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Posts Tagged ‘consumer credit’

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Avoid These So-Called Credit Card Deals

March 10th, 2009 by Matthew C. Keegan | 6 Comments | Filed in Credit Cards

Over the past several months you may have noticed that the number of credit card offers peppering your mailbox has dropped. That is because credit card companies have tightened their lending restrictions and in some case are axing customers.

New Offers On The Way?

credit cardsHowever, don’t be surprised if the number of offers begins to increase, something I’ve taken note of personally these past few weeks. With quite a few banks now taking federal taxpayer money, they’re in the mood to lend again, but they really haven’t eased up on their restrictions. This means that if you have very good credit, you should see additional offers. Not so with the credit challenged consumer.

5 Flags When Considering A New Credit Card

Not every credit card offer received is worth the paper that it is printed on. As a matter of fact, some offers are a sheer horror. With scores of offers out there, why would anyone choose anything less than the best plan? Let’s take a look at some of the credit card offers you’ll really want to avoid.

Annual Fee – With so many cards out there not charging an annual fee, why would anyone choose one that does? For business cards or consumer cards offering a lot of perks, a reasonable annual fee is okay. All the same, if you are being charged $50 annually for a card with a credit line of $500 or $1000 then you are being ripped off.

Application Fee – Paying an application fee is pathetic. The only cards requiring such a precondition are those for people with awful credit. If you have bad credit, the last thing you need is another credit card. Expect to pay a high interest rate for the “advantage” of shopping with one of these cards.

Low Interest Rate, Low Credit Line – If you are offered a low interest rate credit card what good is it if the credit line is too low? How very nice of them to offer to you a 2% opening APR, but with a credit line of $500 or less you’ll have a hard time making good use of the card.

Penalty APRs – Be on the look out for that credit card offer broadcasting a low rate. It could double or triple if you have just one late payment. Do you think that 3.9% is an appealing rate? You’ll quickly rethink that if your rate resets to 21.9% or more!

Bad Deal Convenience Checks – If you idled your credit card a few months ago, do not be surprised if you receive a heavier than normal envelope offering you “convenience checks” to pay off expenses. These checks are not just convenient, but costly. Be careful, you could be hit up with the cash advance rate to borrow money and/or get slapped with a fee to use each check. Stay with those deals where fees are not assessed and borrowing rates are reasonable; familiarize yourself with your user’s agreement.

For certain, most credit card offers are sufficient but you need to know what you are getting before agreeing to a card that just may not be advantageous to you. Consider obtaining copies of your credit report too before applying for a new card.


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Can They Really Cancel My Credit Card?!

December 23rd, 2008 by Matthew C. Keegan | 2 Comments | Filed in Credit Cards

You’ve been waiting online for fifteen minutes to pay for that last minute gift for your Uncle Ed and are eager to make the long trek home so that you can finally begin to enjoy the holiday with your credit cardsfamily. Your turn to pay comes, you hand the cashier your item and a credit card, fully expecting to be out of the store within minutes.

The cashier keys in your card, makes a frown, keys it in again and gives you a funny look – your credit card has been rejected. You ask her why, she says that she doesn’t know, but hands the card back to you and asks for an alternate method of payment. Fortunately, you have another card you can use which she quickly validates, places your purchase in a bag, and you’re on your way.

What just happened here? Your credit card was rejected. In fact, when you call the credit card company you learn that they sent you a cancellation notice earlier in the month, something you ignored. Speaking with the card issuer’s representative you learn that your account was closed because you hadn’t used the card in the past six months, a move you never expected.

Thus, the question is: can your credit card issuer close your account? Absolutely.

In fact, if you read your credit card user’s agreement – I know, I know…whoever does? — you’d see a number of reasons for why your account could be closed. From abuse to lack of use and everything in between.

Credit card accounts cost companies money to operate and they lose money when cards are not being used. As you might guess, with banks feeling the heat of the current economic crisis, many issuers are reviewing their accounts and closing those which are dormant.

If a credit card issuer cancels your account, you can expect that your credit score will take a slight hit,  perhaps enough of a whack to push your score down by several points. For consumers with new credit, this move by the issuer can be disastrous particularly if it is the only card that they have. A canceled account could spell the difference between whether you have any credit or not.

If your card is canceled and you would like to keep the account open, contact the issuer and ask for them to reconsider opening your account. In most cases you should have your account restored, but make sure that you use it at least once every three months to keep it active.

Of course, pay off your balances completely each month to avoid finance charges – your bank will still be able to make money off of your account thanks to credit card transaction fees charged to merchants.


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Wise Car Financing Tips You Need To Know

October 29th, 2008 by Matthew C. Keegan | 1 Comment | Filed in Autos Express, Consumer Financing, Consumer Tips

The gloomy news affecting the economy right now can have you believing that absolutely nothing is going right. Even people who have long been accustomed to saying that the glass is half full are rephrasing their terminology to the negative glass is half empty expression, falling prey to what they see to be the prevailing sentiment.

Saturn Aura

Digging through the news you’ll soon learn that housing sales were up for the month of September while new cars sales are still about one million units, demonstrating that people with the means to buy something are taking advantage of lower prices and spectacular deals while they can. Indeed, before the economy does recover, finding a deal on a new car, trucks, minivan, SUV, or crossover vehicle can help you save thousands, but one problem could remain: how do you arrange financing?

Well, the folks at Carmax who happen to be the largest retailers of used cars in the country, have advice for their shoppers as well as for people in the market for new cars. We would all do well to heed the following financing tips, sage advice that can save you time, money, and headaches:

Maintain Good Credit

  1. Maintaining a good credit rating is generally a matter of simply paying bills on time.

  2. You should also be aware that overextending yourself on credit and actively shopping for credit could have a negative impact.

  3. Know your credit history by getting a copy of your credit report. Check your credit report annually to see if any information on the report needs correcting. You can get a free copy of your credit report at www.annualcreditreport.com, You may also contact any of the three nationwide consumer credit reporting companies:

Equifax: 800-685-1111, www.equifax.com

Experian: 888-397-3742, www.experian.com

TransUnion: 800-916-8800, www.transunion.com

Know How Much You Can Afford

  1. Determine how much you can afford for your vehicle purchase and monthly payments. Most financial institutions recommend that your monthly car payment not exceed 15% of your gross monthly income.
  2. Maximize your down payment to lower your monthly payments and it may improve your offer and likelihood of approval.
  3. Calculate how much your trade is worth and how much you owe on it to gain a better understanding of your total purchase. Go to any CarMax superstore for a free appraisal to determine the current value of your vehicle. CarMax will be happy to contact your current finance source for a payoff to help you determine your equity position.

Find a Car Retailer that Offers Competitive Finance Terms

  1. Look for a car retailer that offers competitive finance terms without the hassles of negotiation.
  2. Make sure the retailer shows you all available finance options. CarMax makes it quick, easy, and convenient to apply for financing and will show customers the details of all offers received so customers can make an informed decision.
  3. Only buy a car from a retailer that offers at least a three-day payoff option. If you find a better offer or decide to pay cash after you take the car home, this gives you the option to pay off the financing with no fees or penalties.

Be Prepared at the Car Retailer

  1. When shopping for a vehicle, take essential paperwork items with you, including the title and the registration for your current vehicle, your driver’s license and your insurance card.
  2. Before signing any paperwork, review all the documents and understand all terms including vehicle price, trade amount, financing, warranties, return policies and fees.
  3. Beware of any add-on or hidden costs not previously disclosed or explicitly requested by you.
  4. Do not hesitate to ask lots of questions. Be prepared to walk away if you are unhappy with your car-buying experience.

Certainly, preparation is the key ingredient when buying a new car so go into any sales negotiation armed with the information you need to succeed. Creditors may have tightened things up for consumers with average or poor credit, but if your credit is good or excellent, you stand to find the best auto financing deal while saving big bucks on your purchase.

(Source: CarMax)


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You Can Raise Your FICO Credit Score!

September 9th, 2008 by Matthew C. Keegan | 1 Comment | Filed in Consumer Financing, Consumer Tips, Credit Cards, Credit Reports

FICO, which stands for Fair Isaac Corporation, is a term which describes your personal credit score. That score is used by lenders who will determine if you qualify for a loan and the interest rate you’ll credit cards
charged as well as the length of your loan. The higher your score, the more likely you’ll be approved for a consumer loan and receive favorable terms.

In these pressing economic times, not everyone has a good FICO credit score, which can be especially problematic if you need to apply for a consumer loan. Whether seeking a mortgage, a home equity loan/line of credit, car loan, credit card, or some other type of loan, you need to get the highest score possible.

Raise Your FICO Credit Score Step By Step

Fortunately, you can raise your score and see significant results within 2-3 months time. If you plan on applying for a loan some time over the next few months, the following steps can help you improve your FICO credit score:

Shrink those balances: You don’t have to pay off your credit cards, but running big balances is a red flag to creditors. Work on reducing your debt, a step which will gradually raise your credit score.

Don’t apply for too many loans: You may have unwittingly caused your credit score to drop by applying for too many loans in a short period of time. This can happen if you are planning to shop for a new car and are arranging your own financing. By applying to several different lending institutions for the sake of finding the best deal, you’ll be shooting up another warning flag to creditors. Find out the rate first, then apply.

Remedy credit problems: If you’ve been late making payments in the past, then your score will take a hit. Make payments on time and pay more than the minimum amount due each month. Get free copies of your credit reports and check them for errors; notify the credit reporting agencies if you find mistakes. They are required by law to fix mistakes within thirty days or that information must be automatically removed from your credit report.

Keep consumer accounts open: Odd as it may sound, closing a credit card or other consumer account will negatively impact your credit score. Simply tuck your unused credit cards away in a safe place and don’t use them again. You can gradually close them after you secure new credit, especially if you have no plans to borrow again in the near future.

More accounts means a reduced score: Opening more accounts will work against you. Only open up enough consumer accounts as needed.

Consider NOT moving your money around: Consumers have gotten into the habit of shifting outstanding balances from one account to another, but that move can actually reduce your credit score. Consolidating your balances to one account may cause your credit score to drop.

Building a good credit history is an achievable and laudable goal for any consumer. Take care of your credit score and your credit score will take care of  you in the form of favorable lending terms for your next consumer lending opportunity.


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