NextAdvisor Daily » Credit Cards

Lower credit limits for California residents?

Caitlin — Mon, 21 Sep 2009 20:45:36 +0000

MSNBC reports that a San Diego resident was told that his credit limit was lowered simply because he lives in California. Paul Smith recieved a letter from issuing bank HSBC informing him that, based on information obtained from Equifax and due to the current economic environment, the credit limit for his General Motors credit card would be lowered from $7,000 to $1,400. Smith contacted Equifax and discovered that, because he carried a $1,400 balance before the credit limit had been lowered, he now owed more than 51% of the available credit on the card, which caused his credit score to drop. Smith's credit report also showed that he had never been late with a payment and had always paid more than the minimum required. So Paul called HSBC and spoke with a customer service representative who explained that his credit limit was cut due to the financial situation in California, and that similar measures were being taken in Nevada, Florida, and Arizona. When reached for comment, an HSBC spokesperson stated, "As standard business practice, HSBC's card business adjusts credit criteria based on economic, market and other factors."

Depending on your balance, lower credit limits can often lead to a lower credit score, since the percentage of available credit that is being used is one important factor in calculating your score. For this and many other reasons, it's a good idea to monitor your credit report for any significant changes. Keep in mind that it's best not to carry a balance greater than 50% of your available credit at any given time. Check out our reviews and comparison charts to learn more about credit cards and credit report monitoring.

You know that minimum credit card purchase requirements aren't allowed, right?

Caitlin — Wed, 09 Sep 2009 20:27:19 +0000

Many merchants post signs near the cash register, stating that you must spend above a certain amount in order to be allowed to use a credit or even a debit card. However, these minimum credit card purchase requirements violate MasterCard and Visa's merchant agreements. Obviously, many retailers choose to disregard this rule, and they generally get away with it. Their position is understandable, since the merchant has to pay a fee to the credit card company whenever a customer uses a credit card, and paying that fee seems less worthwhile when the customer is making a $2.00 purchase. But technically, if credit cards are accepted, the retailer must accept them for any purchase, regardless of amount.

NonToxicReviews.com has created a nifty little wallet card that references MasterCard and Visa's merchant agreements, to prove his point in the event of a dispute with a merchant. If you do choose to challenge a retailer who attempts to enforce a mimimum credit card purchase requirement, you will be in the right, and this convenient card may facilitate your argument.

Personally, though, I'm not sure that I'd be comfortable doing so. Despite the rules of the merchant agreement, I sympathize with the retailer's position and would feel uncomfortable mounting a challenge. What about you? Would you hold a merchant to the rules, and demand to be allowed to pay with your credit card? Would you use NonToxicReviews.com's card to help get your way? Or would you just respect the retailer's wishes and pay with cash, or purchase additional items in order to meet the requirement?

To learn more about credit cards and to compare terms and conditions, see our credit card reviews and comparison chart.

Consumer Reports advises college students on responsible use of credit

Caitlin — Tue, 25 Aug 2009 00:29:53 +0000

In anticipation of the start of a new school year, Consumer Reports is blogging about personal finance issues for college students. Today's post kicks off the series by addressing credit card debt.

Some points worth noting:

84% of undergraduate students have at least one credit card, and more than half have four or more.
Only 17% pay off their balance each month.
The average balance is $3,173.
Recently passed credit card reform will regulate credit card companies' aggressive marketing toward college students.
The new rules will require consumers under the age of 21 to provide either a co-signer or documentation of their ability to repay card debt in order to obtain a new credit card.

Consumer Reports recommends that students begin building a good credit history by finding a credit card with no annual fee, using the card to charge a recurring expense, and paying off the balance in full and on time each month. If you are in the market for a credit card, check out our reviews and comparison chart. And if you're concerned about building and maintaining a good credit history, you may be interested in learning more about credit report monitoring.

Your cash is no good here

Caitlin — Wed, 29 Jul 2009 20:43:56 +0000

A popular Manhattan restaurant has issued a press release announcing its new "credit cards only" policy:

Carrying around cash is a thing of the past. Leave it to Commerce, Harold Moore's West Village hot spot, to modernize and go "paper-free," now only accepting credit cards as a convenience to its patrons. With robberies on the rise in the West Village, owner Tony Zazula also sees the switch as a safety precaution. It will eliminate the dangerous situation that employees face when walking to local banks with large sums of cash. So forget about that last-minute trip to the ATM and head to Commerce for a relaxing meal.

Could this be the start of a new trend? It is difficult, but still technically possible, to live without the convience of credit cards. But it doesn't look as though cash will be making a comeback any time soon. As our reliance on credit increases, so do the risks. It's important to use credit responsibily and to guard against credit card fraud. You may be interested in our reviews, comparisons, and FAQs if you'd like to learn more about credit cards, credit report monitoring, or identity theft protection.

Ten things NOT to put on your credit card

kent — Thu, 09 Jul 2009 17:02:37 +0000

Robert Manning, author of Credit Card Nation, has made a list of ten things you shouldn't put on your credit card. Why? Because credit card companies may start to see you as a risk if, for instance, you're charging your federal taxes. But there are other things too. Here's the list, courtesy of NPR's Marketplace:

1. Traffic Tickets

2. Retreading Your Tires

3. Bargain Shopping (shopping at low-cost stores suddenly, when you haven't already)

4. Adult Purchases (pornography, strip clubs)

5. Marriage Counseling

6. Lottery Tickets

7. Cash Advances

8. Personal Pampering

9. Income Taxes

10. Alcohol (specifically charging your bar tab)

The bottom line is that credit card companies have decided that you are what you buy. So, next time you're at the bar you might want to consider using cash. While you're busy rethinking your charging habits, you can also check out our credit card reviews and comparisons.

Beware of new credit card fees

Caitlin — Tue, 07 Jul 2009 00:39:41 +0000

An article in today's Wall Street Journal warns consumers to beware of unexpected credit card fees. In the current economic climate, it's no surprise that banks and credit card companies are looking for any excuse to earn an extra few dollars here and there. A CEO of a bank-card advisory firm is quoted saying, "The fee income is becoming increasingly more important as interest income is falling as a percent of total revenues." Late fees, loan origination, over-the-limit, and overdraft charges are becoming more essential sources of income for the banking industry.

So now, more than ever, it's crucial to read your credit card terms carefully and check your statements. Most fees are avoidable, so long as you're attentive to rules and deadlines and practice fiscal responsibility. And when opening a new checking account or applying for a credit card, take the various fees into account when deciding which one is right for you.

To learn more about credit cards and compare terms and rewards, see our reviews and comparison charts.

Consumers Union wants to know what you think about credit card reform

Caitlin — Wed, 01 Jul 2009 23:36:04 +0000

Consumers Union has created CreditCardReform.org, which provides news updates and explanations to ensure that readers understand how credit card reform effects their financial situations, as well as a wealth of tips to help readers use credit responsibly.

In the months before the new protections outlined in the latest legislation go into effect, Consumers Union is attempting to monitor the various tactics that credit card companies sometimes use against cardholders. If your credit card provider adds a new fee, raises an existing fee, increases your interest rate, closes your account, lowers your credit limit, or takes away your rewards, they'd like to hear your story.

To learn more about credit cards or to find a credit card that's right for your financial situation, check out our reviews and comparison charts.

Master hacker pleads guilty

kent — Tue, 30 Jun 2009 21:08:36 +0000

Infamous hacker Max Ray Vision, a.k.a. "Iceman", a.k.a Max Butler pleaded guilty yesterday to wire fraud charges. Wired Magazine reports that he "stole nearly 2 million credit card numbers from banks, businesses and other hackers, which were used to rack up $86 million in fraudulent charges." Butler started out as a good guy, doing contract security work, but quickly picked up a nefarious sideline. Butler did more than just steal credit card numbers directly from credit card users. He actually stole credit card numbers from other hackers and identity thieves, proving once-and-for-all that there's no honor among thieves—or hackers.

How did he steal from them? He hacked the online forums that identity thieves use to buy and sell personal information.

You can help safeguard your own personal info by signing up for identity theft protection. Check out the best options with our identity theft protection service reviews.

Credit Card Accountability, Responsibility and Disclosure Act dissected

kent — Thu, 25 Jun 2009 19:20:53 +0000

When President Obama signed the Credit Card Accountability, Responsibility and Disclosure Act into law, a number of credit card companies went on the defensive, predicting annual fees, diminished grace-periods, and other customer-focused expenses. Enter two doctoral candidates at Harvard, Ryan Bubb and Alex Kaufman, who tell us in their recent New York Times op-ed piece that it just isn't so. Or at least if credit unions are an example, then the future for credit card companies, and their customers, won't be bad at all. The two economists compared the proposals in the CCARDA to the way that credit unions deal with credit cards, and found that credit unions make a pretty good template for how credit card companies will need to act in the future. Their conclusion? If employee credit unions can make it work (and they do), then for-profit credit card companies can too.

You can compare current credit card offers with our Credit Card Comparison reviews.

Credit Cardholder's Bill of Rights includes special protections for college students

Joe — Mon, 08 Jun 2009 17:24:02 +0000

While the Credit Cardholder's Bill of Rights offer protections for all Americans, there are a few amendments that specifically designed to help prevent college students from racking up thousands of dollars of debt while they are still undergrads.

First, there are much more strict limits on the amount of credit that can be offered up to a college student by an issuing bank. A student without a co-signer is limited to the greater of 20% of that students annual income or $500. While this may limit some students access to credit, it ensures that the particular individual is not put in a position where they have more spending power than they are reasonable able to pay back. We believe this should help most students develop positive credit usage habits and prevent heaps of unpaid debt from racking up.

Next, banks are prohibited from providing inducements to students in exchange for completing a credit card application. Anyone who has spent any time on a college campus over the last two decades knows how common the practice of providing incentives such as t-shirts, mugs, hats or even candy bars in exchange for signing up for a credit card. We see this as a positive move in that it removes a certain level of frivolity from the process of signing up for a credit card.

Finally, banks must disclose the terms of so called "affinity agreements" between credit card issuing banks and universities. These agreements typically give a bank exclusive rights to market credit cards with the college or university's logos to students and alumni in exchange for marketing fees. This is good for several reasons, but probably the most important has to do with privacy. Often affinity agreements allow banks to have access to significant amounts of personal information and we think it is good that this part of the bill of rights allows students to know exactly how their information may be used by outside parties.

You can learn more about credit cards for college students and tools to monitor credit reports and scores by reading our reviews and comparisons.