Credit and debit cards can both be used for shopping but operate differently. Credit cards impact your credit score but debit cards donâtâread on for more.
Credit and debit cards can both be used for shopping but operate differently. Credit cards impact your credit score but debit cards donâtâread on for more.
Credit cards exceptional financial instruments. They allow you to buy without any cash and earn rewards while at it. Another interesting feature is the option of adding another person as an authorized user to your card. However, credit card usage does have a huge impact on your creditworthiness. So, does removing your name from a […]
The post How Removing Your Name from a Shared Credit Card Affects Your Credit Score appeared first on Credit Absolute.
AÂ credit cardÂ is designed to help you in an emergency, to give you options when there are none. But what happens if you have a maxed-outÂ credit cardÂ in one hand and an empty card in the other, can you use oneÂ credit cardÂ to pay off the other and, more importantly, should you?
TheÂ short answerÂ is yes and… probably not. However, there is a better option available and it’s actually one of the best ways to clear aÂ credit cardÂ balance.
There are three ways you can clear aÂ credit cardÂ billÂ using anotherÂ credit card. The first two options are nothing short of terrible and are likely to cause more issues than they fix. The third is really the only one you should consider, but before we get to that option, let’s get the bad ones out of the way.
Credit cardÂ companiesÂ won’t let you pay off oneÂ credit cardÂ with another, at least not in that way. However, you can get around this by usingÂ convenience checksÂ or aÂ cash advance. The former is sent by your creditor for you to make a deposit into yourÂ checking account; the latter is used to withdraw cash.Â
Technically, you can get cash from yourÂ credit card, put this into yourÂ checkingÂ account, and then use that money to clear yourÂ credit cardÂ debt.
âBut, as mentioned above, this is aÂ bad idea.Â Cash advanceÂ feesÂ can be enormous and if you’re moving large sums of money and being charged a high fee for doing so, you could be seriously out of pocket. Luckily, there is aÂ better alternative.
AÂ balance transferÂ is the act of moving aÂ credit cardÂ balanceÂ from one or more cards to another. There are specificÂ balance transferÂ credit cardsÂ designed to help you with this process and all come with anÂ introductory periodÂ where youâre offered 0% APR for the first 6, 12 or 18 months.Â
Once this period ends, you may be charged aÂ higherÂ interestÂ rate, but if you can clear your balance during that intro period those extraÂ interest chargesÂ won’t matter.
Balance transferÂ credit cardsÂ are used byÂ credit cardÂ companiesÂ to attract new users. These introductory offers convince you to move your balance to aÂ newÂ credit cardÂ company, after which they hope you will continue to make purchases, accumulate debt, and remain with them for years to come.
MostÂ balance transferÂ credit cardsÂ charge a fee for moving the money across. This fee is often levied as 3% or 5% of the total balance, which equates to $300 or $500 for a balance of $10,000.Â
That sounds like a lot, but it also comes with a 0% APR, which means yourÂ monthly paymentsÂ will go exclusively towards the principal, paying it off quickly.
Usually, the majority of yourÂ minimum paymentÂ goes towards interest, which means your balance will decrease slightly with each passing month. By removing this interest obligation from the equation, all your payment will go towards the balance, thus clearing it quickly and cheaply.Â
These cards can save you thousands of dollars if used properly, but it’s important not to swap an older problem for a new one; not to create the same issues on yourÂ new cardÂ that you had on your old card.
Use aÂ balance transferÂ offerÂ to remove the balance entirely. Meet theÂ minimum payment, pay more where possible, and ensure that when theÂ introductory periodÂ ends, there is no balance on which interest can build. Once you reach this point, you’ve wiped the slate clean and can start afresh, makingÂ credit cardÂ paymentsÂ on time and clearing your balance in full every month.
ManyÂ balance transferÂ credit cardÂ offersÂ come with a $0Â annual feeÂ and don’t charge you for foreign transactions. However, they typically won’t provide you with the sort ofÂ cashbackÂ rewards you can get from otherÂ credit cards.
If you haveÂ bad credit, you may struggle to find aÂ balance transferÂ cardÂ with a high enoughÂ credit limit. These cards, like all goodÂ credit cards, require a relatively cleanÂ credit report, preferably with aÂ credit scoreÂ above 670.
As long as yourÂ credit scoreÂ is above 580, you’ll still options, but those options may be limited toÂ high-interest ratesÂ and unfavorable terms. In such cases, there are a few things you can to clear your credit debt:
AÂ balance transferÂ feeÂ is the only real downside to aÂ balance transferÂ credit card, so it’s worth putting the time and effort in to get one of these cards. It may only take a few months to improve yourÂ credit scoreÂ to a point where you can apply for one of these cards.
Take a look at theÂ bestÂ balance transferÂ credit cardsÂ (Discover, Visa, Chase) to give you an idea of the sort of card that can help you and the type ofÂ credit scoreÂ you need. Once you have that target in mind, you can work towards achieving it.
A credit counselor can look at your current financial situation and determine the best course of action going forward. These services are offered by manyÂ credit counselingÂ agencies and you typically only need to pay a token amount for a short 30- or 60-minute session.
Debt consolidation is very similar to aÂ balance transfer, as it swaps one or more smaller debts for a big one. The difference is that it pays theÂ credit cardÂ balancesÂ off with a single loan, and you then focus on repaying that loan.
Typically, debt consolidation extends the length of your loan with a view to reducing theÂ monthly paymentsÂ but increasing the total balance. This can help to make yourÂ credit cardÂ debtÂ more manageable and it will also improve your debt-to-income ratio.
Debt settlement is one of the cheapest ways to clearÂ credit cardÂ debt. It begins when a debt specialist requests that you stop meeting all monthly payments and then move your money to a separateÂ bank account.Â
The debt specialist will then use thisÂ bank accountÂ to negotiate with your creditors, waiting until they desperate to settle and then offering them a greatly reduced settlement sum.
Just bear in mind that when you miss aÂ minimumÂ monthly payment, you run the risk of your account defaulting, which will hurt yourÂ credit score.
Can you Pay a Credit Card with a Credit Card? is a post from Pocket Your Dollars.
Direct Link to offer
Weâve seen the same deal for various other merchants. There was a $75 offer for Nike, but I think a lot of people will prefer $50 at the gas station.
Hat tip to Milestomemories
There’s nothing fun about declaring bankruptcy, but those who emerge from it can be thankful for the opportunity to rebuild their personal finances without the burden of debt. Unfortunately, bankruptcy also does damage to your credit, making it difficult to get approved for credit cards and other lines of credit. Since credit cards are a good way to build or rebuild credit, we have the details for some credit cards to get after bankruptcy.
Secured credit cards generally have lower credit score requirements and often can be obtained post-bankruptcy. While they do require an upfront security deposit to open, they otherwise work just like traditional credit cards and can help you rebuild your credit. When choosing a secure credit card, look for one that lets you build toward unsecured credit status and reports to all three credit bureaus so it helps you positively impact your credit.
Secured credit cards are often considered bad debt credit cards because they’re targeted to people with poor or no credit. But you can also find credit cards that are approved for people with less-than-stellar credit and don’t require a security deposit. In return for the chance to get positive reporting on your credit report via one of these cards, you might have to pay an annual fee or deal with a high interest rate.
Thereâs no single best credit card to get after a bankruptcy, but there are many options to consider. Carefully review the details of relevant credit card offers before making a decision for yourself.
Card Details +
Annual Fee: $35
APR: 17.39% (variable)
Why we picked it: This card helps you build credit while still offering a fairly low interest rate and a refundable deposit for as little as $200 (some restrictions apply; see cardholder agreement for details).
The details: There is no credit check necessary to apply, and you can apply in less than 5 minutes. Your responsible use of the card is reported to all three credit bureaus each month. And when you need extra credit, you may be eligible for a credit line increase.
Drawbacks: There is an annual fee, which isn’t necessarily bad in exchange for building credit.
Card Details +
Annual Fee: $29
APR: 19.99% Variable APR for Purchases
Why we picked it: With responsible use, this card can be a good place to start working to rebuild your credit. There is no minimum credit score required for approval, and it also reports to all three credit bureaus each month.
The details: You can secure your credit line by putting down a fully refundable deposit of $200 to $2,000 during the application process. When you pay off your balance, you can receive your deposit back. Its expedited processing option lets you receive your card more quickly, and you can apply in minutes with no negative impact to your credit score.
Drawbacks: While the APR isn’t super high for a bad-credit credit card, it’s still high enough to run up hefty interest charges. You’ll want to pay the balance off as often as possible to avoid that extra expense. The card is not yet available in all states.
Card Details +
Annual Fee: $35 – $99*
Why we picked it: It is possible to be approved with poor credit and a bankruptcy on your credit report, but you don’t have to start with a security deposit. Plus, you can choose your card image at no extra charge!
The details: Prequalification doesn’t require a hard credit inquiry, so you can find out if you’re a likely candidate for this card without impacting your credit. You can access your account via mobile to manage it, helping you stay on track with positive payment history and balance management, and the card comes with decent fraud protection.
Drawbacks: The annual fee can be pretty high depending on the terms you’re approved for. The interest rate is also fairly high, so you might not want to carry over large balances between statements.
Card Details +
Annual Fee: $0 – $99*
Why we picked it: You can prequalify for this card without impacting your credit, and thereâs no security deposit required.
The details: The APR is fairly steep, so you probably want to limit what balances you carry over each month. How much the annual fee is depends on your credit profile. However, it doesn’t require a security deposit.
Drawbacks: A potentially high annual fee and less-than-stellar APR make this a potentially expensive way to build credit.
Card Details +
Annual fee: $39
APR: 25.99% (variable)
Why we picked it: Thereâs no deposit required, no penalty APR, and no hidden fees.
The details: What you see is what you get with this card. With responsible use, you can strengthen your credit history.
Drawbacks: There is an annual fee and the variable APR can be a bit steep. You may also need fair credit to qualify.
Card Details +
Annual fee: See Terms*
APR: See Terms*
Why we picked it: All credit types are welcome to apply, and the pre-qualification process wonât impact your credit score.
The details: Surge can be used anywhere Mastercard is accepted. , and the card reports to all three major credit bureaus.
Drawbacks: You need a checking account to apply. Because the card is specifically for people with less-than-perfect credit scores, interest rates and terms may be a bit high.
After a bankruptcy, improving your finances and rebuilding your credit should be a priority. Do some research and pick a credit card that helps you achieve that goal. If you feel that you can’t responsibly manage credit right now, you should wait until you’re in a better place to submit a credit card application.
Since secured credit cards require an upfront security deposit, you’ll need to determine how much money you can afford. Most secured cards will give you a credit line that equals the amount of your original deposit.
While high APRs and annual fees are common with all of these credit cards, you should compare rates across several cards to find the ones that are best for your spending habits.
Some cards for bad credit are designed to exploit people using unfair terms or policies that make it difficult to rebuild your finances. You may even start receiving multiple credit card offers in the mail after your bankruptcy is discharged. Watch out for red flags to avoid getting burned.
And remember: A credit card can only build credit if you use it correctly. You should keep your credit card balance below 30% of the available credit limit and make all your payments on time to help build your credit.
The post Easiest Credit Cards to Get After Bankruptcy appeared first on Credit.com.
Flying can be a hefty expense â especially when youâre buying more than one airline ticket at a time. If you frequently fly with a companion, whether it be your child, spouse or friend, a companion pass can drastically reduce your travel costs.
While the terms vary depending on the airline and credit card, generally, companion passes allow a second passenger to fly with you for free or at a significantly discounted rate. Some credit cards automatically offer a companion pass when you are approved for the card or each year on your account anniversary. Others require you to charge a certain amount within a given time frame to earn the pass.
For more details on some of the most common companion passes, including what they offer and how to earn them, read on.
The Travel Together ticket is valid for 24 months from the date of issue.
|Which cards help you qualify?|
|British Airways Visa SignatureÂ® Card|
Travel must be booked on alaskaair.com.
The Famous Companion Fare is valid from the date of issue until your next account anniversary.
|Which cards help you qualify?|
The Bank of America content of this post was last updated on March 20, 2020.
Signing the back of your credit card is an important security step for protecting your cardâs information if it should fall into the wrong hands. Merchants are supposed to check that the signature on the card matches the signature on the sales receipt as a security precaution. If a card has no signature on the back, they arenât required to process the ensuing payment.
Should You Sign the Back of Your Credit Card?
Signing the back of your credit card is always better than not, without exception. Itâs another step provided by your credit card company to try and keep your personal information as safe as possible. When used in conjunction with the card verification value (CVV) on your card, it creates a line of defense should a fraudster try to swipe your plastic.
While the signature itself doesnât protect you, the ability for a salesman to match it to your existing official signatures is where its value lies. This is done most commonly with your driverâs license, or if youâre abroad, your passport is a fine stand-in. In other words, taking a few seconds to sign that little black or white strip could be the difference between your identity being stolen and not.
Hereâs a look at how the major credit payment networks handle unsigned cards:
Mastercard urges merchants in its payment network not to accept charges from customers with unsigned credit cards. On the back of every Mastercard, it even says ânot valid unless signed.â
The company tries to instill in merchants that they should not process customer transactions unless the customerâs signature appears in the signature space on the back of the card.
If the card has no signature, merchants are to request the customer sign the card. A merchant also will need to see a confirming form of identification.
At Visa, merchants must verify that the signature on the back of any card matches the customerâs signature on the transaction receipt and any identification. They want to know you are who you say you are and recreating the same signature on demand when you sign for a credit card transaction is one way to do it.
Visa considers an unsigned credit card to be invalid. The words âNot Valid Without Signatureâ appear above, below or beside the signature panel on all Visa cards. Turn over the card and youâll see it. And like Mastercard, Visa urges merchants not to accept unsigned credit cards.
When a customer presents an unsigned Visa card to a merchant for payment, Visa requires a merchant to check the customerâs identification by requesting a government-issued form of ID.
Where permissible by state law, the Visa merchant may also write the customerâs ID serial number and expiration date on the sales receipt. (Beginning in California in 1971, the recording of personal information during credit card transactions has become illegal, with the passage of the Song-Beverly Credit Card Act.)
Visa also instructs merchants to ask the customer to sign the card, within full view of the merchant. They then check that the customerâs newly written signature on the credit card matches the signature on the customerâs ID. If a customer refuses to sign a Visa card, the card is considered invalid and cannot be processed. Merchants will then be forced to ask the customer for another form of payment.
Discover keeps things very simple. The company urges its cardholders to sign the backs of their Discover cards as soon as they activate them. This is because the signature makes the card valid and a cashier may decline the transaction if the card is not signed.
American Express also urges retailers to compare a customerâs signature on the back of an American Express card with the transaction sales receipt. And if an American Express card is presented unsigned, the clerk is to request a photo ID of the customer with a signature. Following this, they must request the customer sign the back of the American Express card and the sales receipt while the clerk is holding on to the customerâs photo ID.
Writing âSee IDâ on a Credit Card
Writing âsee IDâ or âcheck IDâ on a credit card might seem like a great way to protect from fraud. But it actually may invalidate the card. This is because only your valid signature that a merchant can match with a signature on a sales receipt is acceptable. In some cases, the merchant may ask you for another card to make your purchase. To save yourself from a slower-than-needed transaction at the cash register, sign your credit card as intended.
Tips for Protecting Against Credit Card Fraud
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Photo credit: Â©iStock.com/PeopleImages, Â©iStock.com/hsyncoban, Â©iStock.com/RichLegg
The post Should You Sign the Back of Your Credit Card? appeared first on SmartAsset Blog.
When you think âcredit score,â you probably think âFICO.â The Fair Isaac Corporation introduced its FICO scoring system in 1989, and it has since become one of the best-known and most-used credit scoring models in the United States. But it isn’t the only model on the market.
Another popular option is called VantageScore, the product of a collaboration between the three major credit reporting agencies: Experian, Equifax, and TransUnion. It uses similar scoring methods to FICO but yields slightly different results.
Each scoring model has multiple versions and multiple applicationsâyou donât have just one FICO score or one VantageScore. Depending on which bureau creates the score and what type of agency is asking for the score, your credit score will vary, sometimes siginifcantly. One credit score isnât more âaccurateâ than another, they just have different applications. Learn more about the different types of credit scores below.
When you sign up for ExtraCredit, you can see 28 of your FICO scores from all three credit bureaus. Your free Credit Report Card, on the other hand, will show you your Experian VantageScore 3.0.
VantageScore was created by the three major credit reporting agenciesâExperian, Equifax, and TransUnion. It uses similar scoring methods to FICO but yields slightly different results.
One of the primary goals of VantageScore is to provide a model that is used the same way by all three credit bureaus. That would limit some of the disparity between your three major credit scores. In contrast, FICO models provide a slightly different calculation for each credit bureau, which can create more differences in your scores.
So, what are the differences between an Experian credit score calculated using VantageScore and one calculated via the FICO model? More importantly, does the score used matter to you, the consumer? The answer is usually no. But you might want to look at different scores for different needs or goals.
Credit scores from the credit bureaus are only as accurate as the information provided to the bureau. Check your credit report to ensure all the information is correct. If it is, your Experian credit scores are accurate. If your credit report is not accurate, youâll want to look into your credit repair options.
Our free Credit Report Card offers the Experian VantageScore 3.0 so you can check it regularly. If you want to dig in deeper, you can sign up for ExtraCredit. For $24.99 per month, you can see 28 of your FICO scores from all three credit bureaus. ExtraCredit also offers rent and utility reporting, identity monitoring and theft insurance, and more.
FICO and VantageScore aren’t the only scoring models on the market. Lenders use a multitude of scoring methods to determine your creditworthiness and make decisions about whether or not to give you credit. Despite the numerous options, FICO scores and VantageScores are likely the only scores you’ll ever see yourself.
Hereâs what FICO uses to determine your credit score:
VantageScore uses the same factors, but weighs them a little differently. Your VantageScore 4.0 will be most influenced by your credit usage, followed by your credit mix. Payment history is only âmoderately influential,â while credit age and recent inquiries are less influential.
Each company also gathers its data differently. FICO bases its scoring model on credit data from millions of consumers analyzed at the same time. It gathers credit reports from the three major credit bureaus and analyzes anonymous consumer data to generate a scoring model specific to each bureau. VantageScore, on the other hand, uses a combined set of consumer credit files, also obtained from the three major credit bureaus, to come up with a single formula.
Both FICO and VantageScore issue scores ranging from 300 to 850. In the past, VantageScore used a score range of 501 to 990, but the score range was adjusted with VantageScore 3.0. Having numerical ranges that are somewhat consistent helps make the credit score process less confusing for consumers and lenders.
Your score may also differ across the credit bureaus because your creditors arenât required to report to all three. They may report to only one or two of them, meaning each bureau likely has slightly different information about you.
If you don’t have a long credit history, VantageScore is the score you want to monitor. To establish your credit score, FICO requires at least six months of credit history and at least one account reported to a credit bureau within the last six months. VantageScore only requires one month of history and one account reported within the past two years.
Because VantageScore uses a shorter credit history and a longer period for reported accounts, it’s able to issue credit ratings to millions of consumers who wouldn’t yet have a FICO Score. So, if you’re new to credit or haven’t been using it recently, VantageScore can help prove your trustworthiness before FICO has enough data to issue you a score.
A history of late payments impacts both your FICO score and your VantageScore. Both models consider the following.
FICO treats all late payments the same. VantageScore judges them differently. VantageScore applies a larger penalty for late mortgage payments than for other types of credit payments.
Because FICO has indicated that it factors late payments more heavily than VantageScore, late payments on any of your accounts might cause you to have lower FICO scores than your VantageScores.
VantageScore and FICO both penalize consumers who have multiple hard inquiries in a short period of time. They both also conduct a process called deduplication.
Deduplication is the practice of allowing multiple pulls on your credit for the same loan type in a given time frame without penalizing your credit. Deduplication is important for situations such as seeking auto loans, where you may submit applications to multiple lenders as you seek the best deal. FICO and VantageScore don’t count each of these inquiries separatelyâthey deduplicate them or consider them as one inquiry.
FICO uses a 45-day deduplication time period. That means credit inquiries of a certain typeâsuch as auto loans or mortgagesâthat hit within that period are counted as one hard inquiry for the purpose of impact to your credit.
In contrast, VantageScore only has a 14-day range for deduplication. However, it deduplicates multiple hard inquiries for all types of credit, including credit cards. FICO only deduplicates inquiries related to mortgages, auto loans, and student loans.
VantageScore and FICO both penalize credit scores for accounts sent to collection agencies. However, FICO sometimes offers more leniency for collection accounts with low balances or limits.
FICO 8.0 also ignores all collections where the original balance was less than $100 and FICO 9.0 weighs medical collections less. It also doesn’t count collection accounts that have been paid off. VantageScore 4.0, on the other hand, ignores collection accounts that are paid off, regardless of the original balance.
FAKO is a derogatory term for scores that aren’t FICO Scores or VantageScores. Companies that provide FAKO scores don’t call them this. Instead, they refer to their scores as âeducational scoresâ or just âcredit scores.â FAKO scores can vary significantly from FICO scores and VantageScores.
These scores aren’t completely valueless, though. They can help you understand where your credit score stands or whether it’s going up or down. You probably don’t want to shell out money for such scores, though, and you do want to ensure the credit score provider is drawing on accurate information from the credit bureaus.
The post Experian Credit Score vs. FICO Score appeared first on Credit.com.