Best Credit Card Rates Comparison FAQ Guide

Here at CreditCardChaser.com, we're all about getting the best credit card de...
In addition to the interest rate you will be charged, you need to decide if a reward card is going to benefit you.
You can...
representatives to strong-arm you.

If the credit card company is refusing to help, a simple threat of transferring the ba...
you. It may just save you a lot of time and money. Get started comparing credit cards today!



                          ...
You have the option of notifying the old credit card company by phone or in writing that you want the account
closed, but ...
consolidating your debt onto the card with the lowest interest rate may be the right choice for you. Assuming you
have eno...
Any purchase made with a credit card is covered under the Fair Credit Billing Act. If you make a purchase and
find the ite...
your advantages unless you live in a specific state.

State Laws and Capping
State law is what dictates interest capping, ...
Ideally, everybody wants to pay off their credit card debt. For any number of reasons, that goal could be
postponed or for...
is the keyword here. There are many scam operations posing as debt consolidation firms.

Remember that debt consolidation ...
* How long has the borrower been paying on a home?
  * Is the borrower older or disabled? Or is he/she likely to work agai...
are going to use credit cards to build your credit score or pay for items, then use a tool like the credit card
“Chaser” t...
you cannot pay something on your credit card, you probably cannot afford an attorney. And if you owe the money
that you ar...
One thing that you need to understand is that the biggest credit card processors may not be the best one for
you. However,...
* File fee
  * Security fee
  * Audit fee
  * Conversion fee
  * Over the limit fee
  * Excessive transactions fees
  * Di...
Minimum Monthly Payment?
Minimum monthly payments may seem arbitrary at times, but rest assured, they are precisely chosen...
Beware of the Minimum Payment Temptation
The ultimate flaw of paying only the minimum monthly payment is that you’re reall...
many credit card companies are looking for individuals with a good or great credit score to present with a credit
card, so...
Some credit card companies will automatically raise your limit after you prove yourself, but others will not. You
should r...
charging you approximately the same rate of interest, then consolidating all of your credit cards is probably not
the best...
cards in the past. Even if it has been a while since they have missed a payment, with the current economic
situation and w...
comes with terms and conditions that will clearly state the introductory interest rates, how long that rate is
effective, ...
again.

Some credit card companies will ask you if you want to increase your limit and wait for your approval. Others will...
You can alternate the type of your rewards redemption as often as your card allows. This means that you can
choose cash ba...
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Best Credit Card Rates Comparison Faq Guide

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Get your credit to work for you instead of against you. This credit card FAQ and guide aims to help you understand the inner workings and technical aspects of credit card policies and credit card debt. Get the best card rates and deals by applying these tips.

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Best Credit Card Rates Comparison Faq Guide

  1. 1. Best Credit Card Rates Comparison FAQ Guide Here at CreditCardChaser.com, we're all about getting the best credit card deals and rates for you, the consumer. With this, one of our goals is to help you find the best credit card deal for you. Credit card comparison, credit card rate checking, as well as some advice articles may be of help to you. However, if you want a quick rundown of how to get the best credit card deal, we've compiled this guide to help you compare credit card rates. Enjoy and don't forget to contact us with questions and advice! CreditCardChaser.com Team Credit Card Deals and Steals Here's the basic stuff about credit card deals companies offer you. IN this section, we'd talk about how you could get the best credit card deals, how to handle credit card companies and their terms, as well as some tips and tricks on how to manage to get really good deals that are secretly offered by credit card companies. Tip: talk to the right person. • How Do I Get the Best Credit Card Deal? • How Do I Negotiate with Credit Card Companies? • How Do I Transfer a Credit Card Balance? How Do I Get the Best Credit Card Deal? In order to get the best credit card deal possible you need to be aware of your spending habits and the offers available. By assessing the reasons and way that you intend to use your credit card, the interest rates attached, and any rewards you can locate an ideal credit card for your needs. Then, as long as you use it responsibly, you can improve or maintain your credit card rating, pay low fees and end up with some nice benefits. First of all, decide what you will use this credit card for. Is it only for emergencies, or will you use it on a regular basis? Are you interested in racking up points for reward benefits, or is your main goal to build or improve a credit rating? Knowing this is important because different cards meet these different goals. If your main purpose for getting this credit card is to build your credit rating then you can consider a secured credit card. For some cards like this you will need to deposit a set amount of money, and that is what you are allowed to spend. If you have poor credit right now, this means that the company takes no risk by offering you a card as you are guaranteed to pay it off. The great part for you is that you can build a record of on time payments without having the risk of going over your credit limit. They simply won’t allow it to happen. Know Your Options Once you are sure of your purpose you need to look at the options. In order to find out what sort of interest rates the different lenders are willing to extend to you, you will need to apply to a few different card services. Probably the quickest way to access several services at once is with an online tool like the free credit card chaser tool. Free tools like this one let you shop around, at no cost, and quickly and easily compare the benefits of several card providers.
  2. 2. In addition to the interest rate you will be charged, you need to decide if a reward card is going to benefit you. You can get reward card for things like free airline tickets, restaurant and shopping gift certificates, sports related events and a ton of other specialty freebies. Be cautious however, sometimes the higher rates and fees attached will make this attractive sounding option a losing situation financially. These cards work best for those folks who are able to pay off purchases immediately. That way you don’t accrue the interest and late fees that can negate an otherwise good reward. Manage Your Credit Ironically, the people who get the best credit card deals are those who have the best credit to begin with. If you don’t already know your credit score, find out. The three credit rating companies are TransUnion, Experian and Equifax. You can request your report from each. Make sure these are accurate, because false reports do lower your credit score and impact the rates you are offered. So, in order to get the best credit card deal you really need to do three things. First, get clear on your purpose for wanting a credit card, find out what interest rates you are eligible to receive and look for potential rewards. As long as you invest a minimum of time up front to compare your options, you are sure to end up with the best credit card deal possible. How Do I Negotiate with Credit Card Companies? Negotiating with credit card companies is a good idea for anyone who is having trouble keeping on top of their financial obligations. Especially in today’s economy when there are so many other people who are also facing the same problems, it is more important than ever to talk to your credit card companies and try to come to an understanding of some sort. Here is some advice to help you through the process. Keep the Lines of Communication Open The number one piece of advice given by most financial gurus when asked about credit card debt is that you must keep the lines of communication open. If you neglect to do so, you are setting yourself up for problems like a poor credit score which will hamper your efforts to negotiate with credit card companies and possibly prevent you from obtaining credit in the future. If you are struggling to make payments, tell the company. Reasons to Negotiate with Your Credit Card Company It will help your credit score. If you continually skip payments or make payments below the minimum without advising your credit card company of the situation you are in, you will find that such things will be reported to the major credit bureaus. What this means is that your credit score will likely drop. This makes it harder for you to obtain new credit and possibly harder to obtain a job or get reasonably priced car insurance. Without open communications, your credit card company will assume you are trying to gyp them, therefore your account may be put with a collections agency. This is even more detrimental to your credit score. By negotiating with your credit card company you may be able to make a deal that actually saves you money. Credit card companies simply want to get paid and they realize that many of those who are struggling to make payments are the same people who are at risk for facing bankruptcy, in which case an unsecured debt like a credit card will receive little if any reimbursement. It is to the company’s benefit to help out customers facing such situations. Steps to Negotiating with Credit Card Companies First, find a quiet and private place from which to make your phone call. Have enough time available to fully take care of the call. Do not make such calls with children in the room, at work where others can hear you and do not rush through the call. Explain your situation thoroughly and unemotionally to the other person you are dealing with. Firmly state what you can and will do in order to satisfy the debt. You know what you are capable of giving in order to pay off the cards. Do not stand for bullying or high pressure tactics. You should also know that it is illegal for credit card
  3. 3. representatives to strong-arm you. If the credit card company is refusing to help, a simple threat of transferring the balance to another credit card should help them rethink their position. The Things You Can Ask For There are several things that you can ask for from your credit card company when you are negotiating with them. You can request that the interest rate that you are paying be lowered. Attempt to get no interest for several months followed by a rate at least half of what you are paying. Request a retroactive change in interest. Depending on the company, they may say yes. You can also request that they remove any late fees or over the limit fees that they have charged you within the last year. You can also ask them to stop charging you a yearly fee. You may also ask the credit card company for a settlement agreement. What this means is that you will pay off the balance if they accept a percentage of it. Many credit card companies will agree to percentages of 30-60% of the original debt. Mark Brinker of Hoffman Brinker & Roberts, a firm specializing in renegotiating debt, advises that you may want to let the debt go past due a little before attempting this type of agreement, especially if you have always paid on time. This will help you get the best possible outcome. Be cautious with this approach, as not everyone supports this method. Another important thing you can ask for is good credit bureau reporting. If you are past your due date for this month, request that they do not report it as such if you make your payment right away. Also, ask them to report “paid as agreed” to help preserve your credit score as much as possible when settling a debt. Negotiating for a payment plan is also a great tactic when dealing with credit card debt. The company is typically reassured that they will get their money, albeit slowly. It is also better for your credit score than to continue making payments that do not meet the minimum required amounts. The Importance of Speaking With the Right Person While it is certainly important to learn how to write a credit card debt settlement letter it is crucial that you know how to go about getting what you want over the phone as well. If you are trying to negotiate with a customer service representative who keeps continually saying no to your requests, request to speak with a manager or supervisor. Often those in a higher position will have the authority to grant your requests but the representative you would normally speak with does not. It will also save time, as reps typically need to put you on hold and check with their supervisor. When you call a credit card company, start by asking the representative if she or he has the power to make changes to your agreement. If not, get transferred to someone who does. Often the collections department of a credit card company is empowered to make the type of deals necessary to retain customers. Therefore, if you are struggling with dealing with customer service representatives, you might let your next payment go slightly past due, until a collections specialist from the credit card company contacts you. Deal with him or her directly regarding negotiations. Again, it’s always best to pay promptly and be responsible if you can. Using this method is only a strategy for negotiation. Tips You Should Know for Negotiating With Credit Card Issuers Make sure you get agreements in writing concerning changes in your credit card agreement. This is especially important if you negotiate prior to paying off the balance. There are companies which exist that will do the negotiations with your credit card company for you. If you do not have the time, lack the skills to do so, are a poor negotiator and have a high enough debt to warrant paying a third party to get involved, this may be the option for you. As companies raise minimum payments, increase interest rates and tighten their lending agreements in the midst of an economic recession it is becoming more and more necessary to negotiate with them or find a better alternative. If you are tired of negotiating with your old credit card companies and are looking for other options, or to find the perfect card to do a transfer balance to so you can take control of your finances, try our free credit card “Chaser” tool. It will find the best card for you with the terms you want and need, in order to preserve your credit rating, often while even earning you rewards. Take just a few minutes and see what the credit card “Chaser” has for
  4. 4. you. It may just save you a lot of time and money. Get started comparing credit cards today! How Do I Transfer a Credit Card Balance? Transferring a credit card balance from a card with a high interest rate to one with a lower one seems like an attractive option. There are a number of credit card companies that are looking for new business by offering very low introductory rates on balance transfers. Before you decide that you want to transfer your credit card balance, you need to make sure that you understand the terms of the offer completely. Balance Transfer Credit Card Offers Before you sign the agreement to transfer your credit card balance to another card, make sure that you have reviewed the terms of the offer carefully. The low interest rate you are being offered may be available for a limited time only. You will want to find out what interest rate the credit card company usually charges on the type of card you are considering. If you are confident that you will be able to pay off the amount of the balance transfer relatively quickly, as in before interest rates rise to their normal level, then going ahead with the balance transfer may be the right choice for you. Introductory Interest Rates May Apply Some companies will only offer you the introductory rate on an initial balance transfer only. This means you need to make the decision to transfer an existing balance at the same time you accept the offer of a new card. If you decide after the account has been opened that you would like to do a balance transfer, you may be charged a higher rate. The credit card company may also choose to treat the balance transfer as the same thing as a cash advance. In that situation, you will be charged interest daily until the amount of the balance transfer is paid in full. Other companies will also charge a fee when you choose to transfer a balance that is a percentage of the amount you are transferring. To make an informed decision about whether a balance transfer is the right choice for you, be sure to ask whether any other fees apply if you decide to transfer an existing balance to your new card. Steps Involved in Transferring a Balance To transfer a balance on an existing card, there are a number of steps you need to follow. The first thing you need to do is apply for a new card and fill out a balance transfer form. While your application is being processed, it’s important that you continue making at least the minimum payment on your existing credit card account. Once the balance transfer has been completed, you will receive notice from the new credit card company. The first statement will show the balance transfer and it should be clearly identified. Examine your statement carefully to ensure that the amount of the balance transfer and the interest rate you are being charged is the same one that you agreed to when you applied for the transfer. If it isn’t what you agreed to, contact the credit card company. Be sure you have a copy of the forms you signed when you do so. Not only do you want to check the statement on the new account to see that the balance has been transferred, but you will also want to check with the old credit card issuer to make sure that their records show that the balance on your account has been paid. Many credit card companies will provide this information over the phone or online, and it’s a simple matter to find out what your current balance is. Then you wait to receive confirmation from your old credit card company that the balance transfer has been completed. You can check it out by watching for your next statement. Once you receive it, you can go ahead and tell your old credit card company to close the account.
  5. 5. You have the option of notifying the old credit card company by phone or in writing that you want the account closed, but putting it in writing may be the best way to go. If you keep a copy of your correspondence, you have a record of your request and the date you made it. You should also tell the credit card issuer to send a note to the credit reporting companies stating that the credit card account was closed at your request. Compare Credit Card Balance Transfer Offers Those are the steps involved in transferring a credit card balance. If you have decided that this is the right step for you, check out cards with low introductory interest rates for balance transfers by using the free credit card Chaser tool on this site. Click to get started comparing credit cards today! Credit Card Technicalities Let's get into details in this section. A lot of credit card issues have come up because consumers have failed to look into terms and technicalities when they sign up for a card. In this section, we try to discuss the basic issues and problems that may creep up while your • Should I Consolidate My Credit Card Debt? • How Do I Dispute a Credit Card Purchase? • Are There Laws Capping Credit Card Interest Rates? • What Happens If You Do Not Pay Credit Card Debt? • Why Do Credit Card Companies Sue Consumers? • What Happens When a Credit Card Company Sues Me? Should I Consolidate My Credit Card Debt? Consumers who have multiple credit cards may be looking to consolidate their debt to make their payments more manageable. There are some situations where consolidating makes sense and others where it isn’t the right choice. Credit Card Debt The absolute first step in figuring out whether consolidating your credit cards is the right choice for you is to take all of your credit card statements and examine them in detail. Make note of how much you owe and the annual interest rate you are being charged. Armed with this information, you can start to look at your options. Please continue reading to get information about the options so that you can make the right choice for you and then consider taking a look at our free tool to compare credit cards and find the credit card that is best for your needs. When Not to Consolidate Your Credit Card Debt If your credit cards all have similar interest rates on unpaid balances, then it doesn’t make sense for you to consolidate the balances onto one card. You won’t be saving any money in interest by doing so. You also need to consider whether a balance transfer will be considered the same as getting a cash advance on your credit card. Most credit card providers charge a higher interest rate for a cash advance, and they may charge a fee as well. If you are going to lose the grace period before interest starts to run on the balance transfer, keep in mind that you will be paying interest from the day the transaction is completed until the amount is paid in full. Since credit cards give consumers access to a revolving source of credit, moving outstanding balances from one card to another with a similar rate of interest doesn’t give you more time to pay off the loan or get a lower minimum payment. In this situation, you may be better off looking at other options, such as taking out a home equity loan or a line of credit with a lower interest rate to help you deal with your debt. When Consolidating Credit Card Debt Makes Sense If your examination of your credit cards indicates that you have cards with varying rates of interest, then
  6. 6. consolidating your debt onto the card with the lowest interest rate may be the right choice for you. Assuming you have enough room on your card limit to do so, contact the credit card company to find out how you can transfer the balance on your higher-interest card onto the one with the lower rate. Another advantage to consolidating your credit card debt is that it makes your life simple. Rather than having to remember to pay multiple cards each month, you only need to make one payment. When you are considering the right move for you, do factor the convenience of making a single payment into the mix. This reason alone may not be enough to tip the scales in favor of debt consolidation, but it does make this option more attractive. You can find out about credit card rates by checking out the free credit card Chaser tool on this page. Getting Help With a Debt Consolidation If you want to consolidate debt but moving your existing credit card balances to a card with a lower rate isn’t the right choice for you, there are other options. If you want to look after your debt independently, you can sit down with a pen and paper or use specialized software to help you come up with a budget that will allow you to meet your financial obligations while paying down your debt over time. You can also approach your bank or another lender to ask about taking out a debt consolidation loan. The interest rate you are charged may be less than what you are paying on your credit cards right now. You will need to consider how long you will be making payments and the total cost of borrowing when you are trying to decide whether this is the right choice for you. A debt consolidation loan will take your existing credit card debt and combine it into a single loan and your payments will likely be lower than what you are paying on several cards now. The only problem with this solution is that once you have the balances transferred from your cards to the loan, you may be tempted to use the card again. If you think you may find it hard to resist the temptation to use the cards again, limit your use to the card with the lowest interest rate only. Keep your spending to only what you can afford to pay off each month. Closing your credit card accounts may have a negative effect on your credit rating and you may want to store your other cards in a secure location other than your wallet (just remember to use all of your cards every couple months for small purchases and then pay them off in full because sometimes credit card companies will close accounts that haven’t had activity for a long time). Consolidating debt is a responsible method for managing debt in some situations. It requires a commitment to the decision in order to make it work. It is one of several methods worth considering. How Do I Dispute a Credit Card Purchase? There is always a risk involved when a purchase is made. Whether you make a credit card purchase over the phone, over the Internet, or in a store, you should know how to dispute a credit card purchase. With ever increasing access to purchase anything you need from anywhere in the world, comes risk and reward. Here are some tips to keep in mind should you find yourself with a less than perfect purchase. When you use a credit card, the law is on your side and you can use it to your advantage. Paying with cash or debit card may be convenient, but this does not come with the protection of the law. Use credit wisely, but using your credit card for any over the Internet or over the phone purchases is very important. It can be equally important to use a credit card while shopping in a store as well.
  7. 7. Any purchase made with a credit card is covered under the Fair Credit Billing Act. If you make a purchase and find the item to be damaged or poor quality, the Fair Credit Billing Act gives you the right to withhold your payment. The law requires you to first attempt to return the item or make other arrangements with the merchant. At least one attempt should be made, if not more. There are a few regulations to the law. The sale has to be for more than $50 and has to have been made within 100 miles of your home. This law has not yet caught up with the ever growing Internet and phone purchasing that now makes up for over half of the purchases in the United States. Because of this, most credit card companies will waive the two restrictions. You can find out more information about his law at the Federal Trade Commission website. Make the Credit Card Company Work for You Remember that the credit card company wants you as a customer. They receive millions of dollars from interest payments, yearly fees, late payment fees, and over the limit fees. Though you are technically just a drop in the bucket, they don’t want to lose your business. You can use this to your advantage. If a credit card company will not waive the amount and distance restriction, ask to speak to a supervisor. Typically one or two supervisors up the line and you should receive what you are asking for. If you have a clean credit history and payment history, remind the company what a good customer you are and tell them you would like to continue with them, but you need assistance. Another thing that credit card companies know is that if you do leave them and transfer your balance there are at least a dozen other companies ready to snatch you up and take over your credit card habits. It is always good to keep a few recent junk mail credit card offers handy so you can specifically tell your current company what another company may be willing to do for you (or of course use our free credit card finding tool on our home page to find and compare multiple credit card offers). These specifics may just tip the scales in your favor. As the customer, you can ask the credit card company to do the work for you. Most companies will automatically credit the disputed amount until the issue is resolved so that you don’t miss a payment. It is important to know that once you pay your credit card bill, you give up the right to dispute the purchase. Ask your credit card company to call the merchant for you and do the negotiating. They are good at it and most merchants want to keep credit card companies happy. They often have authority you do not and may know if a merchant has many complaints filed against them. If the amount is small, they may settle it amongst themselves. Keep Good Records Through this whole process, keep a paper trail. Write down when you tried to return your product, who you spoke with, what they said, etc. You should always keep your original paperwork, receipts, warranties, and promises made in writing. Also, when an employee of a company knows that you are writing down what they say, they may be more apt to me honest and fair. Also keep track of who you spoke with at your credit card company and what they told you would be done about your situation. Ask for specific dates and call back to make sure they did what they told you they would do. Most credit card telephone operators have operator ID numbers. You should ask for both names and operator id numbers so you have a complete list of what transpired. Are There Laws Capping Credit Card Interest Rates? The word “cap” means to put an upper limit on what is allowable in a contract, usually in terms of finance. When it comes to credit, the interest rate is the item being capped so that the loan terms never degenerate into a predatory lending type situation. As you may already know, credit card companies tend to be seen as largely (but legally) unfair when it comes to calculating interest, especially when compared to traditional bank loan contracts. Forbes Magazine in association with MSNBC recently reviewed some of the “Worst Deals” in America and not surprisingly, pretty much all of the major credit card companies made the top of the list. One might think that there could legal provisions in place that would protect the credit holder from paying an absurd amount of interest every month. After all, the line separating credit card companies and predatory lenders should be only so thin. The broad answer is yes, there are some laws in the United States that protect credit holding consumers. However, a more in-depth answer reveals that you might not be able to use these laws to
  8. 8. your advantages unless you live in a specific state. State Laws and Capping State law is what dictates interest capping, and unfortunately for most of the U.S., less than 50% of all states actually get involved in legal aspects of credit card capping. Capping is an easy lesson to understand. Once the law is set in place, the credit card company cannot increase the interest rate or they will risk legal censure. Therefore, credit card companies are smart enough to stay out of U.S. states that pass these consumer protection laws. Upon analyzing the contact information of major credit card companies, you will notice that the majority of them are based out of states that do not currently have usury laws or any such caps on revolving credit. If there is no capping law, the companies are legally permitted to charge any interest rate they see fit. The only catch, and the only real protection you as a consumer have, is that the terms of the agreement must be documented and signed by both parties before the credit can be extended. National Laws on Capping What about basic American rights? Can’t the credit card companies get in trouble for abusing trust? No, thanks to a very important case known as Marquette National Bank of Minneapolis vs. the First of Omaha Service Corp. (439 U.S. 299) In 1978, the U.S. Supreme Court decided that state-created laws concerning exorbitant rates of interest could not apply to a national bank, with a multi-state presence. From that moment on, nationally chartered banks would be held accountable to Federal law, overstepping state boundaries. Not only did this profoundly affect the credit business in general, but it also gave credit card companies and banks an advantage. They could become a national bank or simply move to a state where there were no or low credit card usury laws in place. The only limitation of this ruling was that the bank or credit company could only charge the state-imposed usury limit as determined by their home state. However, the company’s state-approved interest rate could apply to consumers across various regions of the U.S. Usury laws are not the sort of thing credit card companies take lightly. According to the Federal Deposit Insurance Corporation, back in the year 1982 four of the largest banks in the state of Maryland actually relocated their companies to another state just to get away from certain usury laws which benefited consumers. This is what you might call a cycle of usury—most U.S. states depend on credit card companies’ business in order to profit and so they will purposely not attempt to create legislation or will “loosen the chains” as it were, all in an effort to keep the credit companies nearby. So while there are certain anti-usury laws in effect for certain states like Maryland, Georgia, Utah, Illinois, Nevada, Nebraska and Rhode Island, there is no national protection, nor are there a lot of states that place strict limitations on these matters. Therefore, well-read consumers tend to expect very high interest rates when they deal with credit card companies. This general consensus has no doubt contributed to the popularity of debit cards in this day and age. What Can You Do? What can you do to avoid credit card debt and stay away from those astronomical interest rates? Prevention is important in avoiding these issues. Consumers are advised to apply for credit cards cautiously, carefully review the terms (as it is a legal requirement that the company must disclose all interest rates in advance), and avoid charging and maintaining high balances. You can use free online tools like the credit card “Chaser” on our home page to compare various options and get the lowest possible interest rate. If possible, look for a fixed interest rate contract above an adjustable rate contract, unless caps are clearly stated in the terms. If you are stuck in a bad contract, don’t despair. Instead, look for a new credit card company from which you can refinance the debt under more favorable terms. You may be able to qualify for a lower interest rate based on your credit score or other considerations. Though legal resources are limited when it comes to credit interest rates, you never completely run out of options. What Happens If You Do Not Pay Credit Card Debt?
  9. 9. Ideally, everybody wants to pay off their credit card debt. For any number of reasons, that goal could be postponed or forgotten altogether, much to the chagrin of the credit card issuing bank. Things happen…people get sick, people lose their jobs, or go on spending sprees from which they cannot easily climb out. It’s a given that some good consumers will be unable to pay off their debt. The latest statistics on debt from the Federal Reserve indicate that there is currently a $2.6 trillion dollar debt, which translates to an average of $8,500 for every United States citizen. Credit Card Debt The question is what can “they” do to you when you are unable to pay off your debt? More importantly, what can you do to help yourself out of this sticky situation? First of all, understand that the credit card companies and the issuing banks have legal rights to the money they are owed. The only legal option that can protect you is that of filing for bankruptcy. Federal law does allow a credit card company or bank to pursue their money in court. Attorney Richard Tomlinson explains on his website that credit card companies and bank lawsuits are becoming common practice in today’s climate. In most cases, lawsuits are considered a “last resort” and are usually filed in extenuating circumstances. The Debt and Collection Process When do credit card companies sue? For example, a consumer might be sued if he or she has an unusually high debt and if the credit card company knows the person has valuable assets. The consumer might also be sued if he has a regular job, stable residence and basically any good reason to pay off the debt as agreed. However, most of these companies will not pursue legal options right away. In fact, they may see advantages in hiring a third party collections agency. Collections agencies may give credit companies (or banks) the assurance that they can collect most of their money now, by signing over the debt to the agency. In theory, this saves the credit card company a lot of hassle, not to mention a long and drawn out legal recourse. Collections agencies have experience when it comes to negotiating with debtors, so the option of either hiring collections agencies or signing the note away to them certainly comes up before a lawsuit is pursued. The first step the credit card company will take will be to report your delinquency to a major credit agency. This will harm your credit score and affect your ability to get credit elsewhere. Then the harassing phone calls will start, and either the credit card company or the collections agency will begin to use intimidating speech to get you to pay up. Next, (and assuming you ignore all of the threatening letters) the company will either hire a collections agency or will take you to court and try and force you to pay your expenses. If you have the means to pay, they may try and take some of your assets or request wage garnishment for all of your incoming paychecks. The most common recourses at this point are to try and negotiate with the credit card company, seek debt consolidation or refinancing, or try facing the company in a court of law. The Option of Bankruptcy What about the option of filing for bankruptcy? You don’t actually need a lawyer to file for bankruptcy; however, it’s advisable that you do, so the bankruptcy attorney can guide you through this complicated process and try and absolve most of your debt. Bankruptcy could be an option for you, especially if debt is an ongoing situation. Bankruptcy is discouraged for the most part, since it mauls your credit report and marks you for the next seven years. Some tend to think of bankruptcy as an easy way out. Unfortunately, the facts show otherwise. Recent legislation in congress now states that even if a party files for bankruptcy, that doesn’t necessarily mean that all debts will be forgiven. In 2005, CNN reported that George W. Bush signed a new bankruptcy reform bill that makes it harder for individuals to clear up debts through bankruptcy options, and restores more power to creditors. So, while bankruptcy is an option, it should continue to be seen as a last resort. Unless you have a good bankruptcy lawyer, the odds are stacked against you coming out on top in a bankruptcy situation. The last thing you want is to owe more money after you’ve ruined your credit and filed for Chapter 13! Other Options to Consider There are other options besides bankruptcy. You can try consolidating your debt (which means combining all credit debts and then negotiating for a lower payoff) through a legitimate debt consolidation company. Legitimate
  10. 10. is the keyword here. There are many scam operations posing as debt consolidation firms. Remember that debt consolidation has one primary use for you: refinancing the debt at better terms. If the company doesn’t do that for you—that is to say, if it doesn’t carry the loan—then you are basically paying them just to negotiate with no guarantees. This will not stop your creditors from calling, nor will it change your credit score. It could be a waste of time and money in the end. The good news is that a credit card company is more willing to work something out with you than they are anxious to consult a collections agency or a lawsuit. Hiring a lawyer or negotiating a low payout is ultimately going to cost the credit card company money. If there is any negotiation or consolidation situation that can help the both of you, they may be willing to accept it. The last place you want to be right now is in heavy debt. If you are slowly but surely losing the debt battle, and don’t want to face grim options of bankruptcy, collections agencies or credit card lawsuit, then now is the time to take action. Contact a credit counseling service or a debt consolidation company and see what they can do for you. Research the company online to make sure that it’s a legitimate opportunity. If you want to try and pay your debt off over time then try renegotiating your terms with the credit card company or look into refinancing. Take decisive action by contacting a debt repair company so that you are not left at the mercy of the courts! No matter what your situation is you will want to make sure that if you are looking for a credit card that you find the card that is right for you. Why Do Credit Card Companies Sue Consumers? It must be quite a scare when the average consumer hears that he or she is being sued by a multi-million dollar credit company. People wonder why and how this can happen. It happens for the same reason that anyone attempts to take you to civil court; because you owe them money. Credit Card Debt When you owe a lot of money on a credit account and continue to miss minimum due payments, the credit card company has the right to sue you. In fact, it’s almost inevitable that the company will sue you, given the heavy load credit card companies are carrying in this failing economy. They need every penny they can get to stay in business! The lawsuit is usually filed by local collection law firms that deal with high-volume cases. You will be one of hundreds or thousands of people sued. Like you, these other consumers will be confused as to this turn of events and desperately want information on what to do next. Notice of this action is usually not mailed, but delivered by a process server. The “summons and complaint” will either be personally given to you or perhaps left at your front door. To Sue or Not to Sue Not all credit card companies will choose to file a lawsuit in the event of payment default. Therefore, the sudden decision to sue a consumer can come unexpectedly. It’s likely that a credit card company will consider all of the following before choosing to file a lawsuit: * How far behind is the borrower’s account? * Is there a co-signer that can take over the past due account? * How long has the borrower been working at the same job? (Making a case for wage garnishment)
  11. 11. * How long has the borrower been paying on a home? * Is the borrower older or disabled? Or is he/she likely to work again? As you can see, it’s mainly a question of responsibility. If you have generally favorable circumstances that would allow you to make minimum payments then you are considered more responsible for your debt and more at risk for a lawsuit. Legal Entitlement of Credit Card Companies If a credit card lawsuit is served to you, you made be left wondering if you should file for bankruptcy, hire a lawyer or leave the country entirely! (We would advise against the last option.) Remember that the burden of proof rests with the credit card company since it is acting as the plaintiff. Courts understand that default on credit card accounts is at an all time high and know that the average consumer can’t compete against high priced lawyers. Therefore, according to bankruptcy attorney Craig D. Robins, Esq, the credit card company is obligated to prove “that they are entitled to commence a lawsuit against you.” The credit card company will have to provide evidence that: * You agreed to establish a credit card account with a signature. * You agreed to the terms of the account including principal charges, interest, default rate and other issues * That a default action has indeed taken place. The credit card company must prove that you digitally or physically signed a document authorizing a new account. If they cannot produce this evidence, they may not have a case. The company must prove not only that you agreed to their terms but also that they did not alter the terms during the loan, which would not only null the agreement but also put them at risk of being seen as a predatory lender. The credit card company must clearly state the chance of altering terms at the outset of the contract and must send you copies of the new terms of agreement when it becomes official. Finally, the credit card company must prove that default (or forfeiture of the terms) has occurred. A loan default occurs when a debtor has not met his or her legal obligations, as agreed upon in the original contract. This usually means that a scheduled payment or series of payments has been missed. The credit card company will customarily offer evidence of missed payment to the court. Therefore, if you plan to defend yourself in court, you must be sure that the company doesn’t have entitlement to a case, namely in the aforementioned three areas. What to Do When the Credit Card Company Sues First of all, don’t panic! You do have to legally take action once served with notice and within the stated number of days. Now is not the time to procrastinate or ignore the problem. If you fail to take any action then the court and creditor will consider your inaction basis for a default judgment against you. Harmless, right? Wrong. Attorney Craig D. Robins warns that a civil judgment can result in wage garnishment, liens on your property and frozen bank accounts. Worse yet, these blotches will not leave your public record for several years, even if you later file for bankruptcy. You must answer the summons and then state whether or not you wish to dispute the case. This will at least prevent a default judgment from happening, even though you still have an ugly lawsuit on your hands. However, time is what you need right now. Time will give you further options including debt negotiation with the Credit Company or even debt consolidation solutions. What about bankruptcy? The advantages of filing for bankruptcy include stopping harassment and stopping the lawsuit. For some consumers that have no legal defense and no hope of consolidation, this is the only option. However, even if this is your desired way out, remember that there are bankruptcy qualifications that you must meet. Why do the credit card companies sue? In short, because in this day and age no one can afford to be short- changed. Whatever sum you owe the credit card companies is money that they are bound to lose. This is why it’s important to keep up your minimum payments and avoid getting into further debt if you can possibly avoid it. Being sued by a credit card company can be scary, but taking your financial obligations seriously and communicating with the lender can prevent this nightmarish scenario from happening. Part of avoiding this whole situation is by applying for credits cards consciously and using them cautiously. If you
  12. 12. are going to use credit cards to build your credit score or pay for items, then use a tool like the credit card “Chaser” to compare your options. This will allow you to shop around and compare cards to get the best interest rates possible. What Happens When a Credit Card Company Sues Me? No one wants to be in a position where you cannot pay your bills. However, sometimes a situation occurs that is completely out of your control and you have to decide what bills to pay and what bills not to pay. In that situation, there are three things that become the priority: having food to eat, having a place to live and being able to get to and from work. Credit Card Debt Another situation that occurs is job loss that leads to people using their credit cards to live on, or unexpected medical bills that can also lead to maxed credit cards. And yes, irresponsible use of credit cards can also lead to folks who are thousands of dollars of debt. For many, even if they find a job or extra income today, have no hope of repaying in a timely matter. Read on to learn what happens when credit card companies sue. What Makes a Credit Card Company Sue No one knows when a credit card company will decide to sue over a debt. Some credit card companies will not sue for anything less than a thousand dollars while others will start the process for as little as two hundred and fifty dollars. There is no real way for you to determine if you are going to be sued; not until you get the knock on your door from the sheriff’s office with the legal papers. Before a credit card company takes steps to sue you, they will usually try every other recourse to collect on the debt from constantly calling and trying to get you to relent and make a payment to offering you a settlement offer for less than the total amount owed. If the credit card company thinks that you are holding out, they may take steps to sue in hopes of forcing your hand. The problem, however, is that if you do not have the money to pay, no amount of talking, settlement offers or court cases are going to change your situation. You should be aware of your rights if you are in a situation where you are being sued or you are very behind on your credit card payments. Firstly, the credit card companies are not allowed to harass you. That means that they cannot yell at you on the phone or threaten you in any way. Unfortunately, there are those companies that will threaten to sue you or have you arrested and so on. These are illegal statements and should be reported to the Federal Trade Commission, the State Attorney General and the Better Business Bureau. Also, make sure that you document the date and time of any abusive phone calls and what was said. Credit card companies are also not allowed to call you at work or outside of what is considered reasonable hours (this can vary from state to state but the average is 8am to 9pm). They are not allowed to share your private information with outside parties. For example, it is illegal for them to speak to your boss about your debt. Not all credit card companies will become threatening towards you, in many cases they simply want to work with you and get their money. If you know that you cannot pay and you simply do not want to be contacted by the credit card company, then put it in writing and send it to them by mail (keep a copy for yourself) and they will be required by law to stop contacting you; however, that does not mean that you will not be sued. What Happens When the Credit Card Company Decides to Sue Firstly, you will receive a legal document, which will be handed to you in person by a sheriff. You should be polite and accept the document, the sheriff is only doing their job, which in part is serving legal notices. The legal notice, which will tell you that you are being sued, is called a Summons and Complaint notice. On the summons, there will be the dates that you are expected to be in court. However, if you have the option to meet with the complainant’s attorney outside of court with an arbitrator that can make the official decision, then you may never go to court. Instead, you will meet with the attorney for the credit card company and an arbitrator who will try to help resolve the issue and make a decision if the issue cannot be resolved. There are various opinions as to whether you should hire an attorney or try to handle the case on your own. If
  13. 13. you cannot pay something on your credit card, you probably cannot afford an attorney. And if you owe the money that you are being sued for, an attorney will only be able to tell you where to sign on the dotted line. You do not need an attorney to negotiate a settlement or to explain why you cannot pay, so you may want to skip that extra expense. You can offer a settlement for yourself or negotiate payments as well. If this is a debt you do not owe, or the debt owed is the wrong amount, then you may need an attorney to fight in your corner and help you win the case. In the end, everything boils down to two things, whether or not the debt is yours and how the judge rules. At that time of the ruling, there will be no decisions made on how you should repay, nor will a judge rule that your bank accounts be drained or that you sell your home. This is only part one where the judge determines whether or not you are liable for the debt. How the Credit Card Company Gets Their Money Here is the tricky part. Although it is possible, it is very difficult for a credit card company to get permission to garnish your wages or take money from your banking accounts. If you have a joint banking account and the other person on your account is not responsible for the credit card bill, then they cannot ever have access to that account. According to Consumer Credit Help, a credit card company will garnish your wages if the court allows them too. However, it is not common for a credit card company to be allowed access to your wages. The court takes everything into consideration when petitioned to allow garnishment of wages. They will take into account your monthly obligations and your debt to owe ratio to see if you can live while having your wages garnished. Unless you are jointly sued with your spouse, their wages cannot be garnished in your stead. There are some cases where a judge will allow a lien to be put on your home so that in the event that you sell your home, your debt will have to be paid before you receive any money. The fact that some credit card companies sue does not meant they all will sue, and typically, a credit card company will try to collect by any other means before considering taking on the fees of suing you. However, if you owe thousands of dollars, you can probably look forward to being sued by a credit card company or two. What’s more, if you are sued and the credit card company wins the case, your credit report will show a judgment on it. Even if you pay it off, the judgment will show as a negative for up to twelve years. There may be a couple of options for you if you find yourself in this situation. Option A is, if you own your own home then consider a home equity loan or refinancing your mortgage so that you can pay off your debts and roll that money into a much lower interest rate payment. If you are in a position where you are about to start a new job, you may want to consider applying for a credit card that will allow you to roll your debt onto a new card. This may or may not be an option for you, depending on how bad your credit is at this point. It's All About the Money: Payment, Payment Schemes, and Credit Card Companies Credit cards, credit card companies, and processors are driven by one thing: money. In this section, we go through the players behind credit card rates, policies, and deals as well as monthly payments, interest rates, and credit card limits. • Who Are the Largest Credit Card Processors? • How Do Credit Card Companies Figure the Minimum Monthly Payment? • What Percentage of Your Credit Card Limit Should You Use? • How Do I Consolidate Credit Card Debt? • How Do I Fight a Credit Card Interest Rate Change? • How Often Will Banks Raise Credit Card Limits? • How Do I Choose the Best Rewards Credit Card? Who Are the Largest Credit Card Processors? Choosing the right credit card processor for your company can be confusing. There are literally dozens to choose from and every one of them promise you the lowest rates as well as promising you low minimums, high maximums and more. This leads you to the point of knowing who to use and why.
  14. 14. One thing that you need to understand is that the biggest credit card processors may not be the best one for you. However, the largest credit card processing companies are: * FirstData * Bank of America * Chase Merchant Services * Global Payments Each offers something positive to those who use them, but you should carefully compare them against some of the quality smaller credit card processing companies available to you and determine which one is going to provide you with the services that you need at the lowest rates. A company like FirstData, for example, is one of the largest credit card processing companies in the business and they handle many very large companies like Wal-Mart as well as many smaller companies. So if you are a small home based company, then you would be able to qualify for the First Data credit card processing program but that of course you should still do your research to determine which company is best for you as size does not necessarily mean that First Data is the best credit card processing company for every business in every industry. This does not mean that you cannot accept credit cards, only that you will have to do some more research to determine which company is best for you. Do I Need a Credit Card Processing Company? Many companies start out thinking that they can run their business without taking credit cards; however, they learn pretty quickly that credit and debit are the primary ways of paying for services and products. If someone is ordering online, they do not want to wait an additional week for an echeck to clear or wait for you to receive a money order or cashiers check before they send out their items. As such, you need to have a way of accepting credit cards online. A credit card processing company is a company who manages your credit card transactions for you. Companies like PayPal, for example, are credit card processing companies, although they do not necessarily bill themselves as such. What to Look for When Choosing a Credit Card Processing Company There are a lot of things to consider when choosing the right credit card processing company. Companies like FirstData offer a history of solid credit card processing at a low rate. However, as mentioned above, their specialty is large companies and their requirements would likely be too much for a small company. Companies like PayPal work with any size company, but their merchant fees can be high. With that being said, the first thing you should consider is whether a company will work with your size company. If they do, will they charge you more fees because you will not be making as much money as a larger, more profitable company? Here are some of the fees that you will want to look for: Chargeback Fees & Retrieval Fees – these are fees incurred if a person who uses a credit card to purchase something from you reports that you charged them erroneously or that there was a problem with the transaction. At this point, you will not only lose the merchandise you sold, you will also lose the actual payment and you will be charged a fee because there was a chargeback. Some credit card processing companies offer you protection from these fees, so check for this kind of additional charge. Termination & Cancellation Fees – these fees occur if you terminate your account with your credit card processing service. However, you can negotiate a fixed fee up front and also negotiate that a fee would not apply after a certain amount of time (such as a year). If you have a dispute with your credit card processing company that cannot be resolved, then you should not pay a termination fee. Hidden Setup Charges – these are surprise fees that are unexpected during setup. You should always check your contract before signing, as there are really no such things as ‘hidden charges’ only charges that are disguised. If possible, have a lawyer go over your contract before you sign, tell him or her your expected charges. Then see if they match up with what your lawyer finds. If you find these fees, consider using another company as this is a sneaky way to get you to pay additional fees for your services. If you cannot afford to hire an attorney, look for these ‘hidden’ fees:
  15. 15. * File fee * Security fee * Audit fee * Conversion fee * Over the limit fee * Excessive transactions fees * Discount rate fees charged on refunds * Bill back fees * Licensing fees * Software fees Non-Refundable Setup Charges – many companies do not charge a set-up fee and those that do should keep their rates reasonable. If you see non-refundable set up charges, take the time to compare their services with other companies, you will probably do better elsewhere. Batch Fees – these fees apply when you transfer your money into an account at the end of a business day. Every company charges these fees and they should be very low. Minimum Fees – every company charges minimum fees that range from $20 to $25. This does not mean you will be charged this amount every day, rather it means that your fees from your transactions (every company gets a fee per transaction) need to equal the minimum amount. If your total fees for the day do not equal that minimum amount, then you will have to pay the difference out of your total transactions. Pass Through Fees – fees that your credit card processing company has to pay to Visa/MasterCard/Amex for using their cards that are passed on to you. Voice Authorization Fees – there are times where you will have to call your credit card processing company and have them verify a card. In this case, you will pay a fee for the service. Annual Fees – some companies charge annual fees while others do not. A lower volume of sales will probably garner you an annual fee. Customer Support Fees – this is a common fee that is used to send you your monthly report as well as provide you with access to 24/7 live phone customer support through a toll-free number. Technical Support Fees – many companies do not charge technical support fees, so consider this fee very carefully if it is on your contract. Compare Credit Card Processing Companies There are many companies to choose from and as such, you will want to do your research. There are companies that offer you side-by-side comparisons so that you can see what each company has to offer. Limit your search to companies that work with businesses of your size so that you can avoid getting excited about the rates from a company that offers very low rates but only to companies that meet certain criteria, such as a high volume of customers or longevity in business. If you are a start up company who is not only looking for a company to handle their merchant services, but who are also looking for business credit cards for the company itself then try our credit card chaser tool. You tell us what you are looking for and we will find it for you. This will make your search quick and easy and you can occupy your mind trying to find a great credit card processing company to handle your companies other credit and debit card needs. How Do Credit Card Companies Figure the
  16. 16. Minimum Monthly Payment? Minimum monthly payments may seem arbitrary at times, but rest assured, they are precisely chosen by the credit card company. How can you begin to understand the process of how credit card companies determine minimum monthly payments? Traditionally, the minimum monthly payment is based on a consumer’s total loan amount or balance. Typically, it is not actually based on a particular rate like the interest rate. Instead, it is based on the continuing balance and usually accounts for roughly 2% of the total. You will notice both the account balance and the minimum payment due are printed on your monthly statement. Here is an easy way to figure out the traditional monthly minimum percentage: simply divide the minimum payment by the total balance. For example, if you have an account balance of one thousand dollars and were making a minimum monthly payment of $20 a month, you could easily ascertain that you had a minimum monthly percentage of 2%. Other Factors Involved in Determining the Figure However, there are other factors involved in calculating the total. First, the outstanding credit card balance is taken into account. This is also called the previous balance, or the amount carried over from last month. The APR or Annual Percentage Rate is the next factor to consider. The APR amount is stated on the credit card statement, as well as in the terms and conditions of your contract. Simply put, APR is the entire interest rate for a whole year as opposed to just a monthly rate. When you read the term “nominal APR” this refers to the simple interest rate for a year’s time. “Effective APR” goes one step further and includes the fee plus the compound interest rate for a year’s time. Besides APR, you will also be paying for transaction fees, which are fees charged every time you carry a balance. (They can range from half a dollar to over $4.00). In past times, credit card companies literally used the default of 2% to calculate minimum interest. However, over time they started adjusting the formula to include finance charges and extra fees. Therefore, what was once a 2% of total balance minimum payment due, eventually became a 1% of total balance but plus other fees and interest, thereby bringing the total to an amount near 2%. Blink and you miss the point: By paying more in finance charges and fees (even if it equals the same minimum payment more or less) and limiting yourself to 1% of the balance, then you are actually increasing the length of your loan. This is not even considering other fees the company might tack on such as over-limit fees, late fees, processing fees and insurance fees, all of which can appear on the final bill. Chances are that the average consumer never notices this! Will New Government Programs Really Help? Today, credit card companies differ in their approach to setting the minimum payment due. Some may still use the default percentage rate of 2-4% while others have adopted the sneakier 1% plus fees galore strategy. It should be noted that in the year 2003, the government branch called the Office of the Comptroller strongly recommended that credit card companies adjust their minimum monthly payment formula for the benefit of consumers. Credit card providers were asked to alter the minimum due so that customers could pay a larger portion of their balance, making more of a payment on the actual debt. The new formula was the APR rate plus the transaction fees multiplied by the balance and then plus one percent of the outstanding balance. This formula allowed customers to pay more money on the actual debt and minimize some of the interest and extra fees that were, in essence, holding the account in a stalemate. Some of the top credit card issuers like Bank of America, Wells Fargo and Citibank have followed the Office of the Comptroller in their advice and have altered the minimum payment due according to this formula. Remember also that some companies may give you the option of paying the formula figure or simply paying 2% of the total balance.
  17. 17. Beware of the Minimum Payment Temptation The ultimate flaw of paying only the minimum monthly payment is that you’re really only paying for predominately interest and for the right to keep the debt active. Sounds crazy doesn’t it? You are paying them for the right to stay in debt to them! Little of your actual payment will be paid on principal if you continue making the bare minimum. A better strategy for getting out of debt is to pay at least twice of the minimum monthly payment. The more you pay towards the principal, the less overall finance charges you will pay. Start taking action to pay off your debt faster. Pay attention to your credit card statement and then ask your credit card company how they figure the minimum monthly payment. If you feel that you are paying too much interest then consider the option of refinancing. Remember that over time, minimum monthly payments can rise with accumulating interest and balance. It’s best to take care of rising debt now rather than wait until the situation becomes critical. If you are suffering in debt then try contacting a debt consolidation company and requesting help. How do I lower my credit card interest rates? Do you know how much your interest rates affect your monthly credit card balance? If not, consider this scenario. Imagine for a moment that you have a credit card with a balance of $500 on it, with an interest rate of 14%, and you make the minimum pay of $15 a month on that card. Without any additional fees, and without making any other charges to the card, you will pay a total of $637 to pay off the credit card and it will take you three years and seven months to do it. Now, imagine if you can get a better interest rate, perhaps around 10%, with the same amount owed on your card and the same monthly payment of $15; you can reduce the amount of time it takes to pay off your card by three months and reduce the amount of money you owe $49. This will add up fast if you continue to use the card or if you have multiple credit cards with the same scenario. With that in mind, you may be wondering just how you can get lower interest rates on your credit cards. If you are, you will be happy to know that you do have a couple of options available to you. How to Get Lower Rates from Your Credit Card Company Okay, this may seem a bit simplistic, but the easiest and fastest way to lower your credit card interest rates is by calling your credit card company and asking them. Now, it is important to realize that if you do not have a good credit history with your credit card company, this tactic will not work. Your credit card company will only want to increase your rates if they see you as a risk; so if you have missed your last payment, you probably will not have much luck if you call them for a reduced rate. However, if you are a good customer, who consistently uses your credit card and always pays your bill on time, your insurance company should not have any problem getting the credit card company to change your interest rate to a lower one. With that being said, many credit card companies are not willing to lower their rates because of the bad economy. Some credit card companies are taking steps to increase rates while they have the chance because new laws going into effect next year will prevent them from increasing fixed rates without specific, proven cause. Many credit card customers with years of good standing with their credit card companies are finding themselves surprised with an increased rate rather than a decreased one. If you are one of those individuals, you have two options. Your first option is to play hardball with the credit card company. If you are a credit card holder in good standing with your credit card company, then you can actually demand that they lower your rate. While credit card companies want to ensure that they make a profit every year, most do recognize that if they lose their paying customers they will have a difficult time meeting their bottom line. As such, you can tell them that you will close your account with them and pay off your balance if they do not lower your rates. If they still refuse, then do what you promise. That leads you to your second option. If you are a person with a good credit record and your current credit card company will not work with you regarding your insurance rates, then it is time to move on. In a tough economy,
  18. 18. many credit card companies are looking for individuals with a good or great credit score to present with a credit card, so leave that company that will not work with you and find one that will. Make Sure You Understand What is Available to You There are a couple of important things to consider when you are trying to get a lower interest rate. Firstly, you need to know what the going interest rates are and secondly you need to know what kind of rate you can get with your current credit score (click here for free credit score offers). It will not do you any good to ask for a lower interest rate if you are already getting what the industry considers rock bottom rates. Your credit card company is not going to offer you anything lower than what they are allowed to, so you need to be reasonable. If you have an 8% interest rate and the industry standard is 10%, then you are probably in a much better place than you realize. Also, if your credit score is terrible or, as mentioned before, you have a poor payment history then your credit card company will not feel the need (or desire) to lower your rates. You need to establish a strong payment history for about a year before you can expect lower interest rates to be applied to your account. This does not mean that you should not ask. It never hurts to ask; however, do not get upset if you cannot get what you want in this situation. Your Other Options You do have another option available to you if you want to ensure that you are getting the very best credit card interest rates and that is to let us “Chase” down the perfect card for you. If you have good credit, we can find cards with low introductory rates that will allow you to transfer your balance to the new card, often with very low rates that last up to a year. Then you can find another low introductory rate card that allows you to transfer you balance again, keeping your rates very low for several years. Often you can repeat this cycle many times, and we can continue to find the right balance transfer card or cards for you. If you have bad credit, we can help you find a card too. While you may not have as many low interest rate credit card options available to you as someone with great credit, it is possible that we can find you a card that will provide you with a lower rate than you are currently receiving. The great thing is, we can find you the cards that meet your criteria and you can take them or leave them as you wish, with no obligation. Our job is to find the right credit card for your situation, whether you need a credit card for your business or for personal reasons. Finding the perfect card can be difficult with so many choices and we take all of the guesswork out of the process. All you have to do is check off the things that you are looking for in a credit card on the credit card “Chaser”, and let the tool instantly show you the cards that meet those criteria. What Percentage of Your Credit Card Limit Should You Use? One of the key elements of any credit card is the credit limit. Your credit limit is based on your credit history. A major contributing factor to having overall positive credit is to manage your credit limit well. Some people think that using up to 100% of a credit limit is fine as long as you don’t go over, but that is not the case. There are some ways you can handle your credit limit to reflect positively on your credit history. As mentioned before, credit card limits are based on credit history. The rule of thumb is any credit limit below $2,500 says that your credit history is average. If the only credit limit you can get is below $500, this says that you have poor credit. Once you establish your credit by making payments on time and staying under your limit, you should be eligible for a credit limit increase.
  19. 19. Some credit card companies will automatically raise your limit after you prove yourself, but others will not. You should routinely ask your credit card companies for an increase in your credit limit until you reach a limit above $2,500. This does not mean that you have to use the whole amount up to that limit. You will still need to be responsible. Credit limits also take into account your household income. Anytime you get a raise, add more income, or even receive a bonus you should request an increase. Eventually, when all your credit cards reach higher limits your credit score will increase. It is a negative thing to open several low limit credit cards. This will affect your credit score adversely. Staying Well Below Your Credit Limit It is easy to treat your credit limit as a safety net. As long as you don’t go over, it’s okay right? Wrong. You should only use about 40% of your credit limit. Once you get over this percentage, your credit score begins to fall. A falling credit score can then in turn increase your interest rate. Once you reach your limit, your score can drop 100 points and your interest rates increase to as much as 30% If you are close to your limit, this sudden increase in your interest rates can push you over the limit. Then your credit score will spiral even more and you will face over the limit fees. It is wise to treat your credit limit with caution and not get too close to it. Think of your credit limit merely as a suggestion. For this reason and other reasons, you should not get too close to your limit. If you have an emergency, you want there to be room on your card. If you have a fraudulent or accidental charge that you need to dispute, you want room on your card without going over. But the most important reason is to keep your credit score high and intact. The credit crunch that the nation is under is likely to last well into the future. Most credit card companies have suffered loses over the last few years due to issuing too many credit cards that cannot be paid back. To counteract this, credit card companies are tightening their belts and not lending to as many people or as easily. They are holding to stricter guidelines and requiring higher credit scores. Keeping your credit score high is the only way to have access to the things you need. Using Credit Wisely There is much more to using your credit wisely than just keeping well under your credit score. First of all, you should get your once yearly free credit report every year (click here for free credit report offers that come with a paid credit monitoring service so that you can keep track of your credit score). Even if you have good credit, it will show you anything that has changed or any mistakes that may be on it. If you find a mistake, you will want to fix it right away by contacting the company the mistake is with. Typically, it takes six months for a correction to show up on your credit report. Keeping an eye on your credit score is a good idea, but so is paying on time. Making at least your minimum monthly payment on or before the due date is responsible credit handling. Just one late payment can result in a decline in your credit score. Also, be sure only purchase items you have the money for. Credit cards should be used just to establish a history, not to purchase things you can’t afford in the first place. Deciding what credit card is for you and getting the credit limit you want isn’t difficult. However, it can be overwhelming since there are so many choices. How Do I Consolidate Credit Card Debt? When a consumer has a number of credit cards, they may be wondering about consolidating the debt. Whether this is the right approach for you will depend on the interest rates you are currently being charged and how much cash the strategy will free up. Factors to Consider Before Consolidating The first thing you need to do to figure out whether consolidating your credit card debt is the right thing to do is to make a list of how much you owe and the interest rates you are being charged on each card. If each card is
  20. 20. charging you approximately the same rate of interest, then consolidating all of your credit cards is probably not the best approach for you (unless you can find a new balance transfer credit card or line of credit with an even lower interest rate). However, if you can see that you will be charged a lower rate of interest by transferring a balance from one card to another, then it’s a good idea to consider doing so. You will want to make sure that you understand fully the terms that your credit card company is offering for balance transfers. Companies want to avoid a scenario where customers keep switching from one lower interest rate card to another. Be sure that you have read all the terms carefully and that you understand them before making your final decision. Some cards will offer a lower interest rate on balance transfers than new charges on a card. Be sure to find out whether that is a permanent interest rate that you can expect to pay or if it’s only offered for a limited time, say between six and 12 months. Once you have all the facts, you can start to look your options for transferring a balance. Transferring Your Balance to Another Card If you are considering opening a new credit card account for the purpose of consolidating your current debt, you may need to tell the company that you want to transfer a balance at the same time. As soon as the card is issued, the new credit card company will go ahead and issue payment on the old card for you. Another method you can use to transfer an existing balance to another card is to call the credit card company’s customer service line to give them the particulars. The company will look after paying off the other card and transferring the balance to your account. If you choose this option, be sure to check your next statement carefully to ensure that the balance was transferred and that the amount corresponds to your records. While you are waiting to get your next statement, continue to make the minimum payment on the card that you are transferring the balance from. That way, you keep your account up to date. Getting a Debt Consolidation Loan Another option available to consumers who are interested in consolidating their credit card debt is to apply for a debt consolidation loan from a bank or another type of lending institution. This approach can help you manage your debt in a couple of ways. One of them is that instead of having to make multiple payments on credit cards each month, you simply make one loan payment. The convenience of doing so is very attractive to people who don’t want or need the hassle of juggling multiple payments each month. Another way that taking out a consolidation loan will help consumers is that they usually come with a lower rate of interest than what credit card companies charge. This is not the same kind of revolving credit that a credit card gives you, but since more of your payment is going toward the principal amount that you owe, you will be making a bigger dent in the amount you owe each month. Be sure to ask about the total amount of interest you will be paying over the term of the loan. The total cost of borrowing is important information that you need to be aware of. It will likely be a lot less than continuing to pay the credit card company rates, but you should know how much money you will save up front. If you find that you need to extend the life of the loan too much, it won’t be worth the trade off. Deciding to consolidate your credit card debts into a single payment can make good financial sense. You save interest and free up some much-needed cash in your budget. If you are considering transferring an existing balance to a lower-rate credit card, you can start by comparing some of the various balance transfer credit cards How Do I Fight a Credit Card Interest Rate Change? Across the country people with good credit scores have opened up their credit card bills only to find that their rates have been increased for no apparent reason. This is frustrating and seems downright wrong, but it is perfectly legal to do so. At least until the new credit card laws go into effect. In the meantime, you are stuck with a new interest rate, which in turn increases the amount that you owe to your credit card company. It is even worse for those individuals with less than perfect credit, or who have missed payments on their credit
  21. 21. cards in the past. Even if it has been a while since they have missed a payment, with the current economic situation and with credit card companies facing more stringent laws about their interest rates coming into effect soon, many credit card companies are rushing to ensure that they raise their rates as high as possible so that they can recoup costs from non payers, preempt the possibility of you not making future payments, and simply ensuring that they can make as much money as possible. Many people think that their hands are tied in these situations and simply make their payments while grumbling about the changes. However, the truth is, you have recourse for this situation; you just have to be willing to do two things. First you need to be willing to do some legwork to make some changes; and secondly you need to be willing to make some hard choices. Make a Simple Phone Call You work hard to make your payments on time each month and you make more than your minimum payment only to find a higher interest rate in you next bill. This can make a lot of people angry, but instead of getting angry, pick up the phone. There are many reasons that your credit card company will hike an interest rate and one of them is that they annually raise rates. If that is the case, then it is very possible that you will be able to call and get your rates reduced. Good customers are getting harder and harder to find and many credit card companies are willing to do whatever it takes to ensure that they do not lose the customers that pay their bills on time every month, especially if you are still using your card regularly. Speak to the customer service department, and if necessary the supervisor or manager of the department, and explain to them that you want to have your interest rates reduced. In the course of the conversation stay calm and reasonable, explain why your interest rates should not have been increased. If they mention a late payment in your past, explain why it occurred (you were out of town and forgot, you were in the hospital, etc.). As long as you are not traditionally late on your payments, this should not be an issue (unless it was the previous month’s payments and you may have to make several on time payments again to prove that this will not be a trend). If they refuse to reduce your rates, then it is time for you to get tough and make a couple of decisions about your credit card. When to Get Rid of the Credit Card As you probably know, your credit score is based on your credit history. If you have a card in good standing for a number of years, then it is having a positive affect on your credit score. This leads to the question as to whether or not you should cancel your credit card if they will not lower your interest. If you have many credit cards in good standing, then you can probably afford to pay off your credit card and close the credit account without affecting your credit score. However, if this is the only credit card that you have, then you will want to keep the card. That does not mean you should not pay it off. On the contrary, pay off the card and stop using it. Make sure that your credit card company knows that you intend on paying off the credit card and putting it on the back burner. If you have the cash, pay it off right then, if you do not then you will need to either save the money to pay off the card or get another low interest credit card and transfer your debt to the new card. Even though the economy is tough, banks are still offering great deals for new customers with good credit scores. Even if you have less than perfect credit, a low introductory rate is usually available, although it will not be as low as if you have perfect credit, it will likely be lower than any increased rate that you are receiving from your current credit card company. Apply for a new card and transfer you balance; however, you need to ensure that you find a card that has a long introductory rate of six months or longer and you also want to try to pay off your balance before the low introductory rate increases. You will also want to ensure that when the low introductory rate deal is over that the new rate is something that you can live with. We can help you with that, but more on that in just a bit. How to Choose a New Credit Card As mentioned before, you want to find a new credit card with a low introductory rate. You also want to ensure that you understand exactly when the rates will increase and how much they will increase. Every credit card offer
  22. 22. comes with terms and conditions that will clearly state the introductory interest rates, how long that rate is effective, and what the rates will increase to when the introductory period is up. What’s more, they will also explain what your rates will increase to if you miss a payment (and how many payments you can miss, if more than one, before your rates will increase). Choosing the right credit card can take you a lot of time. If you are looking for low introductory rates, then you will have to read the terms and conditions of every card with a low introductory rate to see how long they last and what they increase to. On the other hand, you could use our Credit Card Chaser consumer tool to find the credit cards that fit your criteria, which will save you a great deal of time. Our chaser tool will find all of the best credit card deals that meet your criteria. If you want a rewards card with a low introductory rate, we can find it for you. If you want a card with a picture of a beach on it, then we can find the credit card companies with that as an option that still fits your other criteria. How Often Will Banks Raise Credit Card Limits? Credit limits on credit cards are so much more than just numbers. They affect your credit score, your standing with credit card companies, your money management, and can even affect your insurance rates. You may wonder how credit limits are determined and just how often a bank will raise your credit limit. There are some basics to consider that may answer these questions and help you as you strive to manage your credit in a responsible fashion and get credit cards with the highest limits possible. Your credit limit is determined by several factors. The most important aspect that a credit card company will take into consideration is your credit history. If you have a history of late or missed payments or a history of going over your limit, the company will start you off with a low limit for a period of time to better determine your financial responsibility. They also look at how many credit cards you have open and how close you are to the limit on those. You may think that because you are under the limit, you are fine. This is not true. Companies will look to see if you have used 50% or more of your available credit and carry that amount as a balance. This is considered poor financial management and if you apply for another card, your limit will be low. Another factor taken into consideration is your income to debt ratio. Having $10,000 in debt may seem like a lot, but if your income is $10,000 a month, it isn’t a large amount of debt to have. That is why companies don’t just look at your debt totals but at your debt as it relates to your income. If the two are close together or the debt exceeds the income expect a small credit limit or to be turned down altogether. Two Ways Credit Limits Increase There are two ways that credit limits are increased; either by your request or by the bank independent of your request. Let’s look at why you may request an increase. Chances are if you want an increase just because you need to purchase something, you will be turned down. You have to have a reason that has staying power such as a raise. If your income increases, you will most likely be approved for a credit increase. Another reason you may request a credit limit increase is to do a balance transfer. This may be accepted by the company because they know they stand to benefit from the interest of your balance transfer. But if you are already very close to your limit and only make your minimum payments every month, you may be turned down. Letting the company know what other offers you have received for balance transfer may persuade them to give you the increase. Another reason people request an increase in their credit limit is because they have had a recent pay off. If you had been carrying a balance for several months and recently paid the whole balance off, it is a good time to ask for a credit limit increase. You have proven yourself to be financially responsible by paying your balance in full and most companies will be ready to give you a higher limit. The second way your credit limit is increased is due to the bank’s automatic limit increase system. If they see that you have had a consistent payment history, have stayed well under your current limit, or if you just paid off your total balance, the company will most likely give you an automatic increase. They want you to start spending
  23. 23. again. Some credit card companies will ask you if you want to increase your limit and wait for your approval. Others will just send you a notice stating that your limit has been raised. There really is no reason to say no to a credit increase. As long as you only use 40% of your limit, an increased limit will increase your credit score. How often a bank does this is really up to the bank, your credit habits, and the need for companies to remain relevant. If you have good credit habits your bank may increase your limit several times a year. Or, if a credit company is struggling, they may offer to increase your limit to entice you into transferring a balance. Deciding on the Right Credit Card for You There are many credit cards to choose from and each one will have a different credit limit depending on that particular company’s standards and eligibility. Using an online comparison tool like the credit card “Chaser” search tool on our home page can show you what different cards have to offer within your credit requirements. Having all this information in one convenient place will help you choose the card that fits your lifestyle. Get started finding the best credit cards now! How Do I Choose the Best Rewards Credit Card? Today there are thousands of credit cards offering rewards to its members. Determining the best rewards credit card is a personal choice, but there are certain factors to consider that will help you pick the right one! Who doesn’t like cash? One of the best rewards cards, of course, offers cash! Usually with cash back cards there are additional selections as well, such as gift cards, merchandise, and statement credit. Some cards offer a flat cash back percentage while other cards, such as Discover, offer up to 5% cash back on select items during specified time periods. For example, they may offer 1% cash back on all qualifying purchases and 5% for all gas and hotel purchases during the month of July with different promotions running each month. Some cards will also allow you to redeem your cash back bonus by trading it up for merchandise from their network merchants. There are usually two benefits to a merchant network when using a rewards card. The first benefit is that you usually you get to increase the amount of your bonus when you make your purchase with select merchants. For example, you may have 1,000 bonus points which earns you $10.00 cash back. You could instead redeem your 1000 bonus points for $20.00 by purchasing merchandise from a specified merchant in the network. The second benefit of the merchant network is that you can oftentimes get a higher percentage of cash back for qualifying purchases made through the merchant network. For example, you normally get 1% cash back for qualifying purchases in retail stores but you get a 2% cash back bonus for purchases made through the online network of qualified merchants. Cash rewards can also be redeemed for gift cards and statement credits. When deciding which route to choose, you should calculate the cash value of the benefit to determine which reward is the most significant. For example, that same 1000 points that has a cash back value of $10 may have a $15.00 value for a hardware store gift card and a $20.00 value as a statement credit. (Obviously, the numbers are exaggerated for effect, but you get the idea!). Also, with some rewards cards, the more points you accumulate, the more value they obtain. So 1,000 points are worth $10 but 2000 points are worth $25.
  24. 24. You can alternate the type of your rewards redemption as often as your card allows. This means that you can choose cash back this month, a gift card next month, and a statement credit a few months later. Some people save their points all year long and cash them in for a vacation package while others save them for Christmas gift cards. Yet some will simply request the occasional cash back or decide they could use some help lowering their credit card balance and apply some of their reward money to their statement. However you decide to use your cash reward, you must be sure you understand the program before you begin using it. Many people have been quite dismayed to find out that the points they were saving all year long disappeared because they didn’t use them prior to their expiring. Or, they lost them when their last payment came late for the second time in a row. Some programs never expire nor have penalties, so you need to know which one you have so that you can track it accordingly. Mileage Rewards If you never travel by plane then you probably don’t want to invest in a mileage rewards card or travel credit card. If you’re a frequent traveler, however, this could be the best type of rewards card for you. Depending on the rewards card you have, you earn a certain percentage or amount of points/miles for every qualifying purchase. Your rewards can then be converted into free or discounted airfare! Some cards are airline specific while others allow you flexibility on airline choice. This is also a personal choice you need to make when determining what type of mileage rewards card to get. You also need to read the program details to see if there are minimum mileage requirements or any other restrictions that could impact your expected benefits. The biggest thing to consider is how much money you actually spend on your credit card every year. If you don’t make enough purchases to redeem your mileage, or if it takes you years to get there, you won’t be reaping any benefits at all. Instead, you would be better off with a cash or merchandise rewards card and just paying for your flight out of pocket. If you are a frequent flyer AND you make a lot of qualifying purchases with your credit card, the airlines credit card is the card for you. Low Interest Rate Rewards When people think of rewards cards they oftentimes don’t consider the interest rate. Usually reward cards come with a caveat: a higher interest rate. If you typically carry a balance or foresee some difficulty with your credit card payments in the near future (due to the economy or a currently strained budget) then the best rewards card for you is the one that doesn’t offer any rewards. Instead, it offers a lower interest rate that rewards you with peace of mind in case you can’t pay your balance in full every month. Think of it this way: you charged enough on your credit card last month to earn you $10 cash back, but you can’t pay your balance in full and you have a 20% APR, which is going to slam you with $200 in interest fees (even an 8% APR could cost you $80)! So, you need to have complete control over your spending habits in order to benefit from a rewards card. Otherwise, you are best off sticking with a low interest rate credit card and calling that your reward. There are many rewards cards being offered by credit card companies. Deciding on cash back, merchandise, mileage, or a low interest rate is a personal choice.

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