Sunday, July 15, 2007

Big Business Helping Credit Card Fees?

I read an article by Mike from and he gave some interesting insight into how big biz is helping to lower credit card fees:

Big Business Leads the Drive for Lower Credit Card Fees

There are a lot of mixed messages floating around about credit cards.
We know that they're a vital part of building and improving credit, but
it's hard to tell exactly what you're paying in monthly fees and late
penalties. It seems so complicated! Fortunately, credit card companies
are beginning to lift the veil of secrecy so that it's easier than ever
to see exactly what you're paying and when.

Why the Change of Heart?

Thanks are due to two unlikely sources: Wall Street and retailers.
MasterCard just became a publicly traded stock in May, and Visa is going to
follow suit next year. This is great for cardholders everywhere,
because Wall Street bigwigs want to see the raw data before they invest
money in a company. There have long been rumors that credit card companies
work together to gouge consumers with excessive fees. No investor would
want to put money into a company that could go the way of Enron.
Lawsuits, scandals, and shifty business all add up to lost money for the
stockholders, so in order to make their stocks attractive to investors,
credit card companies are bending over backwards to show that they are on
the up-and-up. This doesn't only help Wall Street investors, it helps
all cardholders see exactly how much they are paying and when they are
paying it.

The other group that is responsible for this increased disclosure is
the merchants who take credit cards. If a cardholder is unhappy with his
service, he can always switch to another plan, or even another
provider. However, retailers who choose not to take credit cards end up losing
business to competitors who will. They've decided not to take it
anymore, and who can blame them? Merchants typically pay one or two percent
of each purchase to the card companies. There are about eighty types of
fees that merchants have to pay, depending on how a card is swiped,
whether they take a signature, how often each card is used, and much more.
Now that retailers are learning how much they are being charged, they
can put pressure on the card companies to give them better deals - and
a better deal for them means a better deal for you!

The Benefits For the Cardholder

So it's easy to see why investors and retailers want to see the details
of credit card companies' fees. But how does it help the average
person with a Visa or Mastercard in their wallet? The first way is that
comparison shopping is now easier than ever. In the past, most people based
their decisions on interest rate alone. However, that card with the
lower rate could be sticking you with excessive late fees, or even
raising your rate each time you're late - without even informing you!

As cardholders become more informed and comparison shop for the best
deal, companies will undoubtedly lower their fees and rates, especially
those tricky "hidden" ones. The competition will encourage the card
companies to try to win business, rather than just taking it for granted.
Having a credit card is vital in today's society, but it's been a
daunting prospect for some consumers. Soon there will be no excuse for living
without a credit card, and we'll have "Big Business" to thank it!

Saturday, July 7, 2007

Credit Card Mistakes

Students are prone to get caught in credit card debt. Let’s take a closer look at the following mistakes that students make with their student credit cards.

Signing up for the first student credit card offer
As you enter college, you might receive a lot of credit card offers from different credit card issuers. If you’re not going to think about it carefully, you might just sign up for the first offer that you think sounds good enough for a credit card. It’s easy to get one enticed by a credit card offer. Most credit card companies make a lot of exciting promotions that may be hard to resist. However, if you’ll read the complete terms and conditions, you might be surprised to see that there are certain charges that are higher than expected.

To Sign or Not to Sign
To avoid signing up for the wrong credit card offer, don’t just read the best features of the credit card. Take the time to read the terms and conditions which can be found in the credit card’s website. This way, you’ll get to know about all the rates and charges that come with your credit card. Check out websites that give credit card reviews on different credit cards for students. These websites compile all possible student credit cards in the market, along with their main features in just one page. This will help you see what choices you have and compare them.
In addition, since this is your first time applying for a credit card, it will be better if you seek advice from your family or relatives who may know more about credit cards than you do. Better, you may seek assistance from a financial consultant who can give you an objective and informed opinion about the best student credit card.

Using up all your credit limit
Students are usually given a huge credit limit. But this does not mean that you can spend credit limit to the fullest. Bear in mind that you should keep your balances below 50% of your credit limit. Using up your entire credit limit on expenses has a negative impact on your credit report. Also, you’ll more likely have a hard time paying off your balances in time if you get in the habit of spending your credit limit to the maximum. This brings us to the next biggest mistake that students commit.

Not paying on time
The biggest mistake you can do on your student credit card is not paying your balances on time or skipping on your payments. Credit card companies can increase the rate of your APR, charge you with penalty fees and even take back your rewards and privileges. Worse, you might not be able to keep up with your credit. Incurred monthly balances are the most common cause why students get swamped with credit card debt.
Remember that owning a student credit card is your first step in establishing your credit history. You want to make a good credit report for yourself especially because an excellent credit status will be an enormous help for you when you finish college and enter the corporate world. So take your responsibilities on your student credit card seriously and avoid committing these mistakes.
Divine Linkletter is a credit analyst and a writer for She specializes in providing optimal solutions and advices to financial crisis especially to student credit and student credit card mistakes. Copyright 2007
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