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Thread: Credit and charge cards--what to look for?

  1. #1
    SpeakngEZ
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    Default Credit and charge cards--what to look for?

    I've recently made the decision to start building my credit history after, for the first time in my life, I checked my credit score. (Finding a new apartment soon.) It was 706--a mere 15 points away from the next bracket, lower interest rates, etc.

    The main reason I was given for the score not being higher is my lack of a credit history. I've never felt the need to use money I don't have and didn't want to get trapped in the dreaded credit debt, no matter how responsible I am with my finances--which I am.

    Ok, my question: what should I be looking for in a card? What is considered a good interest rate? Should I expect interest or fees if I pay it in full every month? Is there anything I should consider that people don't normally think of before venturing out for their first time?

    Also, I've heard some cards offer frequent flier miles. Has anyone had experience with this? Was it worth it? I figured I could use it to travel for work.

  2. #2
    SpeakngEZ
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    Default Re: Credit and charge cards--what to look for?

    Mmmm . . . bump.

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    Default Re: Credit and charge cards--what to look for?

    An interest rate should not be a concern as you must pay it off each month. If you don't you will be throwing money away; big money.

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    Banned Melonie's Avatar
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    Default Re: Credit and charge cards--what to look for?

    with the 'Credit Card Bill of Rights' having been recently passed in Washington, to be frank I'm not sure what you should expect.




    While these new regulations won't go into effect for nine months, it's clear that credit card issuing banks are taking immediate action to cover their own asses in regard to the future default and bankruptcy loss increases that this new law will force those banks to absorb. Where new account applications are concerned, one can only speculate the following ...

    - banks are likely to become much more selective about approving new credit card accounts, i.e. verifying the applicant's job, verifying the applicant's income etc.

    - banks are likely to cut back on issuing 'subprime' credit card accounts (where the accountholder's income is difficult to document, where the accountholder's 'official' reported income level is < $50,000 etc.), since the new law severely limits the bank's ability to recoup losses in the event the 'subprime' account holder goes into future default or bankruptcy.

    - 'subprime' accountholders are likely to face an annual fee, a comparatively low credit limit, and a comparatively high interest rate. Similarly, 'subprime' accounts are likely to dispense with any card perks that add to the bank's cost of servicing the 'subprime' account i.e. free miles, cash back etc.


    Again the Credit Card Bill of Rights thing is a brand new deal. And while mainstream financial media spent a fair amount of effort reporting on likely changes that would affect 'prime' credit card account holders (i.e. banks burdening prime account holders with more costs, higher interest rates, fewer perks etc. in order to subsidize deadbeat 'subprime' cardholders from which the bank will now be limited in default recovery ability), it hasn't done much reporting on how 'subprime' cardholders will be affected ... other than reporting that new 'subprime' cards will become harder to obtain, will have lower credit limits, will have higher fees and interest rates etc.
    Last edited by Melonie; 05-25-2009 at 06:33 AM.

  5. #5
    SpeakngEZ
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    Default Re: Credit and charge cards--what to look for?

    Thank you for the information, Melonie. I'm afraid I'd be considered "subprime."

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    Default Re: Credit and charge cards--what to look for?

    ^^^ in point of fact, just about every credit card holder who operates an 'independent contractor' business is considered to be 'subprime', regardless of their individual financial situation. For example, credit card underwriter Advanta just sent out the following notice to existing 'small business' accountholders...


    (snip)"Dear Customer,

    Your Advanta Business Card account is funded by an independent trust which owns the balances you owe on your account and provides funding for new transactions. We expect the trust to stop funding activity on our accounts. The trust also restricts our flexibility to fund activity on your account. Unfortunately, as a result, effective May 30th all Advanta Business Credit Card accounts, including your account, will be closed.

    This means that you will not be able to use your card or account for new transactions, including purchases, checks and balance transfers beginning on May 30th. We understand that you may have written checks on your account before May 30th and we will make every effort to honor those checks that are presented to us for payment by June 3rd. If you use your Advanta card to make automatic recurring bill payments, you will need to make alternative arrangements for those payments promptly.

    It is important to understand that you are not required to pay your entire balance at this time. You may continue to pay down your account balance over time, as allowed under your Advanta Business Card Agreement.

    You will not lose the rewards that you have earned. If you participate in a Cash Back program, you will receive a check for the amount of any accrued rewards more than $1.00 as long as you make the required minimum payments and your account remains in good standing. If you participate in a Business Rewards program, you will have at least 60 days to redeem your points as long as you make the required minimum payments and your account remains in good standing.

    We deeply regret the impact this action will have on your business and very much wish it was not necessary"(snip)


    Yup, over 1 million 'small business' credit cards ... with the vast majority of those accounts in good standing ... just got unilaterally cancelled with a whole 5 days of advance notice !

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