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Have You Ever...- 3-14-07

Thought About What to Do About My Credit? (part II of credit)

By ChaChanna Simpson

What do creditors look for before granting you credit?

When a creditor is looking to approve or deny you credit, there are a few factors they take into consideration in determining whether they grant it to you or not:

• Do you pay your bills on time?

• How much and what type of credit do you currently have?

• How much line of credit on your accounts do you currently have available?

• How long have you had the previous lines of credit?

• Do you currently have any outstanding debt?

• What collection actions have been taken against you?

Annual Fees, Reward Points and Debt, Oh My: How to select the right credit card for you
Credit cards are almost a must in today’s paperless world. They are also convenient and tempting to have in your wallet, with their different designs and pretty colors.

Before you go running out to sign up for a card with the lowest interest rate fee, do some research. Yes, that card may have a low interest fee but the fee may be low for a limited amount of time, i.e. first three months. To help you out in the selection process, here are some things to consider when selecting a card.

Check to see if it has a variable or fixed rate. With a variable rate, the rate can change up or down and the credit card company doesn’t have to notify you. Whereas a fixed rate, they have to send you notification before they do it. Think about that the next time you decide to throw away mail from your credit card company. “[I]t may be a notification that your fantastic rate triples the first time you’re late with a payment. The same advice applies not only when you’re searching for a card, but after you get one — check out all that ‘junk’ mail in our statement envelope before you toss it,” says Bankrate.com.
Think about how you pay your bills: in the mail or online? Are both options available?
Make sure you check the APR (Annual Percentage Rate), annual fee, grace period, over-the-limit fees, late charges, and interest rates on cash advances.
Check if and how the credit card company changes your interest rate or any other terms of your deal.

With so many credit cards options out there, it can be very hard to decide which one is best for you. So I went onto the Federal Trade Commission’s website and found these helpful descriptions to make it easier for you to find a credit card to suit your needs.

Regular Credit Cards

It’s just a basic credit card with no frills. There are no rewards or perks. If you just need a card to make a purchase, this is the card for you. Make sure to pick one with a low interest fee. And since you are not getting any extra frills, there’s no need to get one with an annual fee.

Secured Credit Card

If you’re trying to rebuild your credit, then you would benefit from this card. You make a deposit and the deposit is your credit limit. As long as you make your payments on time you will demonstrate you are a good credit card holder.

Pre-paid Credit Cards

Pretty much what the title implies. You make a deposit of your choice and make a purchase up to that amount. Pre-paid cards do not require a credit check.

Reward Credit Card

These are basic credit cards with an upgrade. They offer many perks such as frequent flyer miles, gas mileage points, free services, products and other stuff for you just using the card. There are many categories of rewards. Shop around and I’m sure you’ll find one perfect for you.

Student Credit Card

This is a way for college and high school students to establish good credit. Students are usually given discounts to sign up.

Business Credit Cards

If you have a business, this is a great idea. Some credit card companies have rewards for businesses as well. This is a great way for you not to mix up funds and when it’s time for Uncle Sam to get his cut, your expenses are all in one place.

Catalog Credit Cards

These cards are used only when you order from shopping catalogs and are easier to get then regular credit cards, if you have poor credit. This is also a good way to rebuild your credit if you’ve destroyed it already.

Low Interest Rate Credit Cards

There are two kinds: One for purchases and one for cash advances. The Low Interest Rate for Purchases means if you carry a balance you will pay less over time. Cash Advances: In the event you need a cash advance you’ll have lower interest rates.

Low Introductory Rate Cards

With this type of card, you‘ll get a low interest rate but for a limited amount of time. If you transfer a balance to this card to take advantage of the savings, make sure you know you can pay off the balance before the rate goes up.

Next issue we will have the final installment!

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