The Do's And Don'ts Of Secured Credit Cards

It's hard to get away from using a credit card these days. If you want to travel, you must have a credit card to reserve a hotel room. Renting a car? It takes a credit card. Want to get a membership at the new video rental store? Present your credit card, please.

For those with bad or challenged credit, life can be tough without a credit card. Secured credit cards can help to bridge this gap for those without credit or with damaged credit.

A secured credit card works like this: you deposit a set amount into an account (usually between $300 and $500) and that becomes your credit limit. Your deposit, in essence, "secures" the credit card. If you don't pay, your money becomes the issuing credit card company's security against default.

After you have established good credit, you can increase the credit line by depositing more money, or the credit card company might extend you more credit without an additional deposit.

Secured credit cards can be an excellent choice for many people, but there are a few things to know:

* Almost all secured credit cards have an annual fee. But these fees can vary greatly from one issuing company to another. Shop around.

* Many banks no longer offer secured credit cards, but often credit unions do. If you want to go this route, you can open an account at many credit unions for as little as $5 and then look into the secured credit card there.

* Most issuing companies will require that you pay the balance in full each month. They don't take your payment due from the money you have deposited – you must send a payment just as you would for a traditional credit card. These are usually not revolving credit accounts.

If you think a secured credit card is the right thing for you, there are some do's and don'ts to consider. First, the do's:

* DO shop around. Not all offers are the same. Don't take the first offer that appears in your mailbox. Do your own research.

* DO look into getting a secured credit card with a higher balance if that's what you need. In other words, if you have $3,000 to deposit, find an issuing company that will allow you to deposit that much to start so your limit will be higher.

* DO make sure this is the best option for you. If you have never had credit before, or you have severely damaged credit, this might be the only option. But if you think you can get a traditional card, that's a better option.

* DO read all the fine print. Every single word. Some companies charge so many fees, your small $300 deposit might be eaten up in fees before you can ever use the card. Some require you to purchase insurance, for $50 or more a month. But many companies don't do these things and those are the companies you're looking for. Do your research and get the best deal for you.

Although secured credit cards are a good option for many people, there are some don't considerations. These include:

* DON'T be casual about this credit card. If you have damaged credit, using a secured credit card is an excellent way to re-establish your good credit rating. If you have never had credit, this is a way to establish credit so you can acquire traditional credit later.

* DON'T try to go over your limit (or deposit amount). Not only will the charge not go through, but it will be a mark against you. Keep careful records each month you use the card so you know you're not charging right up against the credit limit.

About the Author:
This article has been provided courtesy of Creditor Web, http://www.creditorweb.com

Understanding Your Credit Card Rights

When you apply for and are issued credit, your signature on the credit application acts as your acceptance of the terms set forth by the issuing financial institution. Even though it may seem that the issuer has the upper hand in all matters related to using the credit, that's not entirely true.

You have certain rights, many of which are provided under the Fair Credit Billing Act. What's important when exercising these rights is ensuring that you take all required steps in the order and time frame specified. Let' start with the biggest credit problem, billing disputes.

Billing disputes

Billing disputes in which merchants charge cardholders for items not received or items received defective happen all the time. According to the Fair Credit Billing Act, you have a right to dispute such charges by taking the following steps.

Step 1

Within 60 days of the date you received the first statement listing the disputed item, you must contact the issuer of the credit card in writing. Be sure to use the separate address listed for Billing Inquiries. Also be sure to mail your letter which must include your name as listed on the cardholder account, account number, details of the disputed item and what you want to happen (i.e., that the error be corrected).

Step 2

Before sending the letter, sign it and make a copy for your records. Include copies of all supporting documentation (dated receipts, etc.) and use a mailing method that offers proof of delivery such as certified mail. The issuer will notify you within 30 days of receipt of your written dispute and will then investigate the matter.

While the investigation is underway you are not required to pay for the item in dispute nor the corresponding finance charges. If the dispute sides in your favor, you are released from further liability in the matter. If not, you will be responsible for making the payment as outlined in cardholder agreement.

Unauthorized charges

This is another big problem with credit cards. However, as a cardholder, your responsibility for proven unauthorized charges is limited to $50; not the full amount. Unauthorized charges can easily run into the hundreds and thousands of dollars so even though it seems high, $50 is a small price to pay if you're ever a victim of identity theft.

When you cannot pay your bill

When you use credit cards to make purchases you're considered a debtor. If you're ever not able to repay credit debt that you incur, you'll likely be contacted by a debt collector.

In the past, debt collectors used all sorts of threatening and intimidating tactics in their efforts to collect debt. Fortunately, the Fair Debt Collection Practices Act prohibits such unfair treatment of debtors. The Act also determines when and how debt collectors may contact debtors. For example, debt collectors are prohibited from making false statements about you or your debt or about any consequences of you not paying that debt, such as saying you'll be arrested or that your wages will be garnished.

None of the above means you're relieved of your responsibility to repay your debt. It just means you have the right to be treated fairly while debt collection efforts are underway.

For more information

If there's ever any question about your credit card rights and you need fair, unbiased answers including an explanation of your rights, try contacting the FTC at http://www.ftc.gov/. There you can learn about credit card fraud, dealing with lost or stolen credit/debit cards, fair billing rights, unfair or deceptive business practices, internet and phone orders, and more. Information on these and other consumer issues is free.

To better understand your credit cards rights as they relate to complicated issues such as declaring bankruptcy or divorce, consider consulting an attorney.

About the Author:
This article has been provided courtesy of Creditor Web, http://www.creditorweb.com

Get Rewards That Feel Rewarding

In the modern world, credit cards have become a basic necessity. Between the ease of using them for shopping, whether in person or online, and the necessity of having one in order to do simple things like make hotel and car reservations, it's difficult to impossible to go without one for long. So as long as you have to have one, you may as well be getting some benefit out of it. Different credit cards come with a vast array of rewards programs that can be redeemed for a variety of products and services, so check out the available options and get a card that actually feels rewarding.

If you have the travel bug, or frequently travel on business, you should consider getting a frequent flier credit card. These credit cards earn you air miles for the purchases that you make on your card and, depending upon the card sponsor, may even give you double benefits for spending at specific venues. Frequent flier credit cards can be sponsored either by a bank, or by an airline, and which type of card-sponsorship you chose can change the benefits you will get.

If you chose an airline-sponsored card, you will get benefits like air miles and airport lounge privileges, but only with your sponsoring airline, so you'll want to make sure it's an airline that travels in your area, and where you want to go. On the other hand, if you go with a bank-sponsored frequent flier credit card, you can use your miles with more than one airline.

The most important thing about using a frequent flier credit card is to watch the fine print. Most frequent flier credit cards come with heavy interest rates, so you only want to use this card for purchases you know you can pay off every month.

Flying isn't for everyone, and credit card companies know this, so there are lots of other options for people who want to enjoy credit card rewards close to home with both of their feet planted solidly on the ground. If you have a long commute, or frequently go on road-trips, you might investigate different gas rebate cards. Gas rebate cards give you cash rebates on the gas that you buy for a small percentage of the overall cost of your gas. Some even offer rebates on the oil you use to heat your home, or purchases that you make at applicable gas stations' convenience stores. The percentage of the rebate varies from card to card, but most of them will send you your rebate once a year in one lump sum so that you really see your savings.

As with the frequent flier credit card, though, it's really only worthwhile to get a gas rebate if you don't plan on carrying a balance. These cards typically come with higher interest rate for any unpaid balance, so only use your gas rebate credit card if you know you'll be able to pay it off.

Feeling like you might miss out on rewards because you aren't constantly on the move? There are options for you too! Different rewards cards offer reward points that can go toward anything from Broadway tickets to books. Entertainment cards are usually pretty benefit-specific, so you'll want to pick a card that offers you points at a place where you'll actually be interested in using them.

But always remember, the terms and conditions always matter more than the rewards you might get from a credit card, especially if you plan on carrying a balance. Free tickets to Cats aren't worth getting stuck with a bad interest rate on your debt.

About the Author:
This article has been provided courtesy of Creditor Web, http://www.creditorweb.com