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Instant Virtual Credit Card Pros and Cons

On July 15, 2010, In credit card

Instant virtual credit cards are the newest wave in electronic monetary purchasing, with many features to recommend it.

What is the virtual credit card? It is just like a regular credit card but it differs in several ways. You do not have a solid piece of plastic in your wallet. The card exists only online. It is assigned to you, under your name. Unlike many plastic credit cards, most are prepaid. They are linked to a funding source, such as PayPal, your bank account or savings account. These cards are preloaded with a set amount of money, as a rule. When the zero amount is reached, the card can be reloaded. With the PayPal Virtual Credit Card, if there is no money in your PayPal account, the backup account for the PayPal account will be debited. Visa, Master Card and PayPal are the major players in this new virtual credit card so far. The security these cards offer far surpasses the plastic credit card for online purchases.

Security of use is by far the greatest feature of the virtual credit card. Security is ensured because each time you go to a website that offers the virtual credit card option; you can make a purchase with this card without using your own debit or credit card number. Each time you use your virtual credit card you are given an account or identifier number only for that purchase. The next time you make an online purchase using this card another number will be assigned for that purpose. This helps prevent identity or credit card theft. So far, the virtual credit card is only being used for online purchases.

There are also drawbacks to the virtual credit card. If you have a balance on this card and your card expires, you will lose it. Also, if you return merchandise that was charged to this card you will not get a refund. This doesn’t apply to all but is a general feature of this type of card.

While this newest technology is only for online purchases now, it is likely that in time credit cards will not carry the same account number year after year. Identity theft and credit card number theft has reached astronomical proportions, costing most credit card companies and users either directly or indirectly. Hackers, scammers and credit card thieves have caused us to have to pay more for financial services due to rampant criminal credit card use. By changing credit card account numbers with every purchase it will become extremely difficult to use someone else’s card without direct permission. With no refunds, however, purchasers must use them carefully.

Having this type of credit card does not guarantee that a user won’t have issues with settling credit card debt especially if the account is mismanaged. It doesn’t also not designed to replace an existing credit card in an effort to erase credit card debt. This type of credit card can still lead anyone to financial mess if managed improperly.

The Facts about Eliminating Credit Card Debt

On May 18, 2010, In credit card

Credit card debt is a major problem in the U.S., where people love to live on other people’s money. This situation has been worsened further due to the current global financial turmoil. Certain glaring facts can be cited regarding the card debts. Approximately more than 5 billion credit-card mailings are done yearly in the country of U.S. Among these only 4% get approval to open a credit card account. Approximately $9,300 is the amount of card debt for the average American citizen. But acquainting oneself with certain facts about eliminating credit card debt will free a person from all worries.

One would find plenty of advice provided on how to get rid of the vicious circle of credit card debt. But not all are sound, and one must be rational is choosing the most effective strategy. Getting a clear idea about the prevailing situation is very important. A person needs to create an excel sheet for himself including facts like card name, payment due date, outstanding balance, APR, redemption offers valid on the accumulated reward points, and special remarks. A person should include all the credit cards that he possesses in that sheet. Then he has to identify the credit card that is being the major reason for debt. This would get reflected in the card having the highest balance and APR.

Sometimes reward points can be utilized for making part payments or for covering any sort of fees. A person can also consider procuring any essential item in lieu of those reward points. It would really be meaningless if those items are separately purchased with the credit card. This, in fact, is a very effective strategy to remove credit card debt. A person needs to approach the cards on a priority basis, getting rid of those that are causing him the maximum damage.

Exercising controlled behavior while making purchases is highly important. There might often be items that a person would find tempting, but he needs to buy those products which are really essential to him. This is even more applicable for people who are already under a heavy debt burden.

Tagged with: credit card debt • debt help • eliminate debt • eliminating credit card

Using Credit Cards To Rebuild Credit

On May 3, 2010, In credit card

Many of us feel we must have a credit card as a kind of security blanket – read in case of a disaster. Having a card handy, even if one chooses not to use it, can be a good way to guard against cash shortages.

A credit card can be of great assistance in rebuilding one’s credit score. Often an individual’s credit score is based on their payment history and how often payments are made on time. The more times you use the card and how often you pay down debt will go far to raise your overall credit score.

As long as you’re using credit cards to rebuild credit, you might as well get a few benefits from your cards. Visa, Mastercard, Discover, and American Express all have great rewards programs that will let you earn everything from cash back, to points toward prizes, to airline miles as a reward for using their card. So it works out pretty well when you use your card for everyday purchases (and earn rewards) and then make timely payments (which really helps your fico score).

Before you sign up for any credit card you’re going to want to be sure you read carefully through the terms, conditions, fees, and repayment requirements and penalties. The worse your credit, the less appealing the terms associated with any given credit card will be. If you find the interest rates and other terms to much to handle, consider alternative kinds of cards.

A secured credit card may be a good alternative for you if you are looking to fix your credit but can’t seem to find an unsecured card who will work with you. Just understand these cards are easier to obtain than “traditional” credit cards, but they often carry steep fees. Those fees represent the cost of rebuilding a damaged credit history.

Tagged with: bad credit credit cards • credit cards • credit cards to rebuild credit • rebuilding credit

Start Saving By Writting a Credit Card Debt Settlement Letter

On May 3, 2010, In credit card

The credit card debt settlement letter can be a good alternative to having to be brave by talking to a stranger at the credit card company about your debts. You can instead make a written payment proposal to clear your balance over a period of some months, cutting out a lot of the possible unpleasant negotiations at the same time, as well as possibly some interest too.

With the present financial crisis, credit card companies are bracing themselves for record levels of bad debts that their customers are unable to repay. If you are seriously behind on your payments, then you have an opportunity to negotiate something favorable. Credit card companies would much rather make a new arrangement with you that you both agree is workable, than end up with something worse and they lose most of their money that has been loaned to you via the credit card. They accept a certain risk when advancing credit to cardholders, but will want to will want to collect whenever possible. All this gives you a good chance at reaching a good arrangement.

Before you write to the credit card company, you will want to work out your numbers. The kind of information to gather includes recent spending, recent income, current debts and any assets like cash, savings, investments, etc. With your spending, you must put together a spending plan for the future, so that you know what you can offer in writing. This will be the surplus from your income, once you’ve deducted your spending.

To boost your surplus, you can cut back on your spending a little or take an extra job part-time. Cutting back is often easier to do. You do not have to not buy some chocolate, for instance, you can either change to a cheaper brand or buy something smaller than you usually do. Often switching to own-brands can help too. Small changes add up fast and you can boost your surplus substantially.

In your credit card debt settlement letter you will want to include your monthly offer, but ensure you include a statement of your current financial position. If you have taken on a second employment position, be sure to mention that too. Some people find submitting a budget is helpful and whilst it does give the credit card company a chance to nitpick through your planned spending, they will likely reply asking for a budget or spending plan if you fail to include one. Therefore, it will look more organized if you include one without being asked. Good luck with your settlement.

Tagged with: credit card debt • credit card debt settlement letter

Prepaid Debit Cards And Using Plastic to Build Up Your Credit Score

On February 15, 2010, In credit card

Now I’m not the biggest fan of credit cards you’ll ever meet, but I will admit they can be useful from time-to-time. They’re certainly handy when you’re faced with a large unexpected expense. And they’re always good for a confidence/ego boost – it’s always nice to know you can spend a bunch of money if you need or want to. But other than that, I see them as pretty much a financial accident waiting to happen.

You see I’m really a prepaid debit cards kind of guy. I see reloadable debit cards as safe and sane tools for everyday spending. They give you the same spending options as credit cards but they help you control that spending and stay on budget. However one thing debit cards can’t do very well is help you build up your credit score. Credit cards have the edge there. So how can you use your credit cards to build up your credit and still avoid the traps bad credit card usage can lead you into? The answer is with a careful bill paying plan.

What you can do is set up your credit card to automatically pay your regular expenses each month. These are the bills you see every month like your phone bill, your electricity bill, etc. Then you set up an automatic payment from your bank each month to pay your credit card bill. In this way you will strengthen your credit by making both regular charges and regular payments each and every month.

Now remember when I called this a “careful” bill paying plan? I used that word because you have to be watchful and diligent to make this work. In the first place, you have to be able to set up each monthly payment to each creditor in such a way that you retain full control. You must be able to “turn off” the payment any time you want to. If you can’t, it’s a deal-breaker. You cannot relinquish control of your card to a creditor under any circumstances. If you did then they would have the power to charge you for something you didn’t want or for something that you disputed. Then you would have a tough time getting your money back and a tougher time stopping the payments when you wanted to.

The second thing to be careful with is the actual payment amounts. You must monitor the payment amounts you’re making and especially the automatic payment from your bank to your credit card. How much you’re paying and the timing on those payments is vital to track. And ideally you want to pay off the total of all the individual payments you made to creditors each month plus a little more in order to pay down your credit card balance. That way you’ll be reducing your debt as well. You have to watch this closely so an unexpected creditor expense doesn’t knock you (and your budget) for a loop.

It’s probably best to start out slowly with a plan like this. Choose one bill and start paying it and your credit card in this manner. Once you’ve got the hang of that, move on to a second bill, and so on. Don’t try to get too clever and don’t try to go too fast. Patience will rule the day. If you can do this over time (we’re talking months here), your credit score will improve. Oh, and don’t forget, get in the habit of using prepaid debit cards for your every day purchases – it’s just a better way to go than credit cards.

Tagged with: bill paying • Build Up Credit Score • credit cards • prepaid debit cards • reloadable debit cards

0 APR Credit Card Balance Transfer – Use It To Get Out Of Debt

On February 14, 2010, In credit card

When your credit rating has begun crashing down, it may seem too late to get out of debt quickly enough – however, using a few helpful tools such as the 0 APR balance transfer can make a dramatic difference in your financial situation. Before using 0 APR credit card balance transfer as your means of getting out of debt, it is essential to stop any impulse spending. Sticking to a budget is the number one way to keep your financial situation steady and eliminates the risk of falling deeper in debt.

Finding 0 APR credit cards is typically a very quick process. There are always offers sent to homeowners in the mail, so it is important to look out for these. Once you have received a couple different letters, read them over and begin applying. Taking the time to write out applications for every 0 APR credit card in the same day will improve your chances of being accepted. Increasing the limit on any credit cards you get approved for is also important to make your balance better.

Using a low rate or 0 APR balance transfer credit card provides you with a simpler and more effective method of paying off debt. Any long term debts such as car loans or student loans often have set interest rates, making them the perfect target for using a balance transfer card. Instead of choosing a traditional type of credit card, you can instead get a transfer card, eliminating a high amount of interest built up on your card.

Owing a lot of money due to large loans can be extremely stressful, especially for young adults. Low wages make getting out of debt seem impossible and it can take countless years to finally be relieved of it. High interest rates can also raise the amount you owe dramatically. Switching to using a 0 APR credit card will save you a substantial amount of money from using a traditional credit card. Consolidating transfers to your balance from your old credit card can save all of the money you would have spent previously on the interest rates alone.

Credit card can put you in a financial hole for years to come if you do not tackle it early on. Taking the time to shop around and compare several different balance transfer offers will give you an idea of the kinds of changes you make. Switching to a card with a 0 APR balance transfer will help make paying off your debt much easier and less stressful.

Tagged with: 0 APR Credit Card Balance Transfer • 0 APR credit cards • 0% apr balance transfer • 0% apr credit card • balance transfers

What To Know About Unsecured Credit Cards

On February 1, 2010, In credit card

When applying for a credit card the one thing that you need to be aware of is that there are both unsecured and secured versions of this handy product. Unsecured credit cards are the most common type to be issued; you can even find unsecured credit cards for people with bad credit. Most people aren’t even familiar with the term unsecured credit cards because this is the only type of plastic they are familiar with.

An unsecured credit card is the type of that is issued based on your credit rating, if you don’t match up to the requirements of the issuers you will be declined. With unsecured credit you do not have to put any money down to open the account, while if you have to pay any money upfront for the account that is known as a secured credit card. Unsecured credit cards rely on your promise to repay the amount that you have put on credit based on your credit risk, which makes finding one of these very difficult for people with bad credit.

When looking for unsecured plastic, just like those searching for auto loans bad credit it can be pretty hard to find a suitable deal. The terms and conditions are going to be worse than most other people are going to have to put up with due to the fact that you represent a bigger risk to the lender. If you do qualify for an unsecured card you are going to end up paying very high interest rates. The bad part about applying for unsecured credit cards is that there is no interest rate cap, so the credit card companies can charge you ridiculously high amounts of interest to punish you for your past financial mistakes.

Despite the high interest rates and the arduous process of trying to find one, obtaining an unsecured credit card is actually one of the best things that you can do to repair your credit. However, if you do get one make sure you pay your payments on time as being late will only make your rating even worse and lead to more problems in the future.

Tagged with: auto loans bad credit • secured credit cards • unsecured credit cards • unsecured credit cards for people with bad credit

Should i get department store credit cards?

On January 27, 2010, In credit card

There are some people who love getting department store credit cards and there are others who see them as senseless and would rather just stick to their major credit cards when making their purchases. Both sides have their reasoning and we will take a look here at some issues that you might want to know before you go filling out that application.

With a store credit card you can sometimes reap the benefit of receiving free items and taking advantage of store promotions that are only available to their credit card holders. Department stores will sometimes give away the free items when you make a purchase from them using their card, it does not matter if you make your purchases in the store or online. Sometimes when you are shopping online they will even offer free shipping when you use their credit card. Another great thing about some department store cards is the great deals that they offer when you make a purchase with their credit card. Many times they will offer you interest free specials that will last for a certain amount of time. For instance, they might offer a one year free interest deal when you make a $1000 purchase. This is a terrific bargain for shoppers as they will basically pay no interest at all if they pay off the item in less that one year.

Now for a few cons about department store credit. When you have a department store line of credit, your interest rates on the average will be much higher than that of a major credit card. You have to be careful here as not to drown in debt and have a difficult time getting your balances down. Another disadvantage is that your card is only good for that particular store and can’t be used anywhere else unlike a major credit card that can be used anywhere. If you have too many store cards it may also have a negative affect on your credit report as you will have many lines of credit open with too many creditors. It may actually be wiser to apply for secured credit cards.

Tagged with: apply for secured credit cards • department store credit cards • dept store credit cards • secured credit cards

The Difference Between Secured And Unsecured Credit Cards

On December 12, 2009, In credit card

Do you own a credit card? Now let me ask you this, is it a secured credit card or is it an unsecured credit card? Chances are it’s an unsecured credit card. So you might be wondering, what’s the difference between a secured credit card and an unsecured card?

In this post I will be explaining the difference between the two and which one would be right for you.

Unsecured Credit Cards

These credit cards get their name from the fact that they aren’t backed by any type of asset. In fact a credit card is a loan in itself just like a mortgage is for your home, except a mortgage is backed by an asset, the house.

So how do the credit card companies know how much credit to give you? They look at your credit history and if you have a great credit score and no mistakes on your credit report you’ll be allowed access to a greater limit.

The down side to these cards however is the fact that you have to usually have somewhere between good and excellent credit to get one which is where the secured version comes in.

Secured Credit Cards

How a secured credit works is that you aren’t given credit based your credit score but rather by depositing money towards the card much like a debit card.

In this sense the risk of the card is not held by the credit card company now but instead is now placed on you. If you fail to make payments it’s because you failed to add money to your card and maintain it properly.

The great thing about these cards are the fact that you don’t need great credit to get one, and that over time with managing the card properly you will also build up your credit.

So Which Is Better

Both types of cards have their advantages. However if you look at the statistics the 10 top credit cards that people are using are unsecured cards. Though you still have to find what is right for your situation whichever type you choose to make use of.

Tagged with: 10 top credit cards • secured credit card • unsecured credit card

Get Out of Debt with a 0% APR Balance Transfer

On December 9, 2009, In credit card

The 0% APR balance transfer option is for the person who has a high interest credit card and a card balance that is pushing pretty close to the maximum limit. Taking advantage of the zero APR balance transfer is a smart first step for anyone seeking to reduce overall credit card debt.

The clear advantage of the 0% APR balance transfer credit card is that it saves many dollars in interest in just a matter of about six months. Without having to focus so much on the interest, you have a fighting chance to pay off a balance.

Generally, the payment on the new account you receive after you do the 0% balance transfer will be lower than the interest bearing payment you made on the old account. It is wise to use the money that you save to apply toward your principal balance.

Many have also used the extra cash to build more cash flow on a monthly basis. It may make a borrower feel good to have access to cash, but it does not put a dent in debt; and the longer it is accessible, the more tempted many people are to spend it and create even more debt. This is exactly what the credit card companies are counting on. They want you to use your new 0% transfer card to by additional things that generally don’t get the same treatment as the balance of the transferred debt. Many times, new charges accrue interest at the normal interest rate.

Naturally, a strong resolve and a commitment to actually paying off the credit card balance is the only thing that will make consolidating debt with a new credit card have a significant impact. You have to want to get yourself out from under your debt.

If you use the 0% APR balance transfer card option, you should be aware that there is often a balance transfer fee or an annual fee for the card. Be prepared for the fees and make sure that any deal you decide to take makes sense financially. Additionally, applicants should always read the terms and conditions carefully, since most offers of this kind are time-limited. Usually, after three or six months, an interest rate is added back to the card or to the transferred balance.

If you have not used the time wisely to pay down the balance, you are right back where you started – with high interest on a card that still has a balance. This can defeat the entire purpose of the 0% APR balance transfer.

Tagged with: 0% apr balance transfer • balance transfer • balance transfer with 0% apr

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