Wednesday, January 23, 2008

Should you protect your loans and credit cards with PPI?

Reno Charlton

PPI, or Payment Protection Insurance, is a type of protective insurance cover that is offered with different types of finance, such as credit cards, store cards, and loans. This cover is designed to cover repayments on your loan or card for a specified period of time in the event that you are unable to work and make repayments for a certain period due to sickness, accident, or redundancy.

This type of insurance can prove invaluable to borrowers, offering peace of mind and financial protection in the event that you cannot keep up with your loan and credit card repayments. Nobody knows what fate has in store, and losing your job or finding yourself unable to work for a while due to sickness or an accident can leave you financially crippled, which can make keeping up with loan and credit card repayments impossible. Of course, if you do start missing your repayments you face damaging your credit as well as more severe action such as court proceedings, not to mention the added stress and worry at an already difficult time.

When you take out PPI your repayments will be covered for a set period, which will be specified in your policy, if you cannot work and make your repayments through redundancy, sickness, or an accident. This means that you won't have to worry about how you are going to make repayments on your debts, instead, you can focus on getting yourself back on your feet, or getting another job, whilst your insurance cover takes care of your repayments.

However, there are some things that you should remember about payment protection insurance cover. This includes:

- PPI is not suited to everyone that takes out finance. For example, if you are self employed there is little point taking out a policy that protect you against redundancy because you will never be able to benefit from it

- PPI is not compulsory, although some lenders may make it sound as though it is. It is an optional form of cover, and you should never feel forced to take it out if you do not wish to do so.

- You do not have to take PPI from your lender. You can shop around, as the cost of cover can vary widely from one provider to another. Therefore, if your lender is offering a policy that seems quite pricey but you don't want to be without this cover make sure you compare different policies before you make a decision.


Reno Charlton, award-winning writer, shares her financial expertise as a contributing columnist for Credit Card Comparison - Compare Credit Cards and Personal Loan Comparison - Compare Loans.

Secrets Your Credit Card Company Hopes You Never Find Out!

By Christopher Beard

Credit card use has continued to grow in leaps and bounds. From 1996 to 2005, the total number of bank credit cards almost doubled. In 2004 alone, credit card companies generated $43 billion in fee income from late payment, over-limit, and balance transfer fees. The Federal Reserve reports that the total US consumer revolving debt reached 2.46 trillion in 2007. This large increase in card usage has created a "fee feeding frenzy," among credit card issuers. The whole credit card industry has really evolved for the benefit of creditors in recent years, with the industry imposing fees and increasing interest rates if a single payment is late. Penalty interest rates usually are as much as 30-39%, while late fees now often are $39 a month and over-limit fees are as much as $35. If you consider how that can add up over just one year, it could be very expensive. Consider this: late and over-limit fees alone can easily rack up $900, and a 30 percent interest rate on a $3,000 balance can add another $1,000.

The bottom line is, credit card companies want to issue as much credit as possible to as many people as possible and hope you barely make the minimum payment. It is the exact same way these cash advance companies all over town work. They could care less if you ever pay it off. In fact, they do not want you to pay it off. While most card issuers claim this is the cost of doing business, consumers should not be charged excessively for small errors. Ultimately we are responsible for our own financial choices and credit purchase decisions. However its clear to see that credit card companies will continue to entice and market low teaser rate introductory offers (the bate) and make it easy for us to use the cards. This is attractive to the consumer because they can avoid waiting and have the items or purchases they want now. But what price will we actually pay for these items?

Those credit card offers just keep coming. Seems there's hardly a day that goes by that your mail box is not stuffed with some new credit card offer! But there's a danger lurking for you also, one of which you may already be painfully aware. Over use of credit cards is crippling the spending power of millions of Americans. The following is the truth about what really goes on behind the scenes at your credit card company. I suggest you go to the domain optoutprescreen right now and remove your name from these mail offers right now forever, its like the do not call list for mail offers. You do not need more than 3-5 cards ever!

Consumer debt is at an all time high. The credit card companies know this, but they keep on pushing more credit on unsuspecting Americans. The average consumer has 9 credit cards with total card balances in excess of $10,000. Over one in seven are using 80 percent or more of their credit card limit. (Source: Yes, there's safety in numbers, but is this a group to which you want to belong? I don't know about you, but I'd much rather belong to the "below average" customer group that has less than $1000 in credit card debt.

Credit card companies keep offering us new cards every week. Can you remember how many offers you have gotten in the last year with higher credit limits and cash advances? You know the ones with the little checks attached encouraging you to go do some shopping, what a complete waste of a tree. Basically, they insult our intelligence. Many consumers are flattered when they receive their pre-approved status with Visa Platinum, requesting they just fill out the form attached, or for quicker response fill out our quick online form for instant approval. We think we are being rewarded for having creditworthiness. The opportunity, of course, being able to spend money with the best of them and pay it back better than most of them. Stop trying to keep up with your friends and neighbors; they are probably indebted up to their eyeballs.

If you make the minimum payment due on your average balance of $2500 each month, your credit card won't be paid off for over 30%2B years! It's called "amortization," or in the case of credit card repayment, I should say "lack of amortization." In lay people's terms, this simply means, you have no real term set in order to pay this back. It's open-ended, as in Never paid off!!"

When you buy an automobile, you may finance it for five years. You know if you never send more than your monthly payment to the bank you will own that car on the day of your sixtieth payment. This is not the case with credit cards you can make the minimum payment for eternity.

Because banks know that credit card usage is at an all time high, most of them are fighting each other to get your business. Many offer promotions like transferring balances from other cards to the new card they are offering you. If you transfer balances from other cards, they say they will charge you a reduced rate of interest on those portions that are transfers. This sounds like a great deal (going from 18.99% to a promotional rate of say, 9.9%). However, most of them have a catch. For instance, if you do not charge something on the new card each and every month, the interest goes up to the regular rate of the card, or if you make one late payment, you forego the lower promotional rate, and the rate again goes up to the regular rate of the card. Beware of the "Transfer Trap." And read the fine print. The transfer may help for the short tem but all you're really doing is transferring your agony from one company to another, and avoiding the real solution; finding a workable plan that will get you debt free once and for all.

If you keep making your minimum payment, your balance will never be paid off. Have you ever noticed how, while your minimum payment due on your credit card is $85, your balance only came down a few dollars? That's because you're paying massive amounts of interest on credit cards. Even the low-interest rate credit cards don't show their payments going toward bringing down their balances. All they do is just require a lower minimum payment. Sure, this might help your monthly cash flow right now, however in the long run you end up paying through the nose. Suppose you owe $5,000 on a card with 19% interest and a 2% minimum payment. Paying just the minimum every month, it will take you 99 months--over 8 years--to pay off the debt, and it will cost you nearly $4,900 in interest payments. Doubling the amount paid each month to 4% of the balance owed would allow you to shorten the payment time to 32 months from 99 months--or 3 years as opposed to 8 years--and save you about $3,500.

Have you ever read the fine print of these tiny legal agreements that credit card issuers provide when you accept a credit card offer? Your beginning rate of 6.9% is a teaser rate. After six months, your rate will be 21%. The Teaser or introductory rate credit card has made credit card issuers a ton of money. Most consumers will never ever read these tiny legal agreements. You know the print that you cannot read without getting a migraine? Bankcard issuers design these legal agreements , with a plan to get those who do not pay more than the minimum and hope they make that little error of sitting the bill aside and accidentally paying it a little late so the rate jumps to 32.99%. Bankcard issuers say it's the cost of doing business.

So I suggest you be careful with credit. Don't use plastic when you can pay with cash, and if you do not have the money plan to do without until you do. Otherwise you may spend the majority of your life paying back what you already spent. Over the past 5 years, I have recognized these issues, which is why I wrote this special report and structured my practice around giving the most competent service possible. I hope this report has impressed upon you the need to take aggressive action to stay on top of your credit cards.

Christopher Beard is a specialist in helping people with credit issues through debt consolidation mortgages. He is the president of Trinty 1 Financial Group and works with clients with planning mortgage and insurance strategies visit his site at and

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Sunday, January 20, 2008

How A Credit Score Is Calculated

By Wade Young

A credit score is a rating designed to reflect how likely a borrower is to repay a loan. There is no such thing as a joint score, so married couples are rated individually. Also remember that credit scores have nothing to do with age, income, where you work or where you live. The rating is designed to rank a consumer on one factor and one factor alone -- likeliness to repay a debt. The exact formula for how the calculation is done is proprietary, meaning it is secret. There are, however, some things that we do know. There are five categories that make up a credit score. Here they are ranked by importance:

35% - Payment History

30% - Amount Owed

15% - Length of Credit History

10% - New Credit

10% - Type of Credit

Payment History -- 35%

Pay on time and your score goes up; pay late and your score goes down. There is some common sense to this too. For example, a 120-day late payment is more harmful than a 30-day late payment. The total number of accounts is also important. A consumer who pays cash for cars, has no credit cards and only one mortgage payment would be known as a "thin file." Established accounts paid on time boost your score. Open a few accounts, and pay on time. Do not close the accounts, or you will delete the established history. The longer your credit history the better. If you have a negative item on your profile, put that item in the past, literally. A negative item that is 90 days old affects your rating much more than a negative item that is 3 years old, which may have a negligible impact on your credit score. Every month that you pay bills on time moves your negative item deeper into the past. Because the credit scoring models place the most emphasis on the previous 24 months, work diligently to pay all your bills on time so that you have a clean history for at least the previous 24 months.

Amount Owed -- 30%

Aim to keep credit card balances at or below 30% of your total limits. The balance on any individual card should not exceed 50%. If you exceed these limits, you will be in danger of looking "maxed out" to the scoring system. Equity in an asset also helps your score. If you have a motorcycle that is almost paid off, for example, that will help your score. Your mortgage will reflect a high balance and a current balance. In the gap between those numbers resides your equity, and the larger the gap, the more your credit score will benefit. Paying down an asset is good for your credit score.

Length of Credit History -- 15%

Be careful about closing existing accounts because it deletes established history. Closing a VISA with established history can be devastating to your score. Your profile shows a "date opened" for each account. The longer your history the better. It is also important to use credit lines. An account that you have not touched in five years may not be helping your score even if you have always paid in a timely manner. Charging something on an unused card will often boost your credit score because it brings the established history current.

New Credit -- 10%

Opening new accounts can be detrimental to your credit rating. Opening a department store account to save 10% is a triple whammy. First, the credit bureaus frown on departments store cards. Second, the new card counts as "new credit," which is a negative in itself. Lastly, an inquiry will be placed on your profile by the store to see if you are creditworthy; that too will drop your score. Stick with 2-3 major credit cards, and leave it at that. Be wary about opening new accounts unless you have a compelling reason other than saving 10%.

Type of Credit -- 10%

Aim for a "healthy mix." Unfortunately, no one knows the exact recipe that the bureaus are looking for. It is safe to say, however, that they do not want to see the following profile: no mortgage, no car payment, one Gap card, one Victoria's Secret card and one Ann Taylor card. This would not be considered a healthy mix of credit. A mixture more likely to score well might be something like: one mortgage, two car payments, one VISA, one MasterCard and one American Express. No department store cards.

Copyright © 2008 Wade Young.

Wade Young is a Denver Mortgage Broker. His website is bursting with consumer information about credit scores and mortgages.

Jet Blue from American Express

By: creditwisdom

The American Express card company is one of the most reputed financial service organizations functioning worldwide. Founded in 1850, the credit cards of this company have become synonymous with excellent customer service, immediate purchasing power and amazing benefits to its cardholders. Jet Blue from American Express is one such card and is travel based.

The Main Features of Jet Blue from American Express

The Jet Blue from American Express is ideal for those with good credit and who fly regularly with Jet Blue Airlines thereby taking advantage of the excellent rewards program. The introductory APR for this card is 3.99%, which continues for a period of for six months and applies to purchases and balance transfers submitted with the application. Thereafter, you are introduced to a regular APR, which standing at 18.24%, is above average.

There is also an annual fee of $40, which, however, is much less compared to other airline reward cards from Amex. There is no spending limit on this card. There is a system of rewards in the form of award points for every dollar spent using this card, which can be redeemed for shopping, travel and entertainment.

The Reward Points

The points program for the JetBlue card is that for every dollar spent using the card, cardholders receive 1 Awards Dollar. Two Award Dollars are earned for each dollar spent on JetBlue flights, restaurants, movie theaters, gym memberships, event tickets and golf course fees. Cardholders earn $ 5000 bonus dollars when they make their first purchase with the card.

For every 200 Award Dollars accumulated, cardholders receive 1 trueBlue point and for every 100-trueBlue points, cardholders receive 1 Award Flight. In mathematical terms, this means $200 (real dollars) spent on the card gives you 1 trueBlue point and $20000 spent on the card gives1 Awards Flight.

Using the Card or flying JetBlue will extend the life of your points to a full year. There is no limit to the amount of Award Dollars that can be earned but TrueBlue award-points expire 1 year after they are issued.

Redeeming The Award Points

Points can be redeemed against rewards from 21 airlines, hundreds of hotels worldwide, vacation packages, over 50 cruise itineraries, and spa retreats. Members can also transfer points to 11 frequent flyer programs – in most programs you get 1 point for 1 airline mile. Points can also be redeemed for rewards from over 50 of the finest names in shopping and entertainment, including Banana Republic, Saks Fifth Avenue, COACH®, DellTM Computer, Callaway® Golf, and The Sharper Image®.

Who the Card Is Ideal For

Jet Blue from American Express is good for someone who can afford to pay in full after the introductory period expires and will spend at least $20000 on the card and uses JetBlue services frequently. Awards dollars never expire, but points and rewards expire after 1 year. That is what makes it so important to use JetBlue at least once a year. This card is not meant for someone who will need to make large purchases and carry a balance.

Other Benefits

You can receive up to $100 annually if you book your trip with American Express Travel. The purchase protection plan protects purchases made with this card up to 90 days. There is online fraud protection guarantee. While using the card online for shopping, you will not have to pay for unauthorized charges. Also various Internet account related services, auto rental insurance, emergency card replacement, medical and legal referral services and up to $100,000 in travel accident insurance are provided for by the JetBlue from American Express.

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Devin Gilliland Provides Expert opinions and reviews to help you and Compare American Express Cards - Search American Express Jet Blue with - Unraveling the best in Cards Citi Business Card with Thank You Network.

Why You Need To Improve Your Credit Score?

By: Cornie Herring

Have you checked your credit score? Do you know how high your credit score is? Many people only pay attention to their credit score when they need it for any credit application. If you just realize you have low credit score at the time you need it for a loan or credit application, it might not help in getting the best rate because the best interest rate of any loan or credit always offer to the person with high credit score and time is needed to rebuild your low credit score. Hence, it's better to pay attention to your credit score now and put your efforts to improve it if you found it low.

The three major credit bureaus: Equifax, Experian and TransUnion collect data from your lenders about your history of borrowing and paying back credit. The information is then being compiled into your credit reports. The company like FICO will then takes the information from your credits and applied a trade-secret formula to produce one score ranging from 300 to 850 based on your credit history. The more excellent of your credit history, the higher credit score you will get.

Top tier scores are range from 760 to 850. People who fall into the top tier scores are expected to get the lower interest rates as they are categorized as the lowest risk group by the lenders and this group has more choices to select their favorite loan package with more attractive offers. In general, a score about 500 to 520 is the lowest acceptance level for many lenders to approve any loan or mortgage application. If your credit score is fall in this low acceptance range, you can be expected to be quoted significantly higher interest rates and may be offered with fewer varieties of loan offers. Any score below 500 has very low chances to be approved for any credit unless you go for secured loan.

Example below will give you a better picture on how the credit score will affect the interest rates of credit:

760 to 850 tier: Interest rate = 5.78%

700 to 759 tier: Interest rate = 6.00%

660 to 699 tier: Interest rate = 6.30%

620 to 659 tier: Interest rate = 7.10%

580 to 619 tier: Interest rate = 8.58%

500 to 579 tier: Interest rate = 9.50%

Let assume if you credit score is top tier (760 to 850) and you care being approved for $100,000 mortgage with 30 years term; the total interest for this $100,000 mortgage over 30 years is $110,772. Whereas, if your credit score is at bottom tier (500 to 579), the same $100,000 mortgage, the total interest over 30 years will be $202,709. You are paying about $92,000 extra interest just because your credit score is at bottom tier as compare to if you credit score is at top tier. That's why you need to get the highest possible credit score so that you can save more money in term of interest for any credit you apply for.

Even your credit score is not as bad as fall into the bottom tier, as long as your credit score is not in the top tier, it worth for you to work it out to improve your credit score so that your credit score is fall into the 760 to 850 range so that you have more options to get the best offers whenever you need to apply for a credit.


Lenders measure your credit history based on credit score, the higher credit score the lower risk as seen by the lenders and you are at a better position to get better credit offers. Hence, it worth for you to improve your credit score if your score is not fall into the top tier range.

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Cornie Herring is an finance author of, an informative website that provides FREE information and guides on credit scores, debt consolidation & bankruptcy alternatives.

Saturday, January 12, 2008

Simplifying Your Search For a New Credit Card

By Michael Casamento

Today, selecting the proper credit card can be a bit confusing to say the least. There are literally hundreds of offers from the major institutions eagerly competing for your business. The easiest way to shop for a credit card is to break them down into categories. There are seven major categories that all credit cards fall into. Each category is listed and explained below. Once you identify the proper category, simply narrow down the offers to the ones that best suite your particular needs and lifestyle.

General Purpose/Low Interest Credit Cards:

These cards are great general purpose credit cards for those not interested in all the special features and costs associated with CashBack or Rewards cards. They feature either a low introductory interest rate, and/or a low fixed rate.

General purpose credit cards are usually favored by those who tend to carry a monthly balance on their cards. A lower interest rate can add up to substantial savings on finance charges, and be of more value than cards offering high rewards, or cash back. If you are planning a large purchase, a low introductory APR may be just what you need. You can stretch out your payments over the length of the introductory period, and save a bundle on finance charges.

Cash Back/Rebate Credit Cards:

Cash Back credit cards give you cash or rebate incentives every time you use the card. The amount given is usually a percentage of your total purchases excluding interest and finance charges. Cash back credit cards should be considered by those who tend to pay off their entire balance every month, and therefore would not realize the benefits offered by low interest rate cards. Cash back cards are always hard to beat, but others may favor a rewards program offering goods and services in place of cash. The card you choose will depend upon your particular needs and lifestyle.

Reward Credit Cards:

Reward credit cards give you points every time they are used to make purchases. The points that you accumulate can later be redeemed for goods and services. Cards offering reward points are most attractive to those who tend not to carry a monthly balance. If you pay off all or most of your balance each month, a low interest rate will be of little consequence, making reward cards the perfect solution for reaping some extra benefits out of your spending dollars. There are many cards in this category that give special rewards as incentives to shop at specific retailers. Check the terms of each card to find the one that will best suit your needs.

Airline Miles/Travel Credit Cards:

If you're an airline traveler, you should look into credit cards that offer Frequent Flier miles. You earn Mileage points as you spend on your credit card. You also earn mileage points for the miles you fly. If you took a round trip to Orlando from Washington DC you would earn 1516 mile points. If you bought the ticket on your card you would earn even more! Most Frequent Flier credit cards will give you 5,000-10,000 free miles as a sign-up bonus, as well as discounts on car rentals, free hotel upgrades, and many other perks. Be aware that there may be caps on the amount of miles you can earn in a year, as well as expiration dates for unused miles.

Business Credit Cards:

If you own a small business then you should consider a business credit card. With a business credit card, you can make purchases under your business name, allowing you to separate your business and personal expenses. Business cards can in some cases carry a higher limit than a personal card, and additional cards may be issued to executives, or employees. Most institutions offer business cardholders a special categorized statement that makes it easier to manage your company's finances and spending habits.

Student Credit Cards:

Student credit cards are available to actively enrolled College students. They are ideal for building a credit history, and teaching the principles of financial management. After graduation, the credit history established with a student credit card can be a great help when buying that first new car, or even applying for a mortgage. It pays to start early and establish yourself as a responsible person by paying your bills on time. A student credit card usually carries some restrictions not found on ordinary credit cards. A co-signer is sometimes required on the account, and in such cases, permission from the co-signer must be obtained before the credit line can be increased.

Bad/No Credit Credit Cards:

If you have bad credit, or simply no credit history at all, there are alternatives to help you build/rebuild your credit. Many institutions offer secured, or pre-paid credit cards to individuals seeking to build or rebuild their credit. A secured credit card requires that you supply the institution with some type of collateral such as a car, home, boat, or cash. They will issue you a credit card secured by the value of this collateral. It functions just like a regular credit card, except that if you default the bank can seize the collateral.

Another solution is a Pre-Paid credit card or "Debit" card. Pre-Paid cards require that you deposit funds into the card's account in advance of making any purchases. When a purchase is made, the funds are deducted from the account balance. This is not really considered a credit card since no credit is actually being granted by the institution. Debit cards are a great alternative to carrying cash, and are hence much safer.

© Written By: Michael Casamento

This article may be freely reproduced so long as the above resource box is included in its entirety.

Credit Card Balance Transfers Explained

By Neil Brown

American Express

What is a balance transfer ?

A balance transfer can be explained simply as a balance transfer! When a balance is transferred usually from a credit card, but possible from a bank account or loan to a credit card with a offer interest rate (usually 0%) for a set period. It does not have to be the entire amount. The card receiving the balance will an interest rate for a set term, normally 6 months, but can be 9 months or even a year. Take a look at the current balance transfer deals currently available. This will give you a flavour of the typical kind of deal available.

Should I apply for a balance transfer ?

It is important to remember that a balance transfer does not mean that the debt has gone away. It just means you are not paying interest on it. You will still have to maintain payments.

This may seem obvious but many people do not get this straight in their mind.

The basic criteria for getting a balance transfer is when you regularly have an outstanding balance after making your monthly payments. This is the amount you should look to transfer to another card. This will mean that for the period of the offer you will pay no interest on the balance (provided you make the minimum payments).

You should be very wary of taking up a balance transfer, if your overall debt is increasing. A balance transfer is not a green light to spend more money. The money you save should be used to decrease your debt.

What should I look for in a balance transfer ?

You need to be aware of the following when looking for a balance transfer card

Good things

  • Length of offer period.

  • Offer Interest Rate.

  • The zero or low interest rate charged on the balance.

  • Possible transfers from loans and overdrafts.

  • On some cards you can transfer from existing loans and overdrafts and still get the offer.

Bad things
  • Cut-off period for the balance transfer offer.

  • Hidden Charges on transfers.

  • Some banks will charge a handling fee on the balance transfer.

How long the offer is valid for ?

There is usually a cut off point from the account opening when the offer is no longer valid. Be very aware of this otherwise you could end up transferring a balance to a higher rate !!

What about new purchases ?

Unless there is also a 0% interest rate on new purchases then you should avoid making new purchases on a balance transfer card. This is because the banks will look to reduce the balance transfer debt quicker than the new debt. Provided your credit history is reasonable, there is nothing stopping you having several cards for different purposes. A good way is to have a card, which specialises in 0% on new purchases and another card for balance transfers.

What happens when the balance transfer period finishes ?

When the balance transfer offer period finishes the debt will revert to the typical variable APR. The lenders hope at this point that the cardholder will retain the card and some of the debt, so they can then start charging interest and making some money! So take into consideration the low interest rate credit cards. However, there is nothing stopping the disciplined credit card holder from switching to another balance transfer deal and closing the account. The cycle then starts again. Always allow 6 weeks to 8 weeks before the end of the offer period to apply for a new card. This means you can get the balance transferred to the new card before the lender can start charging the higher rate. You have to be organised to do this, but if you are it does work. People who regularly switch balances are know as card tarts.

The Golden Rules

There are three things to look out for with a balance transfer card

  • As mentioned previously, the unsuspecting can get caught out when spending on a balance transfer card.

  • Maintaining regular payments. If you miss a payment you incur some penalty, so be aware. To be safe set up a direct debit.

  • The interest rate applied when the offer period finishes.

Good luck with your choice.

Discover More Card

Neil Brown is a freelance writer and regular contributor to the credit card sites Choose A Credit Card and Search4 Credit Cards.

Friday, January 11, 2008

Debit Card vs. Credit Card, What Are The Differences ?

By James H. Dimmitt

Perfect alternative to a checking account

Ah, the “good old days”. If you are a baby boomer, like me, then you probably remember how important it was to rush to the bank on payday. You had to get there before the teller lanes closed so that you could have your “cash allowance” for the week. Otherwise, if you needed cash you had to write a check, then go to the bank, and “cash” the check for real cash.

Fortunately the days of the mad rush to get cash from the bank are long gone. We now enjoy the convenience of using a nearby automatic teller machine (ATM) or you can even get “cash back” at your local grocery, hardware or convenience store.

The card you use at the ATM is known as a debit card. When debit cards first appeared it was easy to tell them apart from credit cards. Debit cards didn’t have a credit card company logo on them; instead, they usually just had your bank name, your account number and your name.

Today debit cards look exactly like credit cards even carrying the same logos. Both types of cards can be swiped at the checkout counter , used to make purchases on the internet, or to pay for the fill-up at the gas pump.

When you use your debit card to make a purchase, it’s just like using cash. The account that is attached to your debit card, in most cases your checking account, is automatically debited when you use your debit card. The cost of your purchase is deducted from the funds you have in that account.

On the other hand, when you use your credit card to make a purchase you are using someone’s else’s money, specifically the issuer of the credit card, usually a banking institution.

In effect, you agree to pay them back the money you borrowed to make your purchase. In addition you will also pay interest on the money “loaned” to you at the rate which you agreed to when you applied for their credit card. This is known as the annual percentage rate (APR).

Discover More Card

While the two cards might act and look alike, the levels of consumer protection that each type of card provides can be different.

Under federal law, if someone steals your credit card you're only responsible to pay the first $50 of unauthorized charges. However, if you notify the credit card issuer before a thief is able to make any charges you may be free from all liability. If the credit card is not physically present when an unauthorized or fraudulent purchase is made, such as over the internet, you’re also free from liability for those charges.

MasterCard and Visa offer zero-liability protection where you won’t pay any charges if someone uses your credit card to make an unauthorized purchase.

The protection offered to debit card fraud is similar but with a few exceptions. For example, your liability under federal law is limited to $50, the same as for a credit card, but only if you notify the issuer within two business days of discovering the card's loss or theft. Your liability for debit card fraud can jump up to $500 if you don’t report the loss or theft within two business days.

And if you are the type of person that gives a passing glance to your monthly bank statement, you could be totally liable for any fraudulent debit card charges if you wait 60 days or more from the time your statement is mailed.

Visa and MasterCard zero-liability protection applies to your debit card but only for transactions that do not involve the use of your PIN (personal identification number).

Additional protection against fraudulent use of your credit or debit cards may be available through your homeowner’s or renter’s insurance. Check your policy or with your agent for more information about your coverage.

Also be aware that you should contact your card issuer by certified letter, return receipt requested, after you’ve contacted them by phone to protect your consumer rights.

As for which card to use for what type of purchase, most experts agree that you should use your debit card for the same type of purchases you’d make as if you were using cash. Therefore, it makes more sense to use your debit card than your credit card at the grocery store or gas station (provided you have sufficient funds to cover these purchases of course).

Avoid using your debit card for any online purchase or for something which is expensive. Why ? You’ll find it much easier to dispute a charge when you use your credit card. If your gold-plated, limited edition, hip-swinging Elvis wall clock arrives broken, your credit card company will remove the charge until the problem is resolved.

With your debit card you are stuck dealing with the merchant directly to resolve any problems with a purchase, even if your banking institution could really use a gold-plated, limited edition, hip-swinging Elvis wall clock of their very own.

© 2004,
Author: James H. Dimmitt.
James is editor of "TO YOUR CREDIT", a weekly free newsletter. Subscribe to the newsletter by visiting

19,178 Identity Theft Victims Per Day - Are You One Of Them?

By Andrew Obremski

Identity theft statistics are shocking. And we are told that it will only become worse, before it gets any better. Are you likely to be affected?

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According to recent studies, up to 7,000,000 people become identity theft victims each year, in the United States alone. That’s over 19,000 cases a day, or 799 cases an hour. Whichever way you look at it, these are shocking figures. And with more and more people using the Internet, online banking, and other hi-tech services, things aren’t likely to improve any time soon.

In fact, another research, a survey conducted on behalf of the Federal Trade Commission recently, tells us that the situation is even worse. According to the FTC survey report, 4.6% of the US population were identity fraud victims last year - that’s 10 million people.

According to the FTC figures, if someone fraudulently opens a new credit card or another loan account under your name, on average you can expect the dollar amount to go to about $10,200. That’s just an average amount.

To clean up your name, and your credit rating, you will need to deal with this experience. You can expect to spend between $500 and $1,200 of your own hard-earned money cleaning up the mess. You can also expect to invest between 30 and 60 hours of your time.

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The above figures are just cold statistics. They say nothing about the emotional trauma, through which you are likely to go when it happens to you. It’s all very well to read and hear about bad things that happen to other people. It is quite different when the same thing happens to you, or your loved one.

Is there anything you can do in order to protect yourself? There is. Quite a bit actually. It’s all based on common sense and, while there are no guarantees in life, you will minimise the risk and make the life of an identity thief a lot harder.

Funny thing about thieves. They don’t like working hard. If you make it hard enough for them, they will usually go away - to find an easier target.

One of the common-sense things you can do in order to protect yourself, and your family, is to make yourself aware of the current scams that may affect you.

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The most infamous one at the moment is so a called ‘phishing’ scam. In a nutshell it looks like this:

You get an email that looks like it was sent from your bank. They ask you to log in to your online account and verify some of your details. For your convenience, there is a link included right in the email. All you have to do is click on it an log in. Don’t ever!

The moment you click on that link and log in, the scam artists have your login ID and password recorded. This will enable them to log in to your account and within hours, or days, your account will be cleaned out!.

There are two common-sense approaches to deal with this.

First, you have to realise that your bank already has all the details they need to operate your online account. If they didn’t, you wouldn’t be able to open it in the first place. So, you can most likely quite safely delete the email and forget about it.

Secondly, if you have any doubts as to the authenticity of the email, you can get the bank’s phone number from your local phone book and give them a call. Tell them about the email you received and ask if they tried to contact you. I bet they are going to be as surprised as you are.

And just remember: Whatever you do, never, ever, log in to your bank account, or any other sensitive account for that matter, right from an email. You already have the login link somewhere in your records. If not, go to the bank’s main page and look for an online login page.

What we covered today is just one of the things you need to do in order to protect yourself from identity fraud. There are many more. Lack of space doesn’t allow me to cover more in this short article. You will find many more tips at They are free to implement and could save you lots of time and money.

Andrew Obremski is the owner of, a web site devoted to information about credit reports, identity theft, debt, and other personal finance topics.

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Wednesday, January 9, 2008

How Healthy Is Your Credit

By James H. Dimmitt

There’s only one way to discover the “health” of your credit. You need to examine your credit report. Your credit report is your “consumer identity” that potential lenders will use to judge your credit worthiness.

What is your FICO Score

Use these tips to give your credit profile the “tune-up” it needs.

Tip #1- Check for Errors Your credit report or profile is more than just a collection of who your creditors are and how much you owe them or have paid them.

The first thing you need to do is carefully check that your credit report is accurate. Nearly 70% of credit reports contain errors.

These errors may be as simple as an incorrect middle initial or address. Or it could be as serious as a creditor reporting that you were late with a payment when in fact you were not late at all.

This error might not seem like a big deal to you. However,to a future lender like a mortgage company it makes a big difference !

Carefully examine your credit report and if you find an error contact your creditor and the credit bureaus. Catch and correct these errors now before it hurts your chances of securing credit in the future.

Tip #2 - Correcting Errors The two most common errors contained in credit reports are:

1) wrong account information

2) incorrect recording of late payments.

If you find an account reported that does not belong you, you need to contact the credit grantor or issuer immediately. Remember, finding accounts that you have not personally opened is a sign of possible identity theft.

Hopefully you’ll discover that this error is nothing more than an oversight and not an identity theft problem. Most often this occurs when they report an account belonging to a family member or someone with a similar name on your credit report.

If your problem is an error in reporting a late payment you will need proof to back up your case before this error can be corrected or removed. The most common error occurs when a payment is reported as “late” when it was actually a current or “on time” payment.

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In either case, the problem can and should be corrected. You will need to correct the error in writing. Keep a journal or log of all calls and correspondence.

The Fair Credit Reporting Act (FCRA) requires the credit bureaus and the agency reporting the information to the credit bureau to correct inaccurate information in your credit report. Therefore, it is important that you contact both the credit bureau and the creditor whose information is in dispute.

A sample letter is included here to help you in correcting your credit profile. Make sure that you clearly identify the information that you dispute, include copies of receipts or documents that support your position. Then request that the information be corrected or deleted from your file.

Send your letter by certified mail and request a return receipt from the recipient. Keep all correspondence that you mail out. Give the agencies involved 30 days to begin their investigation. You can call them but be aware that phoning them does not protect your consumer rights! You must notify them in writing to protect your rights.

They must notify you of the results of their investigation. Although the process will take time, it’s important to do it. This is your credit profile, your “consumer identity” that is at stake. Don’t expect an error to correct itself.

At your request, the credit bureaus must send notices of corrections to your credit profile to anyone who has requested your report in the last six months. If you applied for a job and were turned down because of inaccurate information in your credit report, you can have the corrected report mailed to anyone who received a copy in the past two years.

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Sample Dispute Letter Date

Your Name Your Address Your City, State, Zip Code

Complaint Department Name of Credit Reporting Agency Address City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute are also encircled on the attached copy of the report I received. (Identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.)

This item is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely, Your name

Enclosures: (List what you are enclosing)

Originally Posted at


Tip #3 - Budget Planning You can also use your credit report to help you plan and implement a personal budget. Your credit report will show you where you are spending your hard earned dollars. While the credit card balances may not be completely current, you’ll still see which of your cards has the highest balance outstanding.

If you have more than one major credit card you should compare the annual percentage rate (APR) you are paying on each account. If you are working on a budget to “pay down” your credit cards, start by paying down the one with the highest APR or interest.

Once that credit account is paid off, move toward paying off the account with the second highest APR. Using this method you will be able to concentrate your efforts toward paying down your outstanding credit obligations.

You should also check with your credit card company to see what’s the best annual percentage rate (APR) they can offer you. If you are a good customer, you can often qualify for a lower rate than what you are currently being offered.

Caution: Ask if the new rate you are getting is a “promotional” rate or a “contract” rate. A promotional rate will expire at the end of the promotional term, for example 6 months. A contract rate does not have an “expiration” as long as you continue to meet the terms outlined by your creditor for that rate.

Tip #4 - Making a major purchase If you are considering a major purchase such as a car or a home, checking your credit report gives you the chance to see what a potential lender sees and uses to judge your credit worthiness.

You want to make sure that your credit report is accurate before you apply for that sports car or new home. Errors or problems can be corrected before your lender can use those against you and deny your credit request. You’ll also have a better idea of what type or rate of credit you should expect from a potential lender.

Tip #5 - Check your credit report regularly Check your credit report regularly. Guard your “consumer identity” as you would anything else you treasure. Use your credit wisely, along with these tips, and you will enjoy the benefits that your good credit and your good name deserve now - and for years to come.

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© 2004,
Author: James H. Dimmitt.
James is editor of "TO YOUR CREDIT", a weekly free newsletter. Subscribe to the newsletter by visiting

7 Surefire Ways To Repair Bad Credit

By Wesley Atkins

Do you have a poor credit rating? If so, you are one of tens of thousands of Americans with the same problem. In fact, it seems that this has become a national ‘disease.’ And just what do people need that have a disease? They need a cure.

Here are some sure-fire solutions to 'repair bad credit '. Keep in mind, like most ‘diseases,’ credit repair can take some time, but complete healing is possible.

The First Step

The first thing you need to do is find out what is being reported about you. This is easy and inexpensive. For under $10, you can get your credit report from one of the three main credit reporting companies: Equifax, Experian, or TransUnion. Keep in mind however, that if you have recently been denied credit, you can get a free report from the same credit bureau the lender used to reject you as long as you do so within 30 days.


What You Don’t Need

You don’t need a repair clinic. Why? There is no legal way to ‘repair’ your credit. Those that claim to know loopholes and shortcuts are merely out for your money. They may even get you into legal trouble by having you fudge the facts or creating a whole new file for you. Anything legal that a clinic can do, you can do just as easily and without the cost of ‘professional’ help.

Further Steps to Take

1. Stop using your credit cards immediately. Put them somewhere where they will not tempt you. You may consider keeping at least one card for emergency purposes. Additionally, with poor credit, you may find it more difficult to get a credit card in the future. If you keep at least one account open, then you won’t have to worry about applying.

2. Be Honest With Yourself. Taking a good hard look at your financial situation, particularly if it isn’t good, can be very difficult. Yet, to get out debt you have to fully understand what the situation is.

3. Find the Errors. Believe it or not, up to 40% of all credit reports have errors in them. If you find that your credit report shows something that is not true, you need to write to them with all the details. Be sure to use certified mail so that you can keep track of who you wrote to, when you wrote, and who received the mail on the credit bureau’s end. Then ask the credit bureau to send a corrected report to anyone who has requested a report on you in the last 6 months.

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4. Find the Omissions. By law, you are allowed to add information to your report that you believe will help your rating. This might be additional information about a repayment of a loan, good credit you have with companies that do not report to the credit bureau, or salary increases.

5. You Must Have a Plan. Whether you determine to pay your bills down little at a time, take a second job, go to credit counseling, or file bankruptcy, you need to make a plan and stick to it. In order for your credit to be improved, you have to have a plan and then take action!

6. Talk to those that you owe. Creditors want their money. They do not want you to default (quit paying). In fact, most creditors will work with you to get a reduced payment schedule. If you can keep them from reporting you to the credit bureau, then it won’t hurt your credit. The catch here is this: be sure to stick to the new negotiated plan – they won’t renegotiate if you fail to comply.

7. The Best Cure is Time. Have you ever heard the saying ‘time heals all wounds’? It also heals your credit. After 7 years, most items will be dropped. This is good news if you are working to correct your credit. As each year passes, more and more bad items will drop off and more and more good items will be included. Eventually, the disease will be cured.

Follow these steps and you will find that your credit looks healthier and healthier each day. Eventually this path will lead you to full recovery. Good Luck!

Wesley Atkins is the owner of which aims to get you fitted with the best credit cards to suit your situation. With numerous credit card articles and easy online credit card applications you will never choose the wrong credit card again.

What You Need To Know About Credit Cards

By Phil Edwards

What is a credit card?

American Express

A credit card is a card that allows you to borrow money to pay for things. There will be a limit to how much you can spend called your credit limit. At the end of each month you can either pay off the whole of the amount you owe or make a minimum repayment.

Other kinds of cards include:

1) A cheque guarantee card, issued by your bank, that you can use to ensure that your cheque will be honoured up to a certain limit.
2) A chargecard where you have to repay the full amount at the end of each month.
3) A debit card, issued by your bank, where whatever you spend is immediately deducted from your bank account

Do you need a credit card?

Using a credit card is a useful way of making purchases:

a) A credit card means you don't need to carry huge amounts of cash around and risk losing it.
b) A credit card means you can buy items over the internet.
c) A credit card means you can make purchases abroad without having to worry about local currency.
d) A credit card gives the opportunity to spread the cost of a large payment over several months.
e) A credit card is useful in an emergency. For example, an unexpected repair to your house or car.

How do you choose a credit card?

The main two UK credit card issuers are Visa and Mastercard. These are accepted in most places and in 130 countries worldwide. Beware of less well known brands that may not be accepted everywhere.

Before you choose which credit card is the best for you, remember to read the terms and conditions carefully. Never sign up for a credit card without fully understanding what you are agreeing to.

Remember that all the plus factors will be prominently displayed in large print.

You may have to study the small print carefully to discover if there are any negative factors.
A list of the current cards on offer in summary is available on this credit card summary page.

What You Need To Consider:

1) APR (Annual Percentage Rate)
This is the rate of interest that you will pay on any outstanding balance.

2) Special Introductory Rates
You may be offered a low or 0% rate of interest for a limited time (Up to 6 months) when you sign up for a new card. A higher rate of interest may be charged for cash withdrawals.

3) Balance Transfer Rate
Card issuers may offer you a lower rate of interest if your swap your balance from another credit card to theirs.

4) Interest Free period
Remember to check when interest payments will begin. Will you pay interest from the day of the purchase? Or will you have a number of days interest free before you begin to pay? There is usually no interest free period for cash withdrawals.

5) Cashback and Rewards
Some cards over points or rewards for every pound spent on the credit card. Make sure that these are appropriate for you. For example, there&'s no use collecting airmiles if you never fly.

6) Minimum Repayment
Remember to check what the minimum monthly repayment will be. If you borrow £1000 on your credit card the monthly minimum repayment will probably be in the region of £25. But if you only pay this amount each month it will take a long time to pay off the balance and cost a lot in total when you include the interest payments.

7) Annual Fees
This is the fee that the issuer will charge you every year for using their credit card. Not all credit cards have an annual fee, so remember to consider this when you are choosing which one is right for you.

8) Late Payments
There will be an extra charge, as well as the interest owed, if your payment is late. This charge may even be more than the amount you owe so be very careful to check what the charge is, and to ensure that all your payments are made on time. A good way of doing this is to set up a direct debit from your current account.

9) Exceeding Your Limit
You may also be charged a fee if you exceed your credit limit.

Will Your Application Be Accepted?

Whether or not your application is successful will depend on your credit rating. Your credit rating depends on your credit history (a record of your use of credit) and is based on the record of your ability to repay debt.

You can obtain a copy of your credit file by contacting a credit reference agency. There may be a small fee for this service.

When you application has been accepted you will be given a credit limit. The credit limit will be fixed when you first apply for your card (although you can ask for it to be increased or decreased later) and the limit, including the amount you have left available to spend, will be shown on your monthly statement.

Insurances and Protection.

What You Can Do:

1) Take good care of your credit card to ensure that it isn’t lost or stolen.

2) To prevent misuse of your card you must report any loss or theft of your card to the issuer immediately. Many issuers allow you to register all your cards with them so that in the event of you losing a purse, handbag or wallet they can all be cancelled with just one phone call.

3) You must keep all your receipts and also check your statement carefully and report any suspicious transactions. For example payments that you have no record of making.

4) Credit card companies are now issuing cards with PIN (Personal identification numbers) which are known as Chip and PIN cards. Rather than signing your name you will be asked to enter your PIN onto a keypad. You must ensure that you keep this number secret.

What The Issuer Will Do

1) The issuer should insure you against loss, misuse or theft of your card.

2) The issuer may also insure your purchases for up to 100 days.

3) Your issuer may also provide protection against you being sold unsuitable or shoddy goods.

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Important Points To Remember:

a) Credit cards can be a very useful tool to help you to manage your finances.
b) Choose your card carefully, remembering to read and understand all the terms and conditions before you sign up.
c) Remember to set yourself a budget and decide how much you will pay off each month.
d) Check your statements carefully each month.
e) Look after your card to prevent it being lost or stolen.

For a glossary of the terms mentioned in this article please visit the credit card glossary page.

Phil Edwards is a Business analyst in the city of London, freelance writer for several finance magazines and websites and co-owner of 1st UK credit cards and 1st UK bank accounts

How Much Can Credit Card Debt Hurt Your Finances?

By Stephanie Foster

There are some very good reasons to carry credit card debt. Unfortunately, too many of us carry it for bad reasons.

But even when you go into debt for good reasons, it weighs you down. Limits you. Makes your life just that much harder.

Credit card debt is quite simply a strain on the finances.

I've been working for a few years myself trying to get out of credit card debt. I had been solidly on my way when we were slammed by some medical bills that wiped out all my progress and then some. It has taken a year to recover from that and get to where I feel as though I'm making progress again.

In the meantime, we've had to live more frugally than ever. Keeping up with all the bills becomes a struggle. The added debt was in a good cause, but dealing with it has been a strain.

What to do, what to do?

First thing to do is to live frugally as you try to get rid of the debt. Figure out what you can cut from your lifestyle to save money. There are many different ways to do this, such as eating out less, sticking to a paid-off car rather than replacing it, even cutting back on retirement savings.

With this extra money you need to work hard on paying off that debt. Do not pay the minimum. Even a tiny bit over that will be a help in the long run. The more you can pay, the sooner the debt will be gone.

Cutting back isn't enough?

It may be time for a second job or taking a chance on a home business. You decide. But in any case, bringing in some more money is a great way to pay down your debt faster. It's a big sacrifice, especially if your current job already takes up much of your time and leaves you feeling tired, but sometimes that is what it takes.

The home business option is not for those who need money immediately. There's risk involved. You probably won't earn significant amounts quickly. But it can also be a lot more fun.

Debt is a terrible thing in so many ways. It stresses relationships. It limits what you can do financially, even beyond what your current earning levels may do. It takes away money that you could use much more effectively. Once it becomes possible to rid yourself of debt, it is a very good idea to do so.

Stephanie Foster blogs at about credit cards and other financial topics. She offers more credit advice at her site.