MasterCard and Visa: they're both household names in today's credit card world. In fact, MasterCard and Visa are so common that if you're shopping for a new card, it may be difficult to choose one over the other. Which one is more widely accepted? Which one has better benefits? Should you apply for both? Here are some points to consider while comparing MasterCard and Visa credit cards.
How MasterCard and Visa Operate
While you see their name on many cards, MasterCard and Visa do not actually issue credit cards. Rather, they function in a behind-the-scenes way. MasterCard and Visa are payment systems. They create and maintain the computer networks that process their credit card transactions. This is no small task. Literally billions of credit card transactions occur at ATMs and merchants around the world.
Other banks, such as Chase and Bank of America, issue the actual credit cards. These banks work with MasterCard or Visa. They place the brand name on their cards. If you see the Visa name on a credit card, it means that Visa is backing up the card. The same is true for cards with the MasterCard logo on them. This is why you see cards with names such as the Chase Platinum MasterCard. Note that the name of the bank and the payment system are both mentioned. When you make a payment, it goes to the bank that issued the card.
Comparing MasterCard and Visa
As far as worldwide acceptance, MasterCard and Visa are quite comparable. Both of them have an established global presence. Most retailers will take either one without hesitation. In rare occasions, a retailer may only accept one or the other. Even then, you should be able to find another store close by that does take your card.
If you're searching for a credit card, you are probably comparing interest rates, reward programs, fees, and included benefits. Keep in mind that the issuing banks determine these factors. They are not decided by MasterCard or Visa.
Reasons to Get Both
If you are applying for your first card, remember that MasterCard and Visa are quite similar. You will want to look at the various benefits offered by the banks that issue the cards. If you are planning to keep a balance from month to month, you may want to consider a card with a low interest rate. If you are looking for rewards and are able to pay off the balance in full each month, a card with a good reward program may better fit you.
If you have a Visa and want another credit card, it may be wise to get a MasterCard (and vice versa). The same is true for banks. If you have a card from Chase, try looking into a different card issuer. Having variety will aid you should anything happen to one of the institutions. Also, since the different lenders are in competition, you may receive offers for better credit card deals in the future.
MasterCard and Visa are both solid credit card choices. Having a card from each company will give you more credit options. And having cards from different banks will get you access to the best reward programs, interest rates, and other benefits. Start looking online today. Then pick out the credit cards that work best for you.
Tuesday, 16 October 2007
Where Have All The 0% Balance Transfer No Annual Fee Credit Cards Gone?
If you listen to some consumers, you'd think all of the 0% balance transfer no annual fee credit cards have all magically disappeared from the market. Horror stories abound about people signing up for what they thought were these cards, only to be hit with high fees later. Believe it or not, these elusive credit cards do still indeed exist. It's just a matter of knowing what to look for. Here are some tips to keep in mind.
1. How Long Is The 0% Really 0%?
The first thing you need to ask when looking for 0% balance transfer no annual fee credit cards is how long does the 0% interest rate last? After all, if it's only a 6-month offer and you owe thousands of dollars, chances are you won't have time to pay it off before the "real" interest rate kicks in.
Which brings us to point number 2...
2. What's the "Real" Interest Rate?
If the 0% offer isn't good for the life of the balance, what does the rate go up to when the offer expires? If you're looking at a 22 percent interest rate after six months, you might be in worse shape in six months than you are right now. In this instance, the 0% balance transfer no annual fee credit cards can be your worst nightmare – not your best friend.
So how do you avoid the nightmares? By knowing what's out there. Which brings us to our other points...
3. Life of Balance Offers Do Exist
No matter what your credit card companies want you to believe, life of balance credit card offers are out there. However, 0% balance transfer no annual fee credit cards that offer a 0% interest rate for the life of the balance are very hard to find. Even if you do find them, you have to have excellent credit to qualify.
If your credit is less then perfect, this type of card isn't going to be an options. That being said...
4. There Are Suitable Substitutions
If you don't qualify for the 0% balance transfer no annual fee credit cards that offer a 0% rate until the balance is paid in full, opt for a low-interest fixed-rate card instead. A low interest rate of, say, 9.9% over the life of the balance is a lot better than a balance transfer of 0% that jumps up to 22% a few months after you transfer your balance.
5. Get To It
So now that you know what to look for, try to see if you can find some 0% balance transfer no annual fee credit cards that you qualify for. If you can't, then opt for a low-interest fixed-rate card instead. Then, as your credit improves, try for the 0% balance transfer no annual fee credit cards again.
1. How Long Is The 0% Really 0%?
The first thing you need to ask when looking for 0% balance transfer no annual fee credit cards is how long does the 0% interest rate last? After all, if it's only a 6-month offer and you owe thousands of dollars, chances are you won't have time to pay it off before the "real" interest rate kicks in.
Which brings us to point number 2...
2. What's the "Real" Interest Rate?
If the 0% offer isn't good for the life of the balance, what does the rate go up to when the offer expires? If you're looking at a 22 percent interest rate after six months, you might be in worse shape in six months than you are right now. In this instance, the 0% balance transfer no annual fee credit cards can be your worst nightmare – not your best friend.
So how do you avoid the nightmares? By knowing what's out there. Which brings us to our other points...
3. Life of Balance Offers Do Exist
No matter what your credit card companies want you to believe, life of balance credit card offers are out there. However, 0% balance transfer no annual fee credit cards that offer a 0% interest rate for the life of the balance are very hard to find. Even if you do find them, you have to have excellent credit to qualify.
If your credit is less then perfect, this type of card isn't going to be an options. That being said...
4. There Are Suitable Substitutions
If you don't qualify for the 0% balance transfer no annual fee credit cards that offer a 0% rate until the balance is paid in full, opt for a low-interest fixed-rate card instead. A low interest rate of, say, 9.9% over the life of the balance is a lot better than a balance transfer of 0% that jumps up to 22% a few months after you transfer your balance.
5. Get To It
So now that you know what to look for, try to see if you can find some 0% balance transfer no annual fee credit cards that you qualify for. If you can't, then opt for a low-interest fixed-rate card instead. Then, as your credit improves, try for the 0% balance transfer no annual fee credit cards again.
Monday, 8 October 2007
How Credit Card Companies Define The Different Credit Rating Levels Of Applicants
With regard to credit scores, there are different categories in which individuals will fall. These include bad credit, fair credit, good credit and excellent credit ratings. The better the credit score of an individual, the more likely it is that the individual will not only receive favorable credit card offers but have their applications for those offers accepted as well. Credit card companies have category levels in which to group credit card applicants within and each company has their own special criteria which must be met in order for the individual to fall within a specific category. The following will provide a general summation of how the companies determine the category of an individual and what makes someone fall within the excellent credit rating category, for example.
How Credit Card Companies Determine Good to Excellent Credit Ratings
The most favorable category of borrower for the credit card companies is the individual who falls within the good to excellent credit rating. Of course, one who has perfect credit is highly desirable to a credit card company and will almost always be accepted for a credit card. In general, one who has a credit score of 650 or greater falls within the good to excellent category and many credit card companies will offer cards to these individuals. The main determining factor for credit card companies in the decision-making process related to issuing credit cards is the individual credit score. They also look at factors such as employment and annual income.
How Credit Card Companies Define Bad to Fair Credit Ratings
Perhaps the less desirable categories of credit ratings are the bad credit rating and fair credit rating. For these groups of individuals, obtaining a credit card will be more difficult to do as their credit scores may not be as high and therefore they will be declared by the company to be more of a lending risk. In general, those who have less than a 650 with regard to credit scores may fall within the fair to bad credit rating categories. Factors such as prior delinquency on payments and/or bankruptcy, may put the individual into a less desirable category as again, the risk is higher for the credit card company. Each credit card company will have their own determining factors when it comes to application acceptance and which individual falls into what category.
How to Determine Which Category You Fall Into
The best way to determine whether your current financial situation puts you in the bad, fair, good or excellent credit rating category is to choose a credit card company and then determine what their specifications consist of. This can be done by using the Internet to peruse their website or calling the company directly to see if they have certain requirements when it comes to financial categories of credit card applicants. It is also a good idea to know what your individual credit score may be as this will help to determine if you fall within the bad, fair, good or excellent credit rating category. Just keep in mind that every time you apply for a credit card, an inquiry will show up on your credit report and this could have a negative overall impact when you try to apply for credit cards and loans in the future. Therefore, do the necessary research first and then only apply for those cards which truly interest you.
Thursday, 4 October 2007
The Ten Greatest Credit Myths
This is one of my most favorite articles that I have written because it addresses so many questions that people have about credit. I love watching the eyes of my clients widen when they find out the truth about some of these most common myths.
I caution you before we get started In this article, you are going to hear some things that will contradict what you have been told in the past. This is because credit is one of the most misunderstood topics, and most people, even many of those in the financial field, do not really understand credit.
Myth 1: Paying off collection accounts, tax liens, judgments, or late payments will remove the negative item from my credit reports.
This is simply not true. In fact, by paying off an old collection account, you can actually lower your credit scores. The reason for this is because more recent negative items will hurt your score more than older negative items. If you pay off an old collection account, not only will the collection account remain on your reports as a paid collection, but it will now show a current date, and cost your more points. I am not suggesting that you should not pay off your delinquent accounts, only that you need to understand the consequences so that you can factor that into your decision.
Myth 2: Paying my credit card balances in full every month will improve my credit.
Keep in mind that the credit system is designed by the creditors, to help them determine if you are a good credit risk, and if you are an optimal credit user (one who uses the system in such a way that it will generate revenue for the creditors). By paying off your accounts every month, you are not establishing a history of optimal credit usage. What your creditors want to see, is someone who pays slightly more than their minimum monthly payment every month, on time, with only occasional balance pay-downs. This behavior will optimize your credit scores.
Myth 3: Credit repair is illegal.
Very false! Credit repair is not only perfectly legal; it is actually protected by federal law. For more information on the law, you can refer to the Fair Credit Reporting Act (FCRA). It is legal for you to repair your own credit, as well as hire anyone you choose to do it on your behalf.
Myth 4: Credit Counseling (CCCS) programs will raise my credit scores.
We have all seen the statements made by credit counseling companies that state that their program will improve your credit. I can tell you that this is false. When you enroll into a credit counseling program, one of the first things that happens is a statement is inserted into your credit reports for each account included in the program. This statement will say something like "payments made through credit counseling", or "client in CCCS". This statement itself may not cost you any points; however it is looked at by the lending industry as very negative. It is like putting a sign on your forehead that says, "I can't pay my bills!" In addition, most credit counseling programs will make your payments late, and this will then cause you to have late-pays, which will cost you many points on your credit.
Myth 5: The law requires that negative items stay listed on my credit for 7 years.
This is also false. There is no law that dictates the duration that an item must remain on your credit reports. The only thing that dictates that an item must remain on your credit report is that it can be proven to be 100% true and accurate.
Myth 6: I make a lot of money so I must have excellent credit.
Making a lot of money really has very little to do with your credit directly. What determines your credit is your payment history, account balances, your open accounts, the type of accounts, etc.
Myth 7: As long as I have never been late on a payment, I will have great credit.
While never being late is an important part, it is only 35% of your credit scores. In order to have great credit, you need to focus on all the factors that make up your credit scores.
Myth 8: Your credit report from each credit bureau will be the same.
This is not true. In fact, most of the time, all 3 of your credit reports will differ from one another. The reason for this is that each of the credit bureaus is a separate independent company, and the processes at each are different. Also, some creditors may only report to 1 or 2 bureaus, but not all 3. In my experience, your reports will very rarely be exactly the same.
Myth 9: If you are married, you will share the same credit reports as your spouse.
This is not true at all. Even if you are married, you will still have your own unique credit reports. It is possible to see some shared items if you have joint accounts, but your credit reports are yours.
Myth 10: If I close my old credit accounts, my scores will increase.
This one is a big surprise to most people. I am sure at some point you have been told by your mortgage professional to close some of your open account to better qualify for a loan. Once you closed those accounts, you watched in anguish while your scores dipped as much as 100 points or more. Why did this happen? The reason is that one of the largest factors that make up your credit scores is the age of your good-standing accounts. The longer an account has been in good standing, the better it is for your credit scores.
Now that you are armed with this powerful knowledge, you can get on the road to optimizing your credit today.
I caution you before we get started In this article, you are going to hear some things that will contradict what you have been told in the past. This is because credit is one of the most misunderstood topics, and most people, even many of those in the financial field, do not really understand credit.
Myth 1: Paying off collection accounts, tax liens, judgments, or late payments will remove the negative item from my credit reports.
This is simply not true. In fact, by paying off an old collection account, you can actually lower your credit scores. The reason for this is because more recent negative items will hurt your score more than older negative items. If you pay off an old collection account, not only will the collection account remain on your reports as a paid collection, but it will now show a current date, and cost your more points. I am not suggesting that you should not pay off your delinquent accounts, only that you need to understand the consequences so that you can factor that into your decision.
Myth 2: Paying my credit card balances in full every month will improve my credit.
Keep in mind that the credit system is designed by the creditors, to help them determine if you are a good credit risk, and if you are an optimal credit user (one who uses the system in such a way that it will generate revenue for the creditors). By paying off your accounts every month, you are not establishing a history of optimal credit usage. What your creditors want to see, is someone who pays slightly more than their minimum monthly payment every month, on time, with only occasional balance pay-downs. This behavior will optimize your credit scores.
Myth 3: Credit repair is illegal.
Very false! Credit repair is not only perfectly legal; it is actually protected by federal law. For more information on the law, you can refer to the Fair Credit Reporting Act (FCRA). It is legal for you to repair your own credit, as well as hire anyone you choose to do it on your behalf.
Myth 4: Credit Counseling (CCCS) programs will raise my credit scores.
We have all seen the statements made by credit counseling companies that state that their program will improve your credit. I can tell you that this is false. When you enroll into a credit counseling program, one of the first things that happens is a statement is inserted into your credit reports for each account included in the program. This statement will say something like "payments made through credit counseling", or "client in CCCS". This statement itself may not cost you any points; however it is looked at by the lending industry as very negative. It is like putting a sign on your forehead that says, "I can't pay my bills!" In addition, most credit counseling programs will make your payments late, and this will then cause you to have late-pays, which will cost you many points on your credit.
Myth 5: The law requires that negative items stay listed on my credit for 7 years.
This is also false. There is no law that dictates the duration that an item must remain on your credit reports. The only thing that dictates that an item must remain on your credit report is that it can be proven to be 100% true and accurate.
Myth 6: I make a lot of money so I must have excellent credit.
Making a lot of money really has very little to do with your credit directly. What determines your credit is your payment history, account balances, your open accounts, the type of accounts, etc.
Myth 7: As long as I have never been late on a payment, I will have great credit.
While never being late is an important part, it is only 35% of your credit scores. In order to have great credit, you need to focus on all the factors that make up your credit scores.
Myth 8: Your credit report from each credit bureau will be the same.
This is not true. In fact, most of the time, all 3 of your credit reports will differ from one another. The reason for this is that each of the credit bureaus is a separate independent company, and the processes at each are different. Also, some creditors may only report to 1 or 2 bureaus, but not all 3. In my experience, your reports will very rarely be exactly the same.
Myth 9: If you are married, you will share the same credit reports as your spouse.
This is not true at all. Even if you are married, you will still have your own unique credit reports. It is possible to see some shared items if you have joint accounts, but your credit reports are yours.
Myth 10: If I close my old credit accounts, my scores will increase.
This one is a big surprise to most people. I am sure at some point you have been told by your mortgage professional to close some of your open account to better qualify for a loan. Once you closed those accounts, you watched in anguish while your scores dipped as much as 100 points or more. Why did this happen? The reason is that one of the largest factors that make up your credit scores is the age of your good-standing accounts. The longer an account has been in good standing, the better it is for your credit scores.
Now that you are armed with this powerful knowledge, you can get on the road to optimizing your credit today.
Convert Your Bad Credit Score Into A Good One
A bad credit history confines you to very few options. Lenders won’t give you what you want. You will have to remain content with high interest rates. In such a situation you might want to improve your credit rating. You can do it by approaching to the task carefully.
Many lenders accept loan applications from bad credit holders, raising their hopes of borrowing money. Sub-prime lenders in the UK loan market specially deal with bad credit cases. They are the only option for you to improve your financial health.
Bad credit loans help you repair your bad credit scores. These loans not only help you in tight situations but also present an opportunity to positively refresh your credit score. Any repayments that you make have a positive effect on your credit score. Bad credit loans can be put into two categories - secured and unsecured. When you pledge your home to the lender for taking out a financial help, it is reckoned as a secured bad credit loan. Otherwise, it is unsecured.
People have bad credit due to late payments, arrears, defaults or CCJs issued against them. All these factors bring down your credit score. You cannot increase your credit score immediately – it takes time. What you can do is to take out bad credit loans and repay them as per the repayment schedule. This will gradually help you in winning over the confidence of lenders and a better credit score.
Bad credit loans call for high interest rates. But, by pledging your home, you can bring down the rate of interest. If you are a tenant and cannot provide a home as security, lenders will usually lend you at high interest rates. You should not stick to one lender only. You can approach different lenders and compare what they have in store for you.
Many lenders accept loan applications from bad credit holders, raising their hopes of borrowing money. Sub-prime lenders in the UK loan market specially deal with bad credit cases. They are the only option for you to improve your financial health.
Bad credit loans help you repair your bad credit scores. These loans not only help you in tight situations but also present an opportunity to positively refresh your credit score. Any repayments that you make have a positive effect on your credit score. Bad credit loans can be put into two categories - secured and unsecured. When you pledge your home to the lender for taking out a financial help, it is reckoned as a secured bad credit loan. Otherwise, it is unsecured.
People have bad credit due to late payments, arrears, defaults or CCJs issued against them. All these factors bring down your credit score. You cannot increase your credit score immediately – it takes time. What you can do is to take out bad credit loans and repay them as per the repayment schedule. This will gradually help you in winning over the confidence of lenders and a better credit score.
Bad credit loans call for high interest rates. But, by pledging your home, you can bring down the rate of interest. If you are a tenant and cannot provide a home as security, lenders will usually lend you at high interest rates. You should not stick to one lender only. You can approach different lenders and compare what they have in store for you.
Thursday, 20 September 2007
Debt A Growing Uk Problem
Personal debt is an increasing problem across the United Kingdom with millions of adults affected.
According to top debt management consultancy Thomas Charles, over 8m adults each owe unsecured debts amounting to £10,000 or more.
And Scotland compared to other regions of the UK has the highest proportion of adults in debt, at almost 1 in 4.
The latest findings follow a survey commissioned by Thomas Charles and carried out by independent research agency YouGov.
The quarterly survey shows debt numbers up by nearly a third on the previous quarter. And when compared to the same period in 2006, the trend is also up, by almost the same amount.
A quarter of the 8.2m adults in debt are struggling to meet repayments, the survey figures reveal. More men have debt of £10,000 or more compared to women. But more women are likely to struggle to meet repayments than men.
Regionally, some 40% of London residents with £10,000 or more unsecured debt have problems meeting their repayments. The figure for the rest of the South is around 20%, with Wales and the Midlands 18%.
Thomas Charles & Co Ltd was set up in 2004 and operates throughout England and Wales with its head office in Acton (West London). It has a personal, consultative approach to debt management and focuses primarily on providing formal solutions for debt problems including Individual Voluntary Arrangements (IVAs) and bankruptcy. However, it will also provide advice around informal debt repayment plans where appropriate. It works with third party insolvency practitioners around the UK.
Top Debt Tips
Don’t bury your head in the sand. Try working out your financial position using a budget sheet detailing all your incomings and outgoings.
Consider transferring credit card debt to a 0% card while you deal with more pressing bills, such as any council tax or mortgage payments. But don’t use this as an excuse to run up more debt elsewhere, and beware of hefty transfer fees.
Don’t take out other loans to pay off the original debt or use a consolidation loan. If you must do this, be disciplined and don’t use the new loan money for anything else.
Talk to your creditors about structuring a realistic repayment plan.
If you cannot do a repayment plan and you do not want to go bankrupt then try an IVA. Visit IVA.co.uk or call the IVA helpline (0800 197 48 38).
If you want to consider bankruptcy then try the Citizens Advice Bureau (citizensadvice.org.uk)
Debt Relief Counseling
Debt Relief Counseling is of great help if you plan to straighten your credit record and financial history. The primary objective before opting for debt relief counseling is to be committed and follow whatever instructions given to you. Your obedience will bring about positive results. When faced with a critical debt problem there is nothing like resorting to debt relief counseling. As we all know the alternative to debt is bankruptcy, and it is a tough stain that stays on for another 10 years. The negative mark on the credit report can bring a lot of hardships to you, as you will be denied for many other financial transactions. Therefore, it is advisable to consult a financial expert for counseling.
Debt relief counseling advices and guides you through debt elimination program first. Then strategies are formulated after a thorough view of your debt situation. Then the counselor will determine the objective on how to come about the problem and then configure the plan that will work best to accomplish your goals. A debt relief counseling plan can help you maintain a payment plan where you can meet your goals by paying your debt in such a way that it makes it convenient for you and at the same time make it less taxing. And you will be able to clear your debt and get back on the right track.
There are a number of agencies online that provide debt relief counseling programs to cater to your debt problems. These agencies provide professional and qualified financial experts to counsel you as per your requirements. These agencies also provides other debt solution programs too that can help in improving your credit status.
Debt management counseling is also type of a debt relief counseling program, which works only after you are finally able to pay off the debt a little each month rather than building the debt up. This helps establishing relationship with a number of banks and agencies. The counselors will work on your behalf with those people you owe money to, be willing to lower the interest rates and waive off the late fee.
The advantages of a Debt relief counseling is that it works on your behalf with your creditors and makes sure your monthly payments become more manageable. They can guarantee you a debt free life if you are committed to follow the instructions given to follow until all your debts are cleared. So you can start a new and systematic payment system in the days to follow. Debt relief counselors can reduce the high interest rates charged by creditors. They can also eliminate late fees depending on the conditions, therefore this way more of your money goes towards reducing your debts.
With the increase debt problems so also there is an increase in frauds, they claim to deal in debt solution programs, etc. Be aware, and make sure you are selecting the right agency that provides you with quality Debt relief counseling. Do not make hasty decisions and make sure you do a thorough research on the companies you are selecting. Click on the link below to get debt relief counseling today.
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