Get All 3 Credit Scores

How does one compare credit cards to make sure that you are getting the best bargain? There is absolutely no easy way to do this. The traditional customer is inundated with card offers frequently. Through the email messages to your mail box, the companies would like you to decide on their products and so they do everything imaginable to get you to decide they’ve the greater deal.

That evaluation isn’t going to end up being how much credit they may be providing. This is beyond doubt the absolutely wrong means to settle on a bank card. The more expensive limit bank cards sometimes have overpriced apr, substantial annual service fees, short grace periods as well as a variety of elements that may not be valuable attributes to own in a card.

What’s more, you should always read the fine print. Often

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When the new credit card rules go into effect on February 22 (Credit Card Bill of Rights), perhaps one of the most exciting changes will be the way payments are allocated.

In the past, credit card issuers applied payments over the minimum payment to balances with the lowest APR because it worked in their favor.

Let’s look at an example:

Total credit card balance: $5,000
Purchase balance: $3,000 @ 18% APR
Balance transfer balance: $1,500 @ 0% APR
Cash advance balance: $500 @ 20% APR

In the scenario above, credit card issuers would apply any extra payments to the balance transfer balance set at 0% APR.

That would leave the balances subject to the highest APR and associated finance charges intact, costing you more money.

It wouldn’t be until that $1,500 balance transfer balance was paid off before the purchase balance and finally the cash advance balance would be paid down.

The practice meant big money for credit card issuers, and never-ending debt for struggling card holders.

Fortunately, lawmakers said enough was enough, and stamped out the negative payment hierarchy.

Going forward, the reverse will be true when you make more than the minimum payment.

So in the above example, any extra payment(s) will attack the cash advance balance first because it has the highest APR, and thus the most finance charges.

The last balance to be paid down will be the balance transfer set at 0% APR, which benefits card holders because it’s not accruing any interest (at least during the promotional period).

The rule change is good news for card holders looking to pay down debt; of course, it should have always been this way, but better late than never.

Your income may become a more important factor in determining whether you’ll be approved for a credit card, according to a post in the WSJ.

The paper said beginning in February, credit card companies will be required (Credit Card Bill of Rights) to consider an applicant’s income or assets/current debt before extending credit to ensure consumers have the ability to repay.

In preparing for the change, the credit bureaus have already gotten in on the income estimation business, with Experian reportedly nailing down income to the nearest thousand.

They came up with their estimates by matching credit reports with wages, interest, and investment income, along with total credit lines and related payments.

These income estimates will help credit card issuers approve or decline applicants, and may also be utilized to increase or decrease an existing credit line.

In the past, credit card issuers simply asked consumers to enter their gross annual income in a box on the application form, but soon you could be required to provide pay stubs, tax returns, or be asked to fill out a form 4506, which allows the IRS to release your tax filings to lenders (so no fudging the numbers).

What the changes really communicate is that credit scoring has proven to be unreliable, at least as a standalone determinant of capacity to repay debts.

Of course, the income estimates are just ballpark figures when it comes down it, which is why the credit bureaus’ contracts prohibit card issuers from turning down customers based solely on the information.

See: why credit card regulations are worthless.

Credit card consolidation can be a beneficial way to pay down debts.  If you are considering this avenue, make sure that you get the lowest interest rate and the best terms available.  Below are the ways in which you can use consolidation to achieve one low monthly payment:

Home Equity Loans 

By putting your house up for collateral, you can obtain a credit card consolidation loan.  Consolidation loans allow you to pay less interest, and make a lower payment than the combined total of all your credit cards.  Caution should be exercised when taking out a home equity loan for credit card consolidation, because you stand to lose your house if you can’t make the payments.  A good rule of thumb is to close all but one credit card account so that you aren’t tempted to add even more debt.

Balance Transfers

This is another method of credit card consolidation.  Basically, you apply for a card that offers a low introductory rate and transfer all your other balances to that card.

Be aware that this “teaser” rate only lasts for a limited time, and will return to normal interest rates at the end of the introductory period.  Before it converts to the regular rate, you can transfer your balance to another card with a low introductory rate.  

Using balance transfers to consolidate your credit card debt often brings added costs in the form of transaction fees.  Read the fine print to see how much it will cost you to make the transfer for your credit card consolidation.  Be sure to make your payments on time, as late payments often raise your interest rate to the normal rate charged.

When using balance transfers to consolidate your credit card balances, be sure to close old accounts so that you aren’t tempted to use them.  Failure to do so can leave you even deeper in debt if you rack up new charges.  

Credit Card Consolidation Services

If your credit card debt is out of control, you can lower your payments by up to 57% using a consolidation service.  Consolidated loans are not for everyone, though.  Before you make a decision, you must realistically look at the pros and cons of debt consolidation to determine if this is the right decision for you. Click here for m

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The problem with imposing new rules on credit card issuers is their ability to quickly circumvent them and come up with new ways to make money.

It’s quite evident if you look at what First Premier Bank, a subprime credit card issuer, has done recently to skirt the impending rule changes set to take effect on February 21, 2010 (Credit Card Bill of Rights).

The First Premier credit card typically comes with a minimum of $256 in fees during the first year for a $250 credit line, but because the new laws limit fees at 25 percent of a credit card’s total limit, it will be lowered.

Going forward, the bank will charge a $75 annual fee for a $300 credit line, but to make up for that lost profit, they’ve raised the APR from 9.9 percent to 79.9 percent.

That’s not a typo, it’s the highest APR tied to any credit card currently on the market, according to an industry analyst.

For cardholders with a $300 balance on the credit card, it equates to about $20 in monthly finance charges; assuming you pay $20 per month, you’d be looking at $315 in fees annually for a $300 credit line. Not a bad h

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By now, you’ve probably heard about credit card issuers paying customers to close their accounts in the wake of one of the worst credit collapses in history.

But the latest move by card issuers is quite the opposite; some are charging customers inactivity fees for dormant credit card accounts.

That’s right, if you fail to use your credit card for a certain period of time, you may be slapped with a fee (in the ballpark of $20) to keep it open.

Of course, it hardly seems worth paying it, given the fact that most credit card issuers do not charge inactivity fees.

However, some consumers have been led to believe that closing a credit card will do serious damage to their credit score, so they may hold off.

And though your credit score could fall as a result of a closed account, it probably won’t mean a whole lot if it’s a card you seldom use.

Additionally, there’s no reason you should pay a fee to keep your credit card open, regardless of the credit scoring impact.

If you feel you must keep it open, consider using the dormant card to pay a recurring monthly bill such as your gym membership or cell phone bill to avoid the inactivity fee.

Remember, the older the card account, the more value it has in terms of credit scoring, so don’t fret about closing a newer credit card.

And if you’ve got plenty of solid credit history, the “damage” to your score will likely be minimal if at all negative (Should I close my credit card account?).

Tip: Keep an eye out for changes to your credit card terms as issuers look to charge new fees to offset the impact of the recently passed Credit Card Bills of Rights.