will need to set up a “pay to” account for your credit card company. Typically there will be a list of companies to choose from. Just pick the card company associated with your card and enter your account information (name, card number, expiration, and CCV) as well as a nickname for your new “pay to” account and click save. Once the “pay to” account is set up, you just enter the amount you wish to pay and when you would like it to arrive and send the payment. If however, your credit card happens to be through the same bank as your other accounts; you will find that payments are as easy as a simple transfer from one account to another.

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Through your card’s site

Another way to make a credit card payment online is through your card company’s website. You will need to login and choose the “make a payment option.” Once on the payments page, you will be asked for your payment information (typically your debit card information). Once this is filled in you can enter the amount you would like to pay and send the payment. Before making your payment or sometimes after, you will be asked if you would like the website to save your payment information for future payments. If you decide to do this, any future payments made the same way will be a quick and easy process.

Automatic payments

An extension of the other two payment methods, automatic payments allow you to “set it and forget it” so to speak, in regards to your credit card payments. Your first option in this regard is of course to go through your banks website. This is a great option if you have a fairly consistent credit card bill. Just go to your bill pay section and to the “pay to” account you made earlier and select the recurring option for your payments. The other option is through your card company’s site and works basically the same way, except that it will charge the minimum balance due automatically. This is a good way to avoid accidental late fees.

With the information above you should be able to make your credit card payment online and save yourself a little time.

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By David

Because of the vast number of options, it can be a challenge when you attempt to compare card offers, trying to figure out which offers the better deal. In order to help you find a card that is right for you we will walk you through the comparison process.

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Compare card types

As you begin to compare card offers you should know that there are a few different types that work best in different situations.

1)      Prepaid Cards – These cards are set up in such a way that it makes you the lender instead of the associated card company. By adding money to the card before you spend anything on it, you control your spending limit, and since you are the lender, the money spent from the card is interest free. However because you are not actually borrowing money this type of card will not help you to build credit. It does still however have all the security features of a normal credit card, making it a great option for online shopping.

2)      Low- Interest Cards – This type of card has a lower than average APR (annual percentage rate) compared to other cards and is a good choice for balance transfers from higher interest cards and for use as an emergency line-of-credit.

3)      Rewards Cards – A rewards card maintains an average APR (around 15%) and offers you rewards for using the card. These cards are great for use on everyday purchases as they will often include a little bonus for things like gas and groceries. Be sure to pay these cards off in full before the end of the grace period to avoid the interest while still reaping the rewards.

4)      High-Interest Cards – A high-interest card is designed almost exclusively to help those with bad or no credit to begin making strides toward better credit. These cards have higher than average APR and typically have a low credit limit.

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Compare APR

Once you compare card offers and determine the type of card you want, you will want to look at each offer’s APR. For many cards you will find that they have an introductory APR that is around 5% or lower for the first several months. These low rates can be very nice, but remember to do your comparisons with what your APR will eventually become after the introductory rate has expired. The lower the rate you can find, the better off you will be in the long run.

Compare fees

One final consideration when you compare card offers are the fees associated with the card. Make sure there are no fees (such as annual fees) that make the card less desirable when compared with others.

Once you have made your comparisons and found what looks like the best offer to you, go ahead and apply for the card. With any luck, your application will be approved and you can start using your new credit card to build a better financial future.

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By David

Getting approved for a credit card is not a particularly difficult task, but with so many different types, finding the right credit card for you can be a daunting task. How does one even begin to decide between all the perks and features offered from the various companies and their respective cards? Below are a few simple steps that will help you through this process:

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Determine your needs

Many of the credit card varieties you will find available on the market today are custom tailored to fit the specific needs of individual consumers like yourself. Determining what you need from your card and what ways you intend to use your credit card can help you answer the question how to find the right credit card for me? Perhaps you spend a lot of money each month on general things, like gas, groceries, or eating out. In that case, you’d want to go with a rewards card, to get a little bit of a bonus on that spending.

Maybe you would just like to have your credit card in your wallet in case of emergencies, then a low-interest credit card with the highest credit limit you can get would be right for you. Still, maybe you just want to use you card for online shopping. If so, you may wish to consider opting for a pre-paid card for its security features and limited loss potential.

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Types of credit cards

Though we have already looked at a few of the types of credit cards, let us take a look at the different features associated with each and find the right credit card for you.

1)      Prepaid Cards – A prepaid card is great for online shopping as it includes all the security features of a normal credit card and can be loaded with only enough money to make your purchases, so that should it be stolen, you would lose very little of your money. These cards are easy to replace if lost or stolen and are a good method for introducing children to the credit card system.

2)      Low-Interest Cards – best used for balance transfers from higher interest cards or for use as an in-case-of emergencies fall back, the low-interest rate means lower costs for you when you have to put large purchases on your card that you cannot pay off right away.

3)      Rewards Cards – Though they have a higher interest rate than a low-interest card would, they offer additional perks for using your card such as frequent flyer miles or cash back. These cards are great for making your general purchases throughout the month as long as you pay them off in full before the month is over. This allows you to reap the rewards, without any extra costs.

Match a card to your needs

Now that you have identified what you would like from your card and are more familiar with the different card types just match their features to your needs and apply.

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As if we weren’t paying high enough, a recent settlement by large credit card conglomerates have left us open to an additional charge for using a credit card. What? Yes, you could be officially paying for the merchant’s processing fees (ranges between 1.5% to 3.5%) if you were to use your credit card for the purchase?

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Are we going back to the green bills? Not yet, but you must be aware of the fact that some merchants may be imposing a surcharge for credit card use. What is a processing fee? Well, you may not be aware but every time you swipe your credit card, the business that is selling you the merchandise coughs up around 1.5% to 3.5% of the purchase price as processing fees. That’s what it takes for the merchant to route the funds to a payment processor and get it deposited into its bank account.

Wait, but why I should I pay the “credit card extra charge”?

Well, that is the multi-billion dollar question where lobbyists, small business owners, consumers, and large players have been clashing for a very long time. Finally, a multi-billion dollar settlement was reached that would allow businesses to pass on the costs of their processing fees as extra charge for credit card use or a surcharge.

Time will tell if the practice will prevail but for now it is being hailed as a victory by those who pursued the initiative.

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Small businesses ask us: Can I charge customers for using a credit card?

Well, you would have to update yourself on current regulation, but in our opinion it is a bad business practice. Sure you would be passing on the extra costs associated with credit card use but by mandating a charge for using a credit card, you will be putting off your customers, limiting the use of credit cards (and hence total spend at your business), and even losing your customers to competing businesses that don’t pass on the extra costs to their customers.

Think about it again, seriously.

What merchants still cannot do (charge for using credit card)

In many states, merchants cannot push for a minimum spending amount if you want to use a credit card. Also, store owners (and other businesses) that accept credit cards cannot charge extra for credit card use in an amount over the processing fees. If you suspect that a merchant is lining up his bank account by collecting unreasonable surcharges, contact your local authorities and consumer protection bureau officers.

It is quite possible that you may already be paying these fees and not know about it. Businesses often use a variety of tricks to raise their prices and label them under different categories to make up for the lost profits and circumvent regulatory sanctions. But until recently, they could not label these surcharges as an extra charge for credit card use. Now they can, but within limits.

What you, as a customer, can do

As a customer, you can voice your concerns with the merchant, avoid shopping with the merchant that imposes a credit card surcharge (if a reasonable alternative is available), use other forms of payment, or shop for businesses online. It is much easier to do comparison shopping online.

You can also file a complaint against a merchant who imposes unreasonable fees as extra charges for credit card use.

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