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Why my brother chose a card with an annual fee
Now that he’s learned to use credit responsibly and has built up a good credit history, my 28-year-old brother recently decided to up his credit card rewards game and apply for a card with an annual fee to get a larger signing bonus and other perks. Since I’d recently done the same thing, he asked my advice on choosing the right card.
Here’s a look at the areas we discussed.
Study: More cardholders carrying balances
If you have a good job and steady paycheck, but can’t seem to get ahead financially, you’re not alone. One survey shows many U.S. employees still struggle with debt, cash flow and saving.
For example, the 2015 Employee Financial Wellness Survey by audit, tax and consulting firm PricewaterhouseCoopers found that 47 percent of full-time employees carry balances on their cards. That’s up from 45 percent last year, according to PwC’s report on the survey.
And even more Gen X and Gen Y employees — 52 percent — consistently carry credit card balances, up from 51 percent for both groups last year.
How Does Suze Orman’s ‘Approved’ Card Stack Up Against the Competition?
Financial guru Suze Orman is the latest celebrity to brand her own prepaid debit card, following the likes of reality TV’s Kardashian sisters, hip-hop artist Russell Simmons and rapper Lil Wayne.
Orman’s is called the Approved Card, and it’s promoted as “better than cash” and “safer than cash.” But reviews are mixed.
Prepaid cards are billed as a way to control spending or avoid steep bank fees. The idea is that you can’t go into debt because you can only spend the money that’s loaded on the card. The competition is fierce in this space because about one in four American households is “unbanked” or “underbanked,” according to the Federal Deposit Insurance Corporation (FDIC), and prepaid cards offer a way to avoid carrying cash.
But you can still rack up fees with prepaid cards. Orman’s card is no exception, though she says the card costs just $3 a month “if you use it how I tell you to.” For instance, you get one free monthly call to the customer service department, and then it’s $2 per call. If you want a paper statement, it’s $2. You also may get hit with fees at the ATM. The Approved Card partners with the Allpoint ATM network, which has 35,000 machines nationwide in stores such as CVS and Walgreens. Allpoint still charges $2 per withdrawal, unless customers set up direct deposit or a recurring bank transfer of $20 or more. If you go out of network, you’re charged Allpoint’s $2 fee, plus the ATM operator’s fee.
However, the Approved Card does look better than some of its celebrity predecessors. For instance, Simmons’ Rush Card has a $10 monthly fee, among a slew of other fees. It also gleams next to the disastrous Kardashian Kard. The sisters bailed on the card one month after it debuted in 2010 after its high fees were slammed by consumer groups. The card cost $59.95 just to buy and use for six months, or $99.95 for 12 months. That didn’t include the fees for any money loaded onto the card.
By contrast, the American Express prepaid card doesn’t have a monthly fee. Other prepaid cards, including Green Dot, give users ways to avoid the monthly fee, either by setting up direct deposit or making a certain number of transactions monthly.
Orman is working with the credit reporting agency TransUnion so that, eventually, customers’ records with using the Approved Card would be added to their credit reports. Currently, prepaid card use is not monitored by the credit bureaus, meaning that such cards can’t be used to improve credit history. Orman has said this is part of a two-year experiment to help the unbanked get credit. Yet it’s unclear how that experiment will turn out, how the data would be used and whether it would end up helping or hurting these consumers.
Orman’s card offers users unlimited access to TransUnion credit reports and scores for one year. That score, however, is a VantageScore, and not the more widely used FICO score. Keep in mind that, no matter which card you have, you can get one free report from each of the three national credit bureaus once a year at AnnualCreditReport.com.
Never too Early when it Concerns Credit Cards
With the new law in place putting requirements on the ability to get a credit card for those under the age of 21, today many American parents are finding themselves in a much more proactive roll when it concerns their children and using plastic. As plastic (debit, gift, prepaid and credit cards) continues to grown in popularity and is used by younger generations, making sure those using the products are educated has grown into a priority.
According to an article entitled "Credit Cards and Kids: 8 Tips to Teach Your Kids Credit Card Skills" there are many things that you can do to get your child on the right foot when it concerns credit cards. In many cases the earlier it is taught the better as your child will hopefully grow up making the smart financial decisions that were adopted years before. Some tips that can help include the following among others:
- Educate children early
- Teach the value of money
- Set savings goals
- Graduate to a credit card before college
- Outline the big picture
Over the last couple of years many changes have occurred and youths are using plastic more than any other time in history. Without teaching your children of all the aspects of financial products such as credit cards it is very easy for them to fall into debt that would take years to recover from. For the most part this education will not be taught in schools and it something that must be done at home in order to allow your children to reach their financial goals they set later in life.
Renting a Car? A Credit Card Could Have You Covered
As millions of people plan to hit the road this summer, many have chosen to rent a vehicle as part of their travel arrangements. While renting a vehicle is easily done on many accounts, one thing that sometimes confuses renters is wondering what all is covered in case of an accident or incident. While in many cases if the renter has automobile insurance of their own it somewhat mirrors that, in other cases it does not. Regardless of the case those that use credit cards to rent their vehicle could be covered on more than is expected.
In an article entitled "How Useful Is Credit Card Insurance for Rental Cars?", we are given details on a couple of benefits that many cardholders are not aware of when renting a vehicle. On many occasions these benefits are the same that one would get by opting into the insurance plan offered when renting a vehicle that could easily double the price of renting a vehicle. In all, things that could be covered include the following and more:
- Administration fees (collision and/or theft)
- Towing fees
- Car rentals in foreign countries
- Any obscure fees (ie: loss-of-use fees)
For these protections and others without adding extra money onto your total, all one must do it charge the entire rental fee to your credit card. When looking at what all is exactly covered it is best view your credit card’s terms or call your issuer. While one card may cover one thing, a different card could cover something entirely different so it is best to know what the extent of your coverage is before assuming.
When it comes to benefits, features and tools there are many things that millions of cardholders are missing out on. While car insurance is the main focus of this post, there are many others such as tax education and retirement planning that go unutilized by a countless number of cardholders. While they may not seem important to you now, all of the services that you can use are there for your benefit. In all, these services can save you both time and money in the short term as well as the long and could even help alleviate some stress by having the answers that you may be looking for.
Credit Card Mistakes Cost More than Others…Literally
Letís admit it. Every now and then we all do something that we all realize (hopefully sooner than later) was a big mistake and end up paying for later down the road. While some may be small, there are others like those that involve credit cards, which end up making us pay much more over a long period of time than we ever thought we would. Fortunately there are things that can be done to help us keep from making these mistakes and become financially independent.
To keep from paying more than we should for our credit card†purchases there are plenty of things that cardholders should make sure they refrain from doing. While some may be harder to control than others a few of the top mistakes to avoid include the following:
- Taking out frequent cash advances
- Keeping high balances with extreme high interest rates
- Only paying the minimum
- Transferring balances without have a payment plan in place
- Making late payments
Over the last year, for almost everyone’s credit cards have become a lot more expensive to hold in your pocketbook and that even includes not even using them. To keep cost down as much as possible cardholders must now be more observant on their actions with their plastic. Not only that they must know and understand the aspects of their cards, such as the terms of agreement, which were usually neglected in the past. The cost of not understanding your card or making the mistakes that are listed above now have more than just a monetary value. Today these mistakes effect both the long term and short term of your financial goals, which is something that a lot of cardholders have learned the hard way. Luckily it is never too late to learn from any mistake and learning from this one could literally save you hundreds or thousands.
To Share or Not to Share Credit Card Accounts
When it comes to credit cards, do you think it is wise to have joint accounts or authorized users? While the answer to that question varies among cardholders, it is one that many people at one time or another will have to think about. Whether it is a spouse, child, colleague or someone else having someone else on your account is something that takes a lot of thought. If you do decide that add someone onto your credit card account it is best to know the difference between having authorized users and having joint account holders. Each varies on the risk involved and what can and can’t be done by the secondary cardholder. An article on Bankrate.com entitled "Sharing Credit Card Accounts", explains both options in detail.
Like so many other stories involving credit cards, sharing plastic is something that can both help and hurt the main account holder. While there are many pros and cons that can be outlined there are a few that stand out more than others. As for advantages, those that share credit cards often find it easy to track any bills that are needed to be paid as well as any unexpected expenses. Sharing a credit card can also help those that may have little or no credit history. For these accounts, the credit card is reported on both cardholders’ reports and as long as payments are made on time, it will help increase both scores.
When it comes to sharing a credit card there are also disadvantages that often deter many people. A major problem that joint accounts come across is reaching and going above the allotted credit limit associated to their account. Another problem is that if the payments are late or never paid at all, this will be reported on your credit report even if it happens to not be your fault.
Citi Shows Cardholders how to Use Credit Wisely
As we continue to roll throughout 2010 and cardholders continue to grow comfortable with their credit cards, we have found many issuers put an emphasis on helping consumers gain a better understanding on the many things that have take place. While we have heard of educational sites and tools from many sources such as the government and Discover (with the use of "Straight Talk"), there are others available to help educate people when it comes to not only credit cards but to their credit itself.
When looking at credit itself and the impact credit cards have on it a site from Citi Bank entitled "Use Credit Wisely" is one that rates among the best between issuers. Since the focus is on those looking for ways to get and maintain healthy credit rankings you won’t see a push to get you to sign up for one of their cards. Instead you will see answers that are focused on the type of cardholder you may be (traditional consumer, student or business owner). In all you can find information on these topics and much more:
- Credit basics
- Maintaining good credit
- Payment assistance
- Understanding a credit report
- Avoiding identity theft
So will this site be what cardholders need to help them feel more comfortable with their plastic? While it all depends on the cardholder, the one thing that is for sure is that it really does not hurt anything at all. Right now the focus of every credit card issuer is to make sure that consumers are comfortable with the overall credit card environment. Information that helps consumers understand this could essentially help gain that individual cardholder both now and later. Even if you have a credit card and have decided not to use it ever again, the site could be worthwhile to view. The site can be seen at www.usecreditwisely.com.
Get Access to your Issuers’ Credit Card Agreement
When it comes to your credit card agreement do you know what exactly is in yours? Whether you do or don’t the fact is that research shows the many people don’t. Even with the implementation of the CARD Act where issuers are now required to be more transparent, millions of people have yet to fully come to understand the details in the relationship with their issuers. Fortunately, this does not have to be the case as the Federal Reserve has made it easier to not only find your issuer’s standard agreement, but know exactly what it details by going to the Fed’s informational credit cards website.
While using this site to seek out an issuer’s terms of agreement, one must note that the agreements shown after your search is that of a standard agreement. As agreements can vary for each cardholder depending on the plastic you were issued, it is best that you keep the original copy that came with your plastic. If you have lost yours it is best to contact your issuer and request another. Under amendments to the Truth in Lending Act, your credit card issuer must make your terms and agreement available upon request. If you issuer is not listed, don’t fret. You should be able to find your agreement on your issuer’s website as this is required by the Credit CARD Act.
Newest Credit Card Study Released
Have you ever wondered where your credit card issuer stacks up against the rest when it comes to fees associated with your card? How about how much fees have increased since the Credit CARD Act was implemented earlier this year. If so, a credit card study conducted by Bankrate.com may have the answers you are looking for and much more.
According the recently released study on credit card fees, it seems that so far this year the fees associated with your plastic are near those that were seen in previous years. In all there were over seventy cards examined by the fifty of the largest card issuers (including national issuers and credit unions), and the results showed that majority have maintained low- or no-fee policies in the majority of areas.
When it comes to fees associated with credit cards, the results of the survey may come as a surprise to many that expected fees to rise out of control due to the implementation of the CARD Act. While there were some fees that were increased and others that were created to help offset potential losses in revenue, there were many that stayed the same or increased slightly. In all, it may seem that most of the attention given to fees and the potential of absurd charges may have been a simply case of over exaggeration.