Credit card debt changes may be made because of the worst customers

Many consumers may not be too happy with the way lenders are handling credit card debt, especially through increasing interest rates and fees on consumers.

However, a recent letter featured on financial expert Liz Pulliam-Weston's Web site noted that many card policies are put forward because of the worst customers. The letter was written by a representative from a card company, who also noted that customers who are good with their accounts - including paying their bills on time -- may be able to get new fees waived.

Other reports, however, have noted that card companies are increasing fees and interest rates in anticipation of the federal Credit Card Accountability, Responsibility and Disclosure Act. The act will stop lenders from arbitrarily raising interest rates while also putting additional limitations on young people's ability to get credit cards.

Pulliam-Weston noted that some of the requirements from the Credit CARD Act will require lenders to send credit card debt bills 21 days before their due date, rather than 14 days.

"These rules should make it easier for responsible users to avoid late fees," Pulliam Weston wrote.

Donating Credit Card Points to Help Haiti

Credit card networks have already waived fees for certain donations aimed at helping Haiti. Now, many are also making it possible for you to redeem your rewards points to make donations to aid Haiti.

Here’s a look at how to donate your credit card rewards to Haiti. Have you used your points to help Haiti or do you plan to? Why or why not?

American Express: American Express cardholders enrolled in the Membership Rewards program can redeem points to support charities aiding the relief effort in Haiti, with 1,000 points equaling $10. Donations can be made in increments of 1,000, 5,000, 10,000, 50,000 and 100,000 points.
Bank of America: By Friday, Bank of America plans to have a donation option that will enable WorldPoints Rewards and Power Rewards customers to donate to the Red Cross to help Haiti. Currently, the bank does enable customers to donate to other charities, including the Make-A-Wish Foundation and the World Wildlife Fund. To redeem points for a donation, customers log into their account here and select their credit card account rewards tab. Customers can also visit here to redeem points or call the customer service number on their card to redeem by phone.
Capital One: While it doesn’t have a donation program specific to the Haiti crisis, Capital One began a “No Hassle Giving Site” in 2008. The site allows cardholders to donate rewards to more than 1.2 million United States charities, including organizations supporting Haiti relief efforts. Cardholders can set up charitable donations online as one-time only or as a reoccurring donations and also earn rewards on the actual donation transaction.
In addition, a spokeswoman for Capital One said the donations were tax deductible, and donors could get a detailed donation history and summary of taxable donations. The response so far in donating points to help Haiti “has been phenomenal,” she said. “We’ve seen an 850 percent increase in donations year over year comparing January 2009 to January 2010, with one week yet to go in January 2010.”
Chase: As of last Saturday, Chase Freedom, Sapphire and Ink from Chase cardholders can redeem and donate their Ultimate Rewards points to the American Red Cross Haiti Relief and Development Fund. Cardholders can donate starting at $25 for 2,500 points and then in $25 increments, with no limit, up to their points balance.
Citibank: Before the earthquake, the bank enabled customers to redeem their ThankYou Network loyalty points to make donations to the American Red Cross and the ARC Disaster Relief Fund. Donations to these charities increased to 20 times the normal number after the earthquake. As a result, Citibank added a Haiti-specific donation option, to the American Red Cross International Response Fund, on Jan. 20. Since then, there has been a nearly 100 times increase in the daily redemption rate for the American Red Cross, Nancy Gordon, executive vice president for affluent loyalty assets at Citibank, said in a statement.

How Merchants Deal with Rising Credit-Card Costs

Stroll into the Ula Café, a neighborhood coffeehouse in Jamaica Plain, Mass., and you might notice an unusual sign prominently posed on the cash register. The note informs customers that every time they pay with plastic, it costs the coffee shop about 25 cents. Please, asks the sign, reserve use of your credit cards to pay for purchases of $10 or more.
"When our average transaction consists of coffee and a muffin or a sandwich and a drink, a great bulk of our credit-card purchases comes up under $10," says owner Kate Bancroft. "Considering that each card transaction costs us up to 25 cents, there isn't a lot of room for profits," she says.

As credit-card acceptance continues to spread, so does the toll on vendors who accept the cards. That's because merchants who accept plastic as a form of payment don't receive the full purchase amount. Instead, a portion of each credit and debit card sale gets re-routed to the merchant's bank, the cardholder's bank and the network that processes those transactions. In 2008, merchant-paid swipe fees amounted to $62.7 billion, up 3% over the previous year, according to the Nilson Report, a payment industry web newsletter.
Some of these fees are on the rise. The domestic credit-card interchange rate -- a transfer fee set by issuers such as Visa and MasterCard, but paid to the cardholder's financial institution every time a Visa or MasterCard payment product is used -- rose from between 1.25% and 1.91% in 1991 to between 0.95% and 2.95% in 2009. MasterCard's rate also jumped from between 1.30% and 2.08% to between 0.90% and 3.25% last year, according to a recent Government Accountability Office report about credit cards. Processing fees have also been added to debit-card purchases, which in the past, were free for merchants to process.
Why the widening gap in the interchange rate? The GAO's interchange rate fee analysis concludes that several of the networks' higher interchange fee rates increased during this period. At the same time, rates on other cards, which had lower-cost incentive rates for sectors that previously did not take cards, also increased. (Note that debit-card purchases, which account for roughly 70% of Visa transactions in the U.S., were not included in the GAO study.)
What's more, small businesses are feeling the price hikes the most, as larger firms are better able to negotiate with issuers for more attractive terms. "If you're a Wal-Mart, you're going to get a great price on any type of terminal fees or premium," says Conrad Sheehan, founder and CEO of mPayy, a mobile and online payment service. "But if you're a three-store coffee shop or boutique, you're going to be a price taker; you're going to pay statement fees, deposit fees and the like," he says.
Shawn Miles, the head of global public policy at MasterCard, agrees with that charge. "What we tend to see with large volume merchants' acquirers is some tend to charge a little less and some charge more," he says. "A large merchant may pay 1.5% plus flat fee; a small merchant may pay 3% to 4%."
By contrast, American Express's discount rates are primarily set by industry and charge volume, says Christine Elliott, a spokeswoman for the company. "In other words, the more volume with AXP, the lower the rate," she says.
To negotiate, merchants should sit down with their bank -- or, in the case of AmEx and Discover, a third-party acquirer -- over their "merchant discount" rate, which may include service fees such as transaction processing, terminal rental and customer service. However, the interchange rate set by Visa and MasterCard, which they say varies between 1% and 2% based on the type of business a merchant runs, purchase amounts, payment product type, processing technology the merchant uses and region or country, is generally unmovable.
Ms. Bancroft, for example, was unable to get a reduction in fees from her bank, and has stopped accepting American Express, widely viewed as the most expensive card network. (According to the company, AmEx charges 2.54% per transaction without any flat transaction fee.) Other owners have raised prices or installed credit-card minimums and surcharges that, in some cases, violate their credit-card agreements.
Tyler Balliet, the president of The Second Glass, an events company in Boston, recently instituted a surcharge on sponsorship purchases and ticket sales even though some credit-card networks say the practice violates their rules. "We just had to do what all the big guys do: We passed our fees on to consumers," says Balliet. "We try to minimize this fee, [which is attached to the company's shipping and handling charges], but if we ate that, we'd have to raise ticket prices anyway."
Although Balliet was able to pass on his card-processing fees to his customers, many other small businesses have shied away from the practice as the fear of turning cost-conscious customers away with higher prices loomed large during the downturn. Many other owners want to avoid retribution from the credit-card networks. Although AmEx and Discover don't expressly disallow surcharging, both Visa and MasterCard do. Possible penalties include fines and the loss of their ability to accept Visa and MasterCard cards.

Credit Card Debt Consolidation For Debt Riddance

Most of debtors seek the help of credit card debt consolidation company only when they know that the situation has gone out of control. If the credit card is used carefully there is hardly any chance of resorting to credit card debt consolidation.

Why does the credit card debt accumulate?

Some of the major reasons for the accumulation of credit card debt are as follows.

• Misconception: The major misconception is that the monthly payment goes for getting rid of the credit card debt. In fact, the money goes to just pay the interest on the purchases done through the credit card. The matter takes a serious turn when the credit card owner comes to know about the total debt.

• Multiple Utility: What if the utility of one credit card has stopped? The debtor instead of getting rid of the first credit card debt starts using other credit cards.

• Bitter Truth: The debtors usually like to live in a dream world where they believe in small multiple debts. They start ignoring the notices of the credit card debts. These debtors cannot face a single amount debt instead of multiple debts because this amount is too huge to be acceptable. The truth is very bitter especially when finally the amount is concluded post consolidating credit card debt.

Some other factors that can aggravate the financial crisis are the medical bills, natural calamities, and reduction in income due to recession.

Act now! Get rid of credit card debt before it piles up.

How to consolidate your credit card debt?

Debt consolidation is not just substituting multiple credit card debts with one debt. It also includes reduction of the overall debt, monthly payment and the applicable rate of interest. The loans sought to get rid of the consolidated credit card debts are called credit card debt consolidation loans. It is better to avail the debt consolidation program before the delayed payment of the monthly payments adversely affects the credit score. Usually it is seen that people seek debt consolidation services when the situation goes out of control and the credit score becomes poor or bad. When a person with bad credit applies for credit card debt consolidation, it is called bad credit debt consolidation program

Benefits:

Some of the major benefits of credit card debt consolidation services are as follows.

• Reduction in overall debt
• Nullification or reduction in the penalties
• Reduction in the monthly payment
• Decrease in the rate of interest
• A chance to improve the credit score

The benefits of credit card debt consolidation can lure most of the credit card debtors, but the onus of checking the creditability and reliability of the credit card debt consolidation services provider lies with the debtor.

Avail the most affordable credit card debt consolidation services for having a debt free life!

My Turn, Your Turn: Credit Card Accountability, Responsibility and Disclosure Act

Do you remember your first credit card? Back in my day we called them charge cards. It was great that someone believed in me enough to give me a line of credit.

I noticed in later years that line of credit grew to far more than I deserved, but I figured it out. The credit companies didn't really want me to pay back that money, because they're in the business of keeping us in debt.
That's why this new law that goes into effect in February is a great thing.
It's called the Credit Card Accountability, Responsibility and Disclosure Act - or simply CARD. Under the new law:  your rates can not go up just because your payment is a few days late.
Any amount you pay over the minimum will automatically go towards items with the highest interest rate, and your payment date must fall on the same date of each month.
The responsibility is still on us. We all have to learn to live within our means. But for too long the credit card companies have been making things tough on people, and for once I give a lot of credit, to Washington for trying to even things out.
That's my turn. Now it's your turn. To comment on this segment, or anything else.

Forget Debit, Credit Cards: Try the All-Cash Diet

No doubt, you've heard of the Atkins diet, the South Beach diet and the Jenny Craig diet. Now, allow me to introduce you to the All-Cash Diet, a regimen designed not to lose pounds but rather to add heft to your bank account. There are no calories to count, just dollars to save.
With the All-Cash Diet, you put away both your credit cards and debit cards and instead rely upon good old-fashioned cash to cover your day-to-day expenses. Instead of pulling out the cards for each measly purchase, go to the bank, withdraw enough cash to last you a week and then try to live on those funds.

Use it for the gasoline, the groceries, the morning coffee and just about any other daily expense.
This is a routine I've begun to follow myself as I look for ways to trim my personal spending. The early results are promising, but I can't say I've changed all my old habits. There's more work to be done.
My belief is that relying on cash in the wallet rather than plastic instills greater budget discipline and reduces impulse purchases. By relying only on the 10s, 20s and maybe even 50s in your wallet, you buy only what you really need rather than what you think you need or want.
The negatives of credit-card-spending are well documented, but it is only recently that attention has turned to the downsides of debit cards.
At one time, I was a debit-card addict, pulling it out for the smallest and most needless of purchases. My wallet overflowed with debit card receipts.
I actually thought using the debit card was good for my spending, as it prevented me from going overboard with a big purchase as you can with a credit card.
And it fed my desire to keep close track of where and how I spent my money. I've used Quicken personal finance software for many years, and I loved being able to download all of my transactions from my bank and see where every penny went. For a money geek like me, it was almost nirvana.
But what if that debit card only induced me to spend more pennies than I ought and produced data so minute as to be meaningless? Do I really need a record of every Starbucks transaction? Wouldn't it be better to just spend a dollar or two less each time I visit a coffee shop?

Debit Card Users More Likely to Overdraw Their Bank Accounts

I've come to conclude that anything that makes it easier to spend money means, in fact, that we will spend more money.
Such is the case with debit cards. The evidence suggests that consumers spend more when using debit cards rather than cash. They may not go overboard in terms of big purchases, but they do go overboard with small purchases. Debit card users are also more likely to overdraw their bank accounts, according to Consumer Reports.
And a New York Times story last year reported banks earn billions in overdraft fees triggered by small debit card purchases.
Debit card processing fees are a big expense for retailers, but card issuers argue the higher sales from customers make it worth the expense. Many retailers -- particularly mom-and-pop operators -- are becoming vocal in their protests of debit-card processing fees and urging customers to pay in cash.
I sympathize with the small business owners in this fight, but my switch to the All-Cash Diet is more about me and my personal budget than taking up someone else's cause. We just happen to share a common enemy.
The biggest challenge with the All-Cash Diet, of course, is to know the right amount of cash to pull out of the bank each week. Many worry that we will spend too freely if we carry around more cash than usual. But I'm convinced that's a psychological barrier that prevents us from doing what's best for ourselves.
Try the All-Cash Diet for a month and see how it goes. There's no money-back-guarantee, but my bet is you will find more money in the bank.

Will Congress Take Another Swipe at Credit Cards?

Fresh off of its enactment this summer of new regulations on consumer credit card terms, some in Congress want to go further—to impose a national usury ceiling on credit card interest rates and limits on interchange fees (the price that credit card issuers charge to merchants that accept their cards). That caps on interest rates harm consumers is well understood. But price controls on interchange fees would also result in consumers paying more and getting less.
The "interchange fee" (sometimes called the "swipe fee") is an element of the price a merchant pays when a consumer uses a credit card for a purchase. Interchange partially compensates the cardholder's bank for the cost and risk of offering payment cards to consumers. This includes clearing costs, billing and collection, fraud recovery, customer service, credit losses, and the resolution of any disputes that might arise from the transaction.
Credit cards generate three basic revenue streams: finance charges, merchant fees, and behavior-based fees such as penalties for late payment. Because annual fees have largely disappeared on standard credit cards, interchange is generally the only compensation issuers receive for the billions of dollars of credit they make available to consumers who pay their balance off every month. Credit unions and community banks, which cater to lower-risk customers who are less prone to revolve balances and pay penalty fees, rely especially heavily on interchange revenues.
Merchants pay, on average, less than 2% of the transaction amount in interchange fees. In exchange, merchants are relieved of the cost and risk associated with running their own in-house credit operations. And they benefit because consumers can make purchases even when they don't have enough cash in their wallets. This deal is voluntarily assumed by merchants who agree to accept payment cards because the benefits exceed these costs.
But now the Merchants Payments Coalition—a group of retailers, supermarkets, drug stores, convenience stores, gas stations, on-line merchants and other businesses—wants Congress to intervene to rewrite their contracts. Several legislative proposals are on the table and while they differ in their details, they are identical in their intent—to artificially reduce interchange prices.
What would happen if the Merchants Payments Coalition gets its way and politicians squeeze interchange fees? Credit cards are essentially a closed economic system: A reduction in interchange fees will have to be offset by increased revenues elsewhere or a reduction in costs. For example, issuers could try to increase the revenue generated from consumers through higher interest payments, higher penalty fees, or reinstating annual fees.
Card issuers might also reduce the quantity and quality of credit cards by restricting credit availability and cutting back on product innovation or ancillary card benefits. This is exactly what happened when Australian regulators imposed price controls on interchange fees in 2003: Annual fees increased an average of 22% on standard credit cards and annual fees for rewards cards increased by 47%-77%. Card issuers also reduced the generosity of their reward programs by 23%. Innovation, especially in terms of improved security and identity-theft protection, was stalled. Card issuers also increased their efforts to attract higher-risk customers who generate interest and penalty fees to offset lower interchange revenues from lower-risk transactional users.
The most important pro-consumer innovation in payment systems of the past two decades has been the general disappearance of annual fees on most credit cards. Cardholders now carry and use multiple cards at little or no cost. The consequences for consumer choice and competition have been profound—card issuers compete for consumer business literally every time they open their wallet to make a purchase.
Annual fees are essentially a tax on card-holding. Policies that produced a return of annual fees would strangle this process of competition by making it more expensive for consumers to hold multiple cards and to switch cards easily. Small businesses, three-quarters of which rely on credit cards, would also have to pay more to maintain access to multiple credit lines, stifling the most potent engine of economic recovery.
Discouraging credit card use would also slow the evolution from a paper-based payment system to a more efficient electronic system. In 2009 the Federal Reserve budgeted $600 million just to print currency (excluding coins). This doesn't even consider the deadweight costs to the economy of cash, such as the time consumers spend making ATM transactions, the cost of paying armed guards to drive around pieces of paper in armored cars, increased crime and tax evasion, or the time spent waiting in the checkout line behind check-writers. Checks are so inefficient that British banks have announced a plan to phase out their use by 2018.
Critics object that interchange fees impose costs on merchants and force cash purchasers to pay more for goods and services to subsidize credit card users. But there is no evidence that Australia's cap on interchange fees resulted in lower prices for consumers. When allowed to charge credit card users, some Australian merchants imposed surcharges that exceeded the costs incurred and expressly refused to reduce prices for noncredit purchasers.
A November report by the Government Accountability Office concluded that any potential intervention could produce severe unintended consequences and major implementation challenges. Indeed, Australian regulators are facing demands for another round of interventions to address the effects of the prior round, such as to limit retailers' surcharge practices.
Merchants also contend that the current regime forces cash purchasers to subsidize credit card users through higher prices. But federal law expressly permits merchants to give cash discounts (and some do). Moreover, cross-subsidies are ubiquitous in the economy. Newspaper advertisers subsidize readers, and Starbucks' customers who drink their coffee black subsidize those who use cream and sugar. Consumers who pay full price subsidize those who buy the same product on sale, and free parking benefits drivers but not bus riders.
There is no free lunch for interchange fees or anywhere else. But if groups like the Merchants Payments Coalition have their way, consumers may soon find their lunch more expensive if they pay with a credit card.

Late fees can be waived, but be careful when mailing payments

Q: I mailed a check to Barclays Bank for full payment on my credit card on Nov. 17, due date Dec. 5, then got assessed a late- payment fee and a finance charge because it arrived Dec. 12. Is there no recourse but to pay?

A: You've certainly got the right approach to paying your credit cards. Unfortunately, it sounds as if the U.S. Postal Service might have gotten in the way of a good plan.
Today's credit-card rules are so tweaky, especially when it comes to the proper crediting of payments, that it doesn't take much for an issuer to close its eyes and slam you with a late-payment fee — many as high as $40.
The folks at Barclays tell me that it's enough to send a payment five to seven days ahead of the due date to ensure it's credited on time.
Nevertheless, your payment took nearly a month to arrive to Barclay's payment-processing center in Pennsylvania. One possibility is the start of the Christmas holiday rush at Thanksgiving, when mailings pick up precipitously.
The fact is that consumers do take their credit into their own hands when paying by check.
Additionally card issuers have different due-date deadlines, some at noon, some later in the day. If your payment isn't posted by that time, you incur the late fee.
New federal rules that kick in Feb. 22 eliminate that problem, ensuring all payments posted by 5 p.m. are credited that day. No more holding onto a payment for an extra hour. And all payments received in a center are processed that day.
The best method to battle the unwarranted fee is to take it up with the issuer. Barclays tells me that after our inquiry, the bank credited you the late fee and finance charge because of your good history.
Consumers should always point this out — calmly — to the telephone representative. Most have the authority to waive an unreasonable fee once in a while, especially if you ask.
Do point out your credit and good-payment histories. Consumers probably shouldn't ask when they have spotty payment histories, but you never know.

Visa Survey Suggests Debit Cards More Useful Budgeting Tool

A survey commissioned by Visa USA has suggested that consumers lose track of significantly more money when they use cash than when they use debit cards.
According to the survey, the average consumer cannot account for $21 of spending in any given week, which comes out to more than $1,000 per year. The problem tends to be even more pronounced among consumers in the 18 to 24 year old age group, which loses track of about $2,500 in spending in any given year.
"Even for the most organized spender, it can be tough to keep track of every cup of coffee, greeting card, teacher’s gift or stocking stuffer picked up at the mall and paid for with cash. While cash purchases can be difficult to track, the survey revealed that consumers believe debit cards can help them monitor spending more closely and stay within budget," explained Visa Chief Economist Wayne Best in an announcement of the survey results.
The survey found that much of these "mystery" expenditures are thought to end up going for food and grocery items, as well as non-essential leisure shopping, nights on the town, and dining out. On average, consumers reported that they lose track of about 20% of the cash they spend in any given week.

The survey comes at a time when a growing number of consumers have already embraced debit cards and cash at the expense of credit cards, which can saddle users with high interest rates and an increasingly creative selection of fees and other costs.

Unfair credit card companies named

HIDDEN details about the interest charged on partly paid or overdue credit card balances are unfairly costing customers, consumer advocate group Choice says.
A study of 20 credit card companies showed the amount of interest charged on a credit card can depend as much on when a provider stops and starts charging interest and how fairly they apply interest-free days as the actual advertised interest rate.
American Express, Bankwest, Commonwealth Bank, ANZ and Westpac were named as the most unfair credit card providers.
‘‘Many consumers would be surprised to learn they could have two cards with exactly the same interest rate and use them
in the same way yet have one charging twice as much interest than the other if they pay late,’’ Choice spokesman  Christopher Azine said.
‘‘The tricks of the trade make it much harder to compare the relative merits of different credit cards because the headline
interest rate is only part of the story.’’
Most credit card companies backdate their interest to the date of the purchase if a repayment is late, Choice said, meaning just one day late can result in higher interest being charged retrospectively for up to 55 days.
Partial repayments are also unlikely to stop this backdating, Choice said.
For example, if a customer were to underpay a $2000 bill by just $10, the extra interest would still be charged on the  whole $2000.
Fairer credit card providers, such as Bendigo Bank, Heritage Building Society, Teachers Credit Union and some GE cards, only charged interest on the shortfall, Choice said. Mr Azine called on all providers to use the same charging methods, and for customers to be aware of the finer details.
‘‘It’s a simple matter to tweak systems to employ fairer systems, but while most customers don’t understand the tricks they will inevitably continue,’’ he said.

8 Credit Card Myths You Need To Know

Many people think that they know all there is to know about credit card issues and how to solve them. The problem is that much of the information that is out there is faulty, unreliable, or just plain incorrect. In this article, we will go over some of the biggest myths surrounding credit card issues.

1. Anyone can get their credit card bill reduced

Debt settlement firms often claim that anyone can get their debt reduced. They don’t, however, let people know that only consumers with heavy financial problems can get their debt reduced. Things like medical bills, divorce, and losing your job can help get you off the hook but otherwise, you are most likely going to have to pay the full amount of your credit card bill.

2. I have to hire someone to get me out of debt

A big myth involving debt is that you have to hire someone to negotiate with your credit card company. The fact is that credit card companies would actually rather discuss these matters directly with the consumer rather than dealing with a middleman.

3. Debt relief agencies are all the same

This could not be further from the truth. Debt relief agencies vary dramatically, but you’d be better off to choose a debt relief agency that belongs to the The Association of Settlement Companies (TASC). TASC companies will allow you to be in full control of your money at all times and only serve to offer helpful advice and experience.

4. Debt settlement companies are safe

Debt settlement companies that require you to send them the money for your credit card bill every month are not safe. That money is not insured and if the debt settlement company goes bankrupt or they decide to leave town, you will lose both your money and any good credit you have left.

5. Debt settlement won’t affect my credit rating

Asking a credit card company for a debt settlement won’t affect your credit score but once you do come to a negotiation with the company, it can do some serious damage. Likewise, skipping payments, like many non-TASC companies recommend, can hurt your credit score almost as much as bankruptcy.

6. Debt settlement agencies are cheap

Debt settlement agencies are far from cheap and you will most likely end up paying more in the long run than just negotiating with a credit card company yourself. Either way, debt settlement in general is going to cost you a lot more than you think.

7. It’s either debt settlement or bankruptcy

This is not true. Instead of debt settlement, try to find a nonprofit credit counseling organization near you or on the Internet. These groups will help you get back on your feet and out of debt.

8. With debt settlement, I’ll be out of debt in no time

Debt settlement can take years to get you completely out of debt and in the meantime, debt settlement companies will be sending you monthly bills for their services. If you play your cards wrong, you may as well have chosen a new creditor.

Discover Credit Cards with Low Interest Rates

Signing up for a bad credit credit card is something many Americans will do in the year 2010. If you are looking for a Discover credit card with low interest rates there are options for you. It is very important to understand that the interest rate you get on your credit card will be greatly determined by your credit score. If you are a bad credit borrower, with a credit score below 620, then you are going to find very few cards offer you low rates.

This does not mean that there are not options available for you. Currently there are many broad based credit card search engines that will allow you to search for credit cards even if you have bad credit. Some of these credit cards offer a low introductory annual percentage rate. Please understand that this rate does not last forever as it usually ends after six to 12 months.
When going through these search engines it is a good idea to make your search broad to begin. If you haven’t searched for a credit card before then you might not understand how many options are currently available. There are literally thousands of credit cards to choose from and you have the ability to pick and choose from many options. If you have very bad credit then you will likely not get the opportunity to receive all these options.
Before jumping headfirst into a new credit card it would be a wise decision to make sure that you understand the terms and agreements of the credit card. You will want to know what your annual percentage rate is and you will definitely want to know when the introductory rate period ends. You will not want a high balance on your card when the introductory period ends.

Steps you can take to build credit, get a card

Gone are the days when credit card companies barraged you like a lovestruck suitor. Today, bruised by economic losses and consumer defaults, many credit card companies are spurning the customers they once wooed.

And if you've got a dinged-up credit score or no credit history, getting a new credit card is next to impossible.

We know one young man - a recent college graduate with a decent-paying job and no major credit dings - who's been turned down for a credit card repeatedly, even from department stores like Macy's.

"Credit is still tight, so issuers are not approving as many people with no credit or bad credit as they did 18 months ago when the economy was good," said Bill Hardekopf, founder of LowCards.com. "It is a very big challenge for them."

Those with bad credit have long had trouble getting credit cards or finding cards with affordable interest rates.

But those with no credit are in an altogether different category. Typically it's either "young students or the 'under-banked' population - people who don't have a long history with traditional banking services," said Kenneth Lin, CEO of CreditKarma.com, a San Francisco-based consumer Web site.

"Absence of credit is distinctive," known in the industry as a "thin file," according to Lin.

He said it could be newly arrived immigrants or those who've stayed away from traditional banking for loans and financial transactions. Often it's college students, sharing expenses with roommates or getting financial support from parents, who don't have any record of paying bills.

Ironically, the stingier credit card climate is coming ahead of - or perhaps because of - next month's installment of the federal Credit CARD Act, which creates more consumer protections by limiting how credit card issuers can impose payments and fees. In the wake of those protections, which started rolling out last summer, a number of credit card companies have hiked interest rates, slashed credit limits and initiated annual fees.

How should you begin your search for a credit card?

Start small. "Do what I had to do when I got out of college: get a store credit card from Sears or a gas card," like Chevron or Texaco, said Ben Woolsey, spokesman for Creditcards.com.

But don't make it a hobby. Multiple applications and rejections for a credit card can hurt your credit score.

That's why Woolsey and other credit card experts say the best option is a "secured credit card," which is backed by your own deposit.

Typically, you open the card with a minimum of $200 or $300, which is your monthly limit for charging on that card, unless you add more money. Some secured cards will let you deposit up to $10,000.

The deposit, which earns interest, is not used to pay off your monthly credit card balance, however. It's there as security for the card issuer, in case you default. When you close the account, your deposit is refunded.

If you're considering a secured credit card, do some comparison shopping because annual fees and charges vary widely.

For example, two of Lin's favorites - the Orchard Bank MasterCard and the Public Savings Bank Visa - have very different fees and charges. Orchard's MasterCard has no application fee and a $35 annual fee (waived the first year); Public Savings' Visa card has a one-time $79 application fee but no annual fee.

After a year or so of regular payments, you can typically upgrade to a regular credit card with better rates and more flexibility.

When you pull it out of your wallet, a secured card looks just like a regular credit card.

And because it's backed by money you've set aside, it works similar to a debit card. But secured cards have a distinct advantage that debit cards don't: credit history.

Every time you make a payment with a secured card, it's reported to one or more of the three credit reporting bureaus. So assuming you pay it off on time each month, you'll start to build a solid credit history.

And what's so great about having a good credit history? That's what leads to your credit score, that oft-cited number between 300 and 850 that affects what interest rate you'll pay for a home mortgage, car loan, etc. The higher your score, the lower you'll pay. If you're a young adult or someone just starting out in financial life, it could save you big bucks over your lifetime.

But whatever credit card you get, follow the same game plan: Always pay on time and always try to make at least the minimum payment.

The days of credit card offers dropping like ripe fruit may be over, and that may not be so bad, says Joe Ridout of Consumer Action, the San Francisco-based consumer advocacy group.

"Everyone agrees that credit card companies extended more credit than people needed or even merited," Ridout said.

Returning to "saner levels," where the ability to charge is more in line with income, will better serve consumers, he added. "There's no doubt it'll cause short-term pain for many borrowers, but over the long term ... there'll be less of an incentive to get in over your head and buy more than you can actually afford."

Credit laws change for under 21

Starting next month, Illinois citizens under 21 will need a co-signer or a sufficient proof of income if they want to get a credit card.

Signed into law last August, Illinois State Treasurer Alexi Giannoulias released a statement citing the increase in the average debt and a large amount of students paying late fees as the reason why the action was taken.

The law also includes the Credit Card Marketing Act, which bans credit cards companies from entering college campuses and offering gifts as an incentive to sign up. However, this last action will have little effect on SIUE, since they already had a school ban on credit card companies, according to Assistant Vice Chancellor of Student Affairs Lora Miles.

Miles said the school has had the ban for at least ten years after the school did some research into how credit card companies ran their business.

"We looked at that and said we didn't need it," Miles said. "The research showed they hit the student population the most."

According to a 2008 survey referenced in the press release, college seniors who had at least one credit card had an average debt of $4,138, up from $2,864 in 2004. It also found 82 percent of students failed to pay off their credit card debt before incurring late fees.

Miles said university officials didn't need to promote credit cards, considering the main incentive involved a T-shirt or other gifts. Miles said credit cards can be a good thing if used right, but the proper education to use them is needed.

The law also prevents credit card companies from exploiting loopholes such as distributing flyers on campus where free merchandise or food could be redeemed off campus as well as prohibiting universities from selling students' information to credit card companies.

Junior French major Kellen Blanchard related raising the credit card restrictions to the drinking age limit, where a person is an adult yet isn't treated like one. Blanchard does not own a credit card and sees no reason why he should have to jump through hoops to get one.

"I have an apartment, bills I pay. I've proved my responsibility. There's no reason I shouldn't have a credit card," Blanchard said. "Just buying little things like gas can help build credit, so there's no reason why you should limit me in these three years."

Center Manager for the campus branch of The Bank of Edwardsville Becky Yarbrough said the law does not affect the bank too much. Yarbrough said they have followed SIUE's policy and do not promote credit cards the way some other banks do.

"It doesn't really affect us because we don't market credit cards to our customers outside of the bank," Yarbrough said. "We do have applications inside the office, but it's mostly used for those who show interest in a credit card."

Yarbrough said many more use debit cards in comparison; she estimated as much as 98 percent of their customers use them. The Bank of Edwardsville does offer credit cards, most of which have limits of between $300 and $500.

"We've always wanted to give credit cards to people who qualify for them and need them," Yarbrough said.

Consumers increasing use of debit cards

People who are wary of accumulating personal debt are increasingly using debit cards to control their finances.

Financial services group Canstar Cannex senior financial analyst, Harry Senlitonga, says debit card usage has increased at a greater rate over the past year than use of credit cards and electronic funds transfer point-of-sale (EFTPOS) facilities.
Debit card transactions increased by 39 per cent in the year to November 2009, while credit cards were up by 14.9 per cent and EFTPOS rose by 12.45 per cent, Reserve Bank of Australia (RBA) data shows.
Mr Senlitonga says debit cards have become more widely available in the past two years, with all the major banks now offering the product.
"A debit card can be used over the internet, it can be used over the counter when you are overseas and some people like it because it is not a credit card, you are using your money," Mr Senlitonga said.
"Some people see it as the best of both worlds as it has the same acceptance as credit cards."
Consumer body Choice spokesman Christopher Zinn says debit cards make a lot of sense for people into online transactions and various other arenas.
"Also, it is not taking you deeper and deeper into debt and it is more controllable for some people," Mr Zinn said.
CommSec economist Savanth Sebastian says people are more wary about adding too much to their personal debt after moving away from credit cards during the economic downturn.
"That era of consumer conservatism is here to stay, at least for the next year," Mr Sebastian said.
"Excessive debt will be shunned."
Mr Sebastian said despite a solid increase in credit card usage in November, growth in credit cards was unlikely to explode until the local economy had improved significantly.
The increase in total credit card balances was 4.2 per cent in November, while growth in the average credit card account balance rose by 1.8 per cent, RBA data showed.
Growth in average balances on credit cards over the year to November 2009 was 1.7 per cent, compared with an average annual rise of 5.8 per cent over the preceding five years.
"It is more likely to track sideways over the next few months and you might just see these incremental increases as the economy recovers and retail sales start to strengthen," he said.
"Debit cards will be the card of choice over 2010."

Debit Card And Credit Card Dangers At the Gas Pump

The convenience of driving up to a gas pump and using a debit card or credit card, pumping the gas and getting back on the road in a matter of a few minutes are putting some customers at risk. Across the country, debit card and credit card users are having their card information stolen without them even knowing about it.

How this identity theft is happening is a criminal places a device on the gas pump where the debit card or credit card goes to pay for the gas. These devices are called skimming devices.
When someone uses their debit card or credit card on a gas pump that has one of these skimming devices installed on it, the device records the card information from the magnetic strip when the card is swiped. A hidden camera is often place to capture the card holder's PIN number.
The criminals then take the information collected by the skimming device and they create a duplicate debit or credit card. The criminals will use the duplicated debit card or credit card at other locations to purchase items and to even withdraw money from the accounts at ATMs without the card holder knowing anything about it.
A string of these occurrences have been discovered along the Interstate 85 corridor in North Carolina and thousands of debit and credit card holders may have had their card identity information stolen without their knowledge. The State Employee Credit Union has already informed around 300 customers that their card information had been stolen using one of these skimming devices.
The SECU has also released photographs of six men that are being searched for using possible fake duplicated debit cards. The debit card and credit card skimming devices are not just being used in North Carolina.
Reports of debit and credit card information being stolen at gas stations with these skimming devices are being reported across the country. Two men are wanted for stealing card information using the gas pump skimming devices in Bakersfield, California.
Occurrences of skimming devices being used at gas station to steal debit card and credit card information have been report through out California. Other accounts of these skimming devices being used on gas pumps from Washington, Arizona, Florida as well as New Jersey are being reported each day.
The skimming devices are slipped onto the outside of the gas pump where the card slot is. Officials are advising people to look at the pump and if there appears to be a device attached to the slot area, then the card holder should not use their debit card or credit card and report the suspicious device.
Officials also recommend that card holders cover the keypad so that any hidden cameras cannot record them entering their PIN numbers. This will help prevent any criminal from being able to withdraw money at an ATM using a fake duplicate debit card if there is a skimming device on the gas pump.
Card holders must use caution when they pull into a gas station for a quick fill up. A mere second to check out the gas pump for any suspicious skimming devices and covering the keypad when entering their PIN numbers will have them back on the road again without having their debit card and credit card information stolen.

Credit card skimming probe goes global

Sydney fraud squad detectives are heading to Wollongong to investigate links between northern suburbs credit card skimming and international fraud gangs.

The move follows yesterday's announcement by police that a nationwide card skimming scam had already netted more than $50 million in NSW.
Every Australian capital city and some regional centres have been hit by the scam, believed to involve teams of criminals from India.
Hundreds of thousands of dollars was stolen from Austinmer and Thirroul residents via their credit and bank cards in November.
Fraud squad boss Detective Superintendent Col Dyson said criminal gangs were committing armed robberies to get hold of EFTPOS machines used in the nationwide scam.
"This is an international group - it's a very large group," Mr Dyson said.
"The members of that group arrive in Sydney and other capital cities in Australia, they travel between capital cities, commit these offences and leave the country again.
"There are as many as 50 people involved in this particular group. Each has their own role and function to play. There are organisers that are in the country from time to time and then go back overseas again."
Wollongong detective Senior Constable Michael Bugg said police had received leads on the northern suburbs scam after the release of images of three men on January 5.
He said detectives from Strike Force Wigg, established in June to investigate card skimming scams, would visit Wollongong on Monday. The strike force is working with interstate and overseas investigators.
To date, six people have been arrested in NSW.
Mr Dyson said the rising number of incidents had forced police to issue a warning.
"The criminal activity has certainly increased in very recent times. There are also operational reasons why we didn't want to expose this, but the time has arrived now for the community to be made aware," he said.
The process used to skim funds occurs after EFTPOS terminals are "compromised".
"The EFTPOS terminals are removed from stores. Some of those we've charged already have in fact been charged with armed robbery and the subject of those armed robbery offences are the EFTPOS terminals," Mr Dyson said.
"They're taken surreptitiously, they're stolen - in other words, shoplifted. And then they're placed into other stores, generally not the store they're removed from."
The modified terminals can then copy information stored on the magnetic strip of debit and credit cards, which can be used to make further withdrawals from the account.
Many affected customers' bank statements show the withdrawals, most commonly amounts of up to $1000, occurring overseas.
Detectives have urged people to change their personal identification numbers (PIN) regularly, check store receipts for irregularities, check bank statements, be aware of how much money is held in an account and not to write down PINs.

Essential Tips on How to Get a Credit Card

Banks and their marketing associates and divisions are vying with one another to capture a thick slice of the "credit card pie." Offers by phone and mail of free credit cards, pre-approved credit cards, cards with special bonanzas, money back schemes, low introductory rates, and umpteen other perks pour in tempting you everyday.

A credit card is just a form of borrowing that does not come free. Credit terms, interest rates, fees and more can lay a stress on your bank balance. Credit cards are a temptation to spend now and pay later. What invariably happens is that people spend more than they can handle.

Informed consumers must always weigh carefully the pros and cons and compare different options before deciding on a credit card.

Before you decide find out

The advantages of a credit card are that it is a safe alternative to cash. Prevents loss as well as theft of cash. Using a card wisely can build a good credit history which helps when you need a loan or subsidy. It is useful in emergencies like accidents, urgent hospitalization, and unavoidable circumstances like natural calamities and so on. It grants a breather and gives you time to pay the bill. Some memberships offer travel or accident insurance to the card owners at no cost. They also offer privileges like discounts at restaurants, shopping malls, and holiday packages.

The other side is that you can get carried away and live beyond your means, ultimately falling into debt.

To be eligible you need:

• To be at least 18 years old.
  
• Have some income or the backing of credit worthy parents.
  
• Have an operational bank account.
  
• A telephone.
  
• A good credit rating. Your monthly expenses must not equal or exceed your income. Ideal expenses must account for approximately 50% of your income.
  
• To get a Visa or Master card your income must exceed US$ 12,000 a year. Or, you need to apply for a secured credit card where you pay upfront a certain amount of money as security deposit.
  

There are many kinds of credit cards to choose from. Unsecured standard and classic cards are those with a credit limit of US$ 2000 and generally charge higher interest rates and offer lower or less favorable terms than the platinum and gold cards. Unsecured platinum and gold cards are for people with high credit ratings, and the limits for these cards are between US$ 2000 to US$ 100,000.

Here are a few links that will give information and opportunities to apply for cards online:

• Visa at www.usa.visa.com/?country=us&ep=v_gg_new provides information, gives tips, and has listed a number of financial institutions that offer Visa cards and a wide range of services. One can apply for a card online.
  
• MasterCard International at www.mastercard.com/index.html is comprehensive with information, advice, and options of choosing and applying for a card online. They have an online form which when filled will give information of which card would be ideal and a channel which provides instant comparison of various card options.
  
• CreditCards.com at http://www.creditcards.com/ has articles, FAQs, a site map, and online application channels.
  

Tips:

• Pick a card because it has the lowest APR.
  
• Pick a card because all its terms and conditions have been carefully vetted by you. Read the fine print.
  
• Never pick a card because it is free for a year or life.
  
• Do not choose a card because it offers a low introductory rate.
  
• Do not choose a card because it has a cash back policy or great rewards programs.
  

Choose wisely and live debt free.

Everything About 0% Intro Rate Credit Cards

Tired of reading review after review about 0% APR intro rate credit cards? Having no luck when it comes to finding an all-in-one-review about 0% APR intro rate credit cards? Confused with what you've read so far about 0% APR intro rate credit cards because everything seems to be contradictory? Well, look no more because this article is indeed what you're looking for.

In here, you'll learn everything you want to know about 0% APR intro rate credit cards. In this article, you may also discover more than you bargained about 0% APR intro rate credit cards - in a good way, of course. Ready for Lesson Number One about 0% APR intro rate credit cards? Well, here goes.

It's True - Yes, 0% APR intro rate credit cards do exist and if we have our way about it, you'll be one of the lucky people to qualify for a 0% APR intro rate credit cards.

The Application Process - Applying for any credit card, whether it's for 0% APR intro rate credit cards or for credit cards offering reward points is always a tad difficult so don't expect overnight success, especially since you're angling for 0% APR intro rates.

The application process for a 0% APR intro rate credit card starts with submitting the necessary documents - this is SOP for all credit card applications - that would substantiate your contact details and give them an overview about your present financial status. Upon submission of the usual documents, depending on your income level and credit reputation, you may be contacted by the credit company and asked to submit additional documents.

The Qualifications for 0% APR intro rate credit cards - Basically, if you want to have 0% APR intro rate, you must have a squeaky clean credit reputation. That means having a reputation of paying debts promptly, not owing too much from the bank, not having high balances on your other credit cards, not having too much mortgages under your name and not having so many people requiring a credit check on you.

If you're not sure whether you qualify for a 0% APR intro rate credit card, simply approach the nearest credit bureau and request for a copy of your credit report. The details in your credit report can easily tell you if you've a good shot of owning a 0% APR intro rate credit card or not. People with FICO scores equal to 650 or more are more or less guaranteed of having their application approved.

5 Tips for Repairing Bad Credit

Almost all of us are fond of overspending! We buy things we don't really need. Once we see something that catches our eyes, we automatically buy it - often without even thinking if we still have money or not.

People usually do this in order to please themselves. And lots of them have their own credit cards as a reserve once they run out of cash. They tend to spend a large amount of money in order to serve their caprices or to make them feel better about themselves. Unfortunately, this never really works, and it causes more damage than it cures.

Almost everybody has a credit file, maintained by a credit reference agency. Many people have bad credit facts on their files, such as defaults and bad payment history. This means that when these people apply for credit, such as loans, mortgages, credit cards, car finance or even for a simple bank account, they may be turned away.

Sometimes these people are not even aware of their credit information and credit files, which cause them to have a bad credit.

Having bad credit can adversely affect every aspect of your life. A low credit score means severe financial limitations and difficulties. As if this is not enough, you will also have handfuls of credit councilors and other so called money managers trying to take even more from you with their debt consolidation plans that promise to "cut your payments in half", "save you thousands", or our personal favorite - "get you out of debt with the click of a mouse".

If only our computer mouse had the debt relief magic that those bad credit spam emails promise. Although getting out of debt can't be done with a click of a mouse button, it's probably not as difficult as you think.

If you are in this kind of predicament, it is imperative for your financial stability that you do everything you can to repair it.

Now, you might be thinking exactly what is bad credit repair?

"Bad Credit repair" is a common term often used to describe a systematic process of rehabilitating an individual's creditworthiness, or financial credit reputation.

It is a process that you can carry out yourself, and sometimes the steps you can take are simple. However many people find credit repair a difficult and discouraging procedure.

This process is usually initiated by obtaining copies of your credit report, reviewing the credit report for errors, omissions, and misleading information, and requesting corrections to such information by means of a formal dispute.

If you are worrying too much about your credit, conquer that feeling! No matter how bad your credit is, you can take the following steps to make it better:

1. Pay all of your bills on time. Decide if you have the income to meet all of your obligations. Remember, late payments (payments that are 30 days late or more) have a negative effect on your credit rating.

2. Lessen the number of credit cards that you have. This will reduce the tendency to overspend. Contact your creditors about your plan and close your other accounts.

3. Avoid bankruptcies. Bankruptcy may not the end of the world but it will be with you for years. It will stay in your credit report for at least years and hamper your ability to get credit in the future.

4. Request in writing that your creditors reduce the credit limits on your accounts to lower your amount of available credit.

5. Monitor results and stick to your plan. Review your file every few months to make sure that any errors that you have disputed have been corrected. After a period of time inquiries will no longer count against you provided you haven't been applying for credit.

These steps can help anywone with bad credit. If you are in that situation, don't be troubled. Bad credit can almost always be improved or corrected. JUST:

• avoid overspending
  
• establish a realistic budget
  
• get out of debt now
  
• build a financial cushion
  
• read and understand your credit report
  
• get mistakes on your credit report fixed
  
• get positive information added to your credit report
  
• negotiate with creditors
  

Set up your plan and stick with it!

Business Credit Card Debt Consolidation Services & Loans For Unsecured Debt

The first thing that you really do need to go ahead and realize is that a lot of these companies out there are out to take your money and not live up to what they promise to you. They will give you additional fees and do very little to nothing at all in order to help rid you of your outstanding debt situation though Credit Card Debt Consolidation [ http://creditcard.debtconsolidation123.net/ ] . Some of the time these companies can actually get you into a worse situation than what you were in before you sought out their services and help. You know if you get the feeling that this is hopeless then you should just simply use the common sense that you have in order to avoid getting locked into one of these situations. If they are going to have the nerve to tell you something like that they have the ability to remove all of the debt that you have and get all of this bad stuff removed off of your credit profile then just keep walking and find yourself a real company because what they are saying can not be done at all legally.


Best debt consolidation companies will provide you a settlement program in which they will negotiate with your creditors to resolve your debt for less than what you actually owe. These companies may charge upfront fees for their services.Whether it’s a credit card debt settlement plan or any other program which includes other debts, you can stop “paying” your creditors, and in lieu, you have to pay the settlement companies, which will in turn deposit your funds to your account. When enough resources are accumulated, the debt settlement companies will negotiate with your creditors and help to stop all “recovery” efforts.


How much Debt Consolidation companies charge:

Debt Consolidation companies would charge around 25-35% of the debt balance. The fees would be charged on that basis

» What amount you actually owe
» How many debt accounts you have
» How much you’ll can save through settlement
» How much time it requires to settle debts


In case, you’re suffering from debt, and not able to pay your bills on time for any reasons, it’s recommended you avail the debt settlement program. When you actually go in for credit card debt consolidation , your debt will reduce by around 40-60% of the actually amount you owe.



Debts you can resolve: Credit card debt Consolidation Loans is very common. Unsecured credit cards, gas/store cards, medical bills personal loans etc can be settled using debt settlement loans. Nevertheless, tax debts, mortgages, child support, alimony car loans with federally assure student loans are excluded from the settlement plan, and cannot be “settled”.

New Regulations All Set to Offer Added Credit Card Protection

In about a month, holders and users of credit cards will be able to gain various new protections under the many regulatory reforms that have been designed specifically to improve credit card disclosures and end all abusive practices, but these changes in rules and the protection offered will also have their set of repercussions.
According to Ken Clayton, General Counsel for the American Bankers Association, the new legislation "ushers in a new era of consumer protection and empowerment, (but), it is hard to overstate how broad and deep this rule is".
The many new regulations, which are a part of the Credit Card Responsibility and Disclosure Act of 2009, are all set to take effect starting February 22.
Despite the fact that consumer advocates in general are very pleased with the regulations, the banking sector has been sending out warnings that these are bound to have some tough consequences for consumers.
With new restrictions on interest rates, card issuers' ability to act upon a borrower's credit risk will be highly limited, and this means that people with poor credit histories will find it difficult to qualify for a credit card. Also, customers should expect new types of fees and rates.

RBS raises the cost of credit after Christmas

State-owned banks are increasing credit card rates just as consumers begin to grapple with paying off their Christmas debts.

Last week, NatWest and Royal Bank of Scotland (RBS) — both part of the banking group majority-owned by the taxpayer — raised purchase and balance-transfer rates for new and existing customers on their Classic cards from 16.9% to 19.9%.

By contrast, non-state-owned providers have made their deals more attractive in a bid to lure new customers.

Barclaycard, Egg and the AA have all extended their introductory 0% balance-transfer periods for new customers, while MBNA launched a card charging 5.9% a year for life on balance transfers, making it one of the cheapest available, though it does have a 2% transfer fee. 

Kevin Bray, banking analyst at the data firm Defaqto, said the move by the state-owned banks was “opportunistic”: “The rate changes come as people look to consolidate their finances. For many, they could not have come at a worse time.”

The rate rises are a double blow for consumers who are finding it increasingly difficult to find good deals on credit cards. Rumina Hassam, credit card expert at price comparison firm uswitch.com, said: “Card companies are still concerned about risk and are keeping volumes lower by restricting availability.”

The problem is exacerbated by inaccuracies on credit reference files used by providers to determine loan and credit card rates, according to the Information Commissioner’s Office.

Last week, it urged people to check their files, which cost £2 to access through credit agencies such as Equifax and Experian.

The Department for Business, Innovation and Skills is urging the public to contribute to a public consultation about credit card firms, part of a planned overhaul of the industry. The consultation closes this Tuesday and you can add your comments at bis.gov.uk/creditconsultation.

Loans, meanwhile, are getting cheaper. The average loan rate has fallen from a peak of 10.17% in November 2009, to 10.1% today, according to Moneyfacts, the data firm.

Last week, Halifax and the Bank of Scotland, both part of Lloyds Banking Group, reduced loan rates. Bank of Scotland cut rates for sums between £7,000 to £15,000 from 12.4% to 11.5%. Halifax cut rates from 12.4% to 9.9%.

Non-state-owned banks are offering better deals, however. Nationwide has recently cut the rate on loans between £7,500 and £15,000 from 7.9% to 7.6%.

Why a 0% credit card may not be the best deal for you

If you are looking to transfer an existing credit or store card debt onto a card charging a lower rate of interest, you'll probably focus on 0% deals. However, this may not actually be the best option for you.

Interest-free balance transfers offers are great if you'll be able to clear your debt during the 0% period. Once that ends, you'll be charged the standard annual percentage rate which will be significantly higher. For example, the Virgin Credit Card has a 16-month interest-free offer, which will be more than enough time for some people to clear their debt. But once that 0% period ends, you'll be charged interest at 16.6% on any balance that is still outstanding, so it won't be the most suitable card for everyone.

It used to be the case that you could easily move from one credit card to another, which meant that those who hadn't paid off their debt by the time the introductory offer ended could transfer what was left onto another 0% deal. However, this is no longer as straightforward as it used to be.

Peter Harrison, moneysupermarket.com's credit card expert, said: "It is extremely difficult to switch cards at the moment so you need to be savvy about tackling your existing debts. The best approach largely depends on your credit rating and how much you are able to repay every month.

"Whilst the credit card market has seen better days, there are still some great deals out there, albeit hard ones to obtain. People need to be aware that, even if they are accepted for a good product now, there is no guarantee this will be the case in a year's time. You therefore need to plan carefully to ensure your credit card debts are cleared in the most efficient way."

For some people, a card that offers a low long-term rate of interest could be a better alternative. MBNA's new Platinum Visa card, for example, offers a rate of 5.9% on balance transfers. This rate is fixed and it applies until the balance you transfer has been totally repaid.

So how can a low rate card be cheaper than one that is interest-free?

We have compared the new MBNA product to the Virgin deal. Both cards charge a balance transfer fee, MBNA charges 3% for the privilege, with Virgin charging 2.98% of the balance transferred. 
Based on a balance of £3,000, it would take someone making repayments of £50 per month seven years and two months, and they'd pay £1,195.05 in interest. However, if they made the same repayments to the MBNA card, even though the balance transfer fee is slightly higher and there is no interest-free period, it would take six years and two months to repay the debt and they'd pay £610.75 less in interest.
But it all depends on the amount you can afford to repay each month. If you can afford £150 a month, the Virgin card still beats the MBNA deal despite the fact you'll be charged interest at 16.6% after the first 16 months.

Don't forget spending

Making a balance transfer may be the primary reason you are looking for a new credit card, but what about spending?
The Virgin card isn't ideal if you want a credit card to spend on as well. Interest won't be charged on purchases for the first three months but you'll then pay the standard rate of 16.6% on any spending you've done. And because of the repayment system Virgin uses, your monthly payments will go towards paying off the interest-free balance transfer first.
There are two options that could work out cheaper for you. One is to go for a card that has the same interest-free period on both balance transfers and purchases. The Sainsbury's Credit Card for example, has a 10-month 0% offer on both, after which you'll be charged the standard rate of interest of 15.9%. You need to have a Nectar card to qualify for this deal though - for more information, read our product review.
Alternatively, the Halifax All In One card has a nine-month interest-free period on both spending and balance transfers. The standard rate of interest on this card is also 15.9%.
However, the other option if you want a credit card for purchases and to transfer a balance onto is a low rate deal. The MBNA Platinum card won't be suitable in this circumstance because the 5.9% rate applies only to balance transfers - you'll be charged 16.9% on purchases. But Barclaycard Platinum Simplicity could be ideal. It charges 6.8% on balance transfers and purchases, and there is no balance transfer fee.

Forewarned is fore armed

With it being harder now to get a new credit card, it's important to know whether or not you are likely to qualify for a product before you apply. It's well worth getting hold of a copy of your credit file as lenders will check this when assessing any credit application. Our new credit checking channel enables you to compare credit reference agencies.
If you know your credit score isn't perfect there are things you can do to improve it. For more information, read Felicity King-Evans' article 'Could you improve your credit score'.

More people not paying credit-card bills

JPMorgan Chase is writing off $1.4 billion worth of consumer loans in the fourth quarter, and Capital One is writing off more than 10% of its loans. More and more people are walking away from their credit-card bills. Stacey Vanek-Smith reports.

KAI RYSSDAL: You know, it's not often you can say that a $3.3 billion corporate profit report is... eh. But that indeed has been the reaction to JPMorgan's earnings announcement this morning. Yes, its trading and investment banking operations might as well have been printing money. Profits on that side of the business were in the billions of dollars, thanks to the stock market rally most of last year.
The bad news, though, came from credit cards. Chase wrote off a billion and a half dollars worth of bad consumer loans last quarter. Card issuer Capital One said today it's writing off more than 10 percent of its loans.
Marketplace's Stacey Vanek-Smith reports a whole lot of people are deciding those credit-card bills just aren't going to get paid.

---

Stacey Vanek-Smith: The federal government estimates U.S. banks will swallow more than $82 billion worth of credit-card debt by the end of this year.
Mike Moebs is an economist who advises banks. He says they've started writing off more of that debt because collecting it takes so much work.

Mike Moebs: Instead of incurring the costs, which are expensive, because they're labor intense, banks will say -- based upon the size of the debt, the amount of interest that's being paid -- it is not worth it for us to pursue this any further.

Moebs says banks also know that paying off the plastic comes after the mortgage, car payments and utilities.

Moebs: People, they'll do their best until the very end, and then they start working from the bottom of their priority list. And at the bottom is going to be credit cards and they're just going to say: I can't pay it.

Moebs says more and more people will be in that position as long as unemployment remains so high. Credit-card defaults topped 10 percent last year. This year, they're expected to climb to 13 percent.
But banking products analyst Ron Shevlin says the banking industry's got bigger problems with its credit-card business.

Ron Shevlin: The longer-term issue is that it's been a huge driver of revenue and profitability from the banks' perspective, and now the whole game has kind of changed for them.

With fewer credit-worthy customers and regulatory crackdowns coming from Washington, Shevlin says banks are going to have to find new ways to make up for lost fees and business.

By: Stacey Vanek-Smith

Debit vs Credit

Debit or credit? Sometimes it's hard to decide which card might be more beneficial to use when checking out at a store.  A Jan. 3 Chicago Tribune story had some pros and cons to consider for each type of card:

Theft Your liability with a credit card is capped at $50; Visa and MasterCard assume all liability for unauthorized purchases. You don't have the same legal protections with a debit card.

But if your debit card is stolen or someone has used your number, most banks will credit your account, at least provisionally, within a day or two. If you are a responsible customer (who doesn't repeatedly report stolen cards), the bank is likely to assume all liability.

Using the signature side of a Visa or MasterCard debit card instead of punching in the PIN gives you the same protections as you would with a credit card.

Disputes Credit cards offer stronger legal protections than debit cards in case of disputes about the quality of the goods or services and billing errors. Once you notify the credit card issuer, you do not have to pay the disputed charge while the issuer investigates.

But if you've used your debit card, your account must be reimbursed. MasterCard and Visa have similar policies for credit and debit cards, though you may have to sign for your purchase in order to be covered. If you enter your PIN, the bank that issued the debit card ultimately decides whether your complaint is valid.

Credit scoreUsing a debit card rather than a credit card to pay bills and make purchases does not affect your credit score. Credit card payments are reported to the credit bureaus, but debit card use is not. Your payment history makes up 35 percent of your FICO score (the most widely used credit score), and that score determines the interest rate you will be offered when you apply for a mortgage, auto loan and other credit.

Rewards Credit card rewards programs are usually more generous than those of debit cards. You might have to spend as much as $4 to earn a point with your debit card rather than the standard $1 per point you receive when you use a credit card. You must sign for your debit card purchase and not punch in your PIN to receive points.

So using a debit card for smaller purchases, as long as you don't incur overdraft fees, makes sense. But when you're purchasing a big-ticket item, consider using a credit card or sign for your debit card purchase to preserve protections.