Posts Tagged ‘Credit Cards’

Holiday Season Means Your Credit Card Will Be Working. Is It Healthy?

July 20th, 2011

Don’t be left cashless because your credit card fails
Nothing, but nothing will ruin your vacation like having your credit card rejected. Your kids will cry. Your wife will shout and the bartender will take your beer away.
There are 2 reasons your credit card may not work:

Fraud
Your credit card company suspects fraud. Credit card companies use sophisticated software to detect deviations from your normal spending patterns, such as a series of large purchases in exotic locales. Before you leave, call your credit card issuer. Ask the customer service representative to put a note on your account explaining where you’re going and when you’ll return. And it’s not a bad idea to carry an extra credit card, just in case the message doesn’t get through.

Microchip
Your card doesn’t contain a microchip. In the past few years, banks in Europe and other parts of the world have switched to credit cards with an embedded microchip.

In the US the majority of credit cards still have a magnetic stripe on the back and only require a signature. Hotels and restaurants in Europe will accept magnetic signature cards, as will most retailers. You may hit problems at automated systems. To avoid hassles, pay for train tickets and other purchases online before you go. Carry a back-up supply of local currency to use at tolls, parking lots and metro stations.

Keep costs down
Traveling overseas may expand your mind, but unless you’re careful, it will shrink your bank account. At current exchange rates, a café au lait at a charming cafe in Paris could end up costing you $15.

Currency exchange
Try and avoid credit card currency exchange fees. Visa and MasterCard charge a standard 1% for foreign purchases, and many banks tack on their own conversion fees. For some credit cards, the combined currency exchange fee is 3%. Plan ahead. Capital One doesn’t charge conversion fees for any of its cards, and absorbs the Visa and MasterCard fee. Some cards offered by American Express, Citi and Chase also waive currency conversion fees.

Apply for another card
If you don’t have a credit card that waives currency exchange fees, consider applying for one before you travel. An added benefit: Many credit card issuers are offering generous rewards to new applicants with excellent credit. Capital One Venture Rewards, for example, is offering 25,000 bonus airline miles to new card holders. When you apply for a new credit card, you authorize the issuer to check your credit report. That inquiry can ding your credit score. If you already have stellar credit, one inquiry won’t make much of a difference. But if you have shaky credit and plan to buy a house or a car in the next few months, think before you apply for a new credit card.

Card insurance
Finally, check the terms of your credit card’s insurance coverage before you leave for your trip. Most credit cards provide rental car insurance, but that may not apply in some foreign countries.

Travel insurance
If you buy travel insurance make sure you’re not duplicating coverage you already have. Some premium credit cards offer trip-cancellation insurance as long as you purchase your tickets with their credit card.

Tags: Credit card insurance, Credit Cards, Holiday travel, Overseas travel, Travel Insurance
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I’m Thinking about Changing My Credit Card for a Prepaid Card

June 21st, 2011

We went to the mall this morning and I spent and spent
It’s that time of the month; the time when I can see the balance in my bank account and the number of days left to payday with one eye. I then understand that there is more money than days, if you get my drift. So I release my grip on the bank balance and spend. Oh foolish me! I bought an unneeded latte coffee mixer. We don’t need it, although it’s nice to have, especially now that summer’s here and iced coffee is the stuff to drink on these hot and humid days.

Prepaid cards
I may have found a solution to my bad spending habit, a prepaid card. Prepaid cards are re-loadable cards that can be used anywhere credit or debit cards are accepted. They’re popular with people who can’t afford a traditional bank account, or who have been turned off by overdraft fees and other costs. They also offer a way for consumers who don’t have credit cards to shop online. As for me, I will load the card well before payday and promise myself that when the card is empty I will stop spending.

Prepaid vs. debit
More than 17 million Americans don’t have bank accounts, and that number could grow as checking accounts become more expensive. The broad financial reform bill Congress enacted last year requires the Federal Reserve to place “reasonable” limits on the fees banks charge retailers every time a consumer swipes a debit card. That rule is scheduled to take effect July 21. To make up for the loss of billions of dollars in swipe fee revenue, many banks and credit unions are adding fees for services that used to be free.

Less expensive alternative
Prepaid cards offer “unbanked” consumers a safer and less expensive alternative to check-cashing stores and pawnshops, prepaid card issuers say. Many prepaid issuers allow card holders to have their paychecks direct-deposited to their cards. Card holders can also use the cards to pay bills.

Warning
Prepaid cards have plenty of detractors. Consumer groups say many of the cards are loaded with activation, reloading, maintenance and other fees that can quickly erode the card balance. In May, Florida Attorney General Pam Bondi announced that she was investigating five large prepaid card companies for possible unfair and deceptive practices.

American Express prepaid cards
American Express are the latest group to get into the prepaid card business and they offer the following:

Reloading fees
To add cash to your American Express card, you’ll need a Green Dot MoneyPak, which you buy for $4.95 at a retail or drug store, then reload your card online or by phone.

Withdrawal costs
American Express prepaid card holders get one free ATM withdrawal a month; after that, they’re charged $2 for every withdrawal.

Consumer protections
Federal law protects you from liability if someone steals your credit or debit card and embarks on a spending spree. Those protections don’t apply to prepaid cards. While most prepaid card issuers, including American Express, provide “zero liability,” that protection is voluntary.

Limited use
American Express says its prepaid card can be used anywhere that accepts American Express. Trouble is, a lot of small retailers don’t accept American Express because it has higher transaction fees than other card issuers.

Tags: Credit Cards, Prepaid cards, spending, Unnecessary spending
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How Do You Mean, I Must Pay My Credit Card Debt Before I Die?

May 20th, 2011

It’s not as though I can choose when I’m going to die
It’s now a known fact: Retired Americans are racking up credit-card debt like never before, be it for vacations or medical expenses, and a surprising number have no intention of paying it off before they die. Nearly 40% of retired Americans said they’ve accumulated credit-card debt in their twilight years and aren’t the slightest bit worried about paying it off in their lifetime, according to a survey released by CESI Debt Solutions.

At the end of the day
“At the end of the day, some people of a certain age say, ‘It’s too late in the game for me to do anything about it. I can’t win. So I’m just going to stop playing the game,’“ said Neil Ellington, executive vice president at CESI. This may come as a surprise to younger generations who thought their parents, the so-called Greatest Generation, were more responsible than youngsters raised in an era of easy money, a culture of credit.

This generation
But remember that this is the generation that frowns upon talking about money and certainly would be embarrassed by any potential money problems. Add in a recession that slashed many retirement accounts in half and that leaves a generation sinking deeper into debt, with a diminishing timeframe to do anything about it, and too much pride to talk about it. “Most people are too scared to talk about their financial problems, especially in their ‘Golden Years,’“ Ellington said. “Retirement is supposed to be all about enjoying the time you’ve been saving up for, and the reality is that many people couldn’t save enough,” he said. But that didn’t stop them from retiring.

Savings?
More than half of those surveyed had saved less than $50,000 and many of that group said they’d saved absolutely nothing yet they retired anyway. Just 4% said they had delayed their retirement due to debt. “They get to a certain age and they feel privileged,” Ellington said. “They say, ‘I’m going to go on that trip even though I have to put it on my credit card.’“ When you’re young, you have time to pay off splurges like a trip to Hawaii, but for retirees, procrastination can lead to serious financial problems.

Medical expenses
It’s not just vacations and entertainment; one of the biggest sources of senior debt is medical expenses. More than 75% of the seniors surveyed said they went into debt for medical or funeral expenses. Part of the reason they’re not paying off their debts is they don’t know where to start and they’re too embarrassed to ask for help. But the financial crisis may have also played a role. “Financial institutions haven’t been perceived as the friendliest,” and many people blame them for the recession, Ellington said. “They think, ‘Hey, I’m not going to pay back these guys who ripped off America.’“

Late payment
One of the biggest mistakes seniors make when it comes to credit cards is being late with a payment. “That triggers a penalty APR that can exceed 30%, which can trap those seniors who can’t pay their balances in full each month in a downward spiral of debt,” said Ben Woolsey, the director of marketing and consumer research at CreditCards.com.

Tags: Burial expenses, Credit card debt, Credit Cards, Medical expenses, Vacations
Posted in Credit Cards, Finance, Money, Personal / Internet | No Comments »